Say It First

Anticipation and Strategy
Our bankruptcy clients come to us with so many objections that I wonder why they bother to show up in the first place.

It’s as if they make an appointment solely to appease a loved one. Once their objections are validated, they’ll turn around with a smug look and say, “I told you bankruptcy was a bad idea!”

But we lawyers know that bankruptcy can help clear the way for a brighter financial future. To help make that happen, I subscribe to a simple rule: say it first.

When we wait for the objection, we’re put on the defensive. That weakens our position as a credible professional.

I prefer to speak to the objection before the client brings it up. In doing so, I can handle the objection and dispose of it effectively.

The client can’t bring it up again, my credibility goes through the roof, and we can move the process along more effectively.

For example, we know credit scores are important to our clients. You can wait for the question to creep up behind you, or you can handle it proactively.

Try this one out for size:

You’re probably thinking about your credit score after bankruptcy, and whether you’ll be able to get a mortgage or a car loan. Federal guidelines allow for FHA mortgages in as little 2 years after bankruptcy, which gives you a little time to build up your savings for a downpayment. As for cars, one of my clients got a loan from Ford Motor Credit on a new Expedition about 16 months after her discharge. She got the same financing deal that they were advertising on television, which was pretty good.

The story about the Ford Expedition, by the way, is true. So is the part about the federal mortgage guidelines.

I don’t need to tell you that you shouldn’t lie to clients. It’s kind of a big deal with state ethics committees. Also, your parents raised you better than that.

But if you sit down and identify your client’s most likely objections to bankruptcy, you’ve got a much better chance of clearing up problems before they arise.

Wade Deeper

wade deeper

We’re told that it’s important – nay, mandatory – for us to belong to our local bar association and professional organizations.

Online marketers extoll the virtues of Avvo for interacting with potential clients, Facebook and Twitter for social networking (whatever that means), and LinkedIn for … well, for something.

So we join up and wait for the phones ring.

When we get tired of waiting for the phone to ring, we either conclude that the tactic was wrong (because those bar association events are useless) or that we have somehow fallen short of the mark in our execution.

If we choose the former, we stay hungry for work. But when we accept our own shortcomings and take action, we find out what truly works for us.

Joining, we find, is merely stepping into the water.

To gain value from an activity, we need to wade deeper.

So when something isn’t working for you, ask before you declare it a failure whether you’re soaked or if you merely need to wade in deeper.

Better yet – dive in.

Desperate For Business? Your Clients Can Smell It.

stop selling

Clients coming to the office but not hiring you?

Desperation, as anyone with a dog knows, has a scent. People can smell it, too. And the smell makes them run the other way.

So maybe you stink of desperation.

The important thing is that you get rid of the stench, and quick.

Here’s what I did, and continue to do whenever necessary:

  1. Clean My Office: Clutter makes you look disheveled, which in turn makes you seem ineffective. A clean office projects confidence and organization.
  2. Commit to Reading: I’ve been a bankruptcy lawyer for nearly 20 years, but that doesn’t stop me from opening up my copy of the U.S. Bankruptcy Code and reading a few random sections from time to time. I learn something whenever I do this, which increases my confidence.
  3. Shut Down The Email: When you’ve got time on your hands, the lack of new email is a constant reminder that things aren’t going well. Shutting off the email system keeps your head clearer.
  4. Hit A Networking Event – And Talk: Getting yourself out in the real world is always a good idea. Being actively engaged in the professional world keeps you on top of your game, and helps you build confidence.
  5. Remember Why You’re Here: You became a bankruptcy lawyer for a reason, and that’s probably to help people in their times of need. Be refocusing on that drive to help others, you can regain a positive sense of motivation that will drown out the stench of desperation.

Once you’ve taken some time to rid yourself of the stench of desperation, you’ll be in a better position to get back to work.

Understand The Client’s Motivation

client motivation
Let’s say you go want to buy a new car. You have a big family and need to know you’ll have enough room to cart around the kids to their sporting events and to pack up gear for summer camping trips.

The local dealer shows you a red convertible with a screaming audio system. You walk out of the showroom.

When confronted by a problem, we move in one of two ways – away from the pain, or towards the pleasurable end result.

People who move toward pleasure see things in terms of positive visions of the future. Those who move away from pain see the problem in terms of negative consequences that they must avoid at all costs.

Does the client want a better credit score? If so, you’ve got a pleasure seeker.

Does the fear of a wage garnishment seem more pressing than does the prospect of saving for the future? In that case, you’re dealing with a pain avoider.

Finding the client’s motivation for looking into bankruptcy is simple. All you need to do is start the conversation by asking what the client wants out of the process.

From there, simply listen to the answer to determine whether you’ve got a pain avoider or a pleasure seeker.

Finally, verify the answer. If a client says that they want to improve their credit score so they can get a mortgage just say, “so the most important thing for you is to get a better credit score so you can get a mortgage, right?” The client will correct you if you’ve gotten the wrong impression of their motivation.

With the information in hand, you can begin a conversation about how you can help achieve the client’s goals.

Simple enough. Now start.

The Practice Of Bankruptcy Law – Adapting To The New Normal

road in mountains

If you’re a bankruptcy lawyer and expect filings to return to the way they were, it’s time to readjust your expectations. It’s never going to be the way it was. In fact, it hasn’t been that way for over 8 years.

For the first decade of my bankruptcy practice, you could set tell the time of year by the balance of my bank account and the flow of new clients through my doors.

From mid-January through mid-May, the clients came for help. They paid their legal fees with tax refund money, and my office was busy. Things slowed the week prior to Memorial Day, and typically remained a bit low from them until Independence Day.

July was a lean month, but things picked up a bit in the beginning of August. Then things went quiet again until after Labor Day, which is when the phones began to ring off the hook until Thanksgiving. From Thanksgiving until the second week in January, we wrapped up loose ends and cleaned the office.

The bankruptcy law changed in 2005, so that was a crazy year in terms of filings. But as of October 17, 2005 the practice of bankruptcy law as we knew it changed forever.

Welcome To The New Normal

You will probably argue that 2008-2012 were the typical boom in bankruptcy filings, but you’d be incorrect. Those years represented the byproduct of a catastrophic economic situation the likes of which our country hasn’t seen since The Great Depression. We weren’t seeing a rebound in bankruptcy filings, but rather a group of people filing who would never have considered doing so in the absence of the housing market meltdown.

For example, look at your client base in 2004. Now look at your clients in 2011. I’m going to bet that they looked a lot different in terms of income levels and complexity of problems.

That’s because the people who needed our help before 2005 don’t need us anymore. They don’t have a stack of credit cards, and those who do simply don’t have the ability to afford legal fees that are twice or three times as high as they were before the bankruptcy laws changed.

We didn’t notice it because in 2008 we started dealing with a new breed of client – the person who would have been able to get by had the bottom not dropped out of the economy in such a drastic and sudden manner.

Now the economy is recovering, and that new breed of client no longer needs us. They’re getting back to work, and either no longer own a home or hung on long enough to make it work. They don’t have any retirement savings left, but that’s not a debt issue.

“Wait And See” Isn’t Going To Cut It

You’re tempted to tell me I’m wrong, that all we need is some good old-fashioned credit expansion in the hands of the American consumer to bring the bankruptcy filing numbers up to where they were. Hold on for a few more months and we’ll be just fine.

I’d love it if you were right, but you’re not. And if you look at the numbers, Professor Bob Lawless agrees with me. Lawless did a chart on Credit Slips in November 2013 showing the number of people per capita who have filed for bankruptcy in the period of 2008-2013. Here’s his chart (reproduced without permission, but I can’t figure out whether the University of Illinois permits reproduction of charts such as these. If not, I’m sure Professor Lawless will contact me):

Second Derivative Bankruptcy Filings Rate

The 12-month moving average on bankruptcy filings is 3.34 per 1,000 persons. The last time it was this low was in 1995, when I started practicing (and, interestingly enough, right after the law changed to the one in use prior to the 2005 Act).

In 1995, we were coming out of a recession that hadn’t wiped out the retirement plans of millions of people, nor had as many lost their homes and savings to a foreclosure meltdown that left the population distrustful of the entire financial system. We’d taken some lumps, but weren’t battered and bruised. We started buying houses and took out credit cards.

Because It’s Different This Time

Total household debt, though rising, is 9.1% below 2008 levels.

Foreclosures are at the lowest level since 2005, and many parts of the country have begun to see a stabilization of property values. In New York City, San Francisco and some parts of Southern California, values are going up quickly.

But US home sales are declining, down 5.1% in January 2014 after investors came in and snapped up cheap properties in the latter part of 2013.

Let me be clear – the rush of bankruptcy filings you need to keep your doors open is not coming. Not now, not soon, and perhaps not for many years if at all.

You Have Choices

If you want to survive in The New Normal, you’ve got to:

  1. Hone your skills by attending – and paying attention at – events such as the annual convention for the National Association of Consumer Bankruptcy Attorneys;
  2. Include other complementary areas of practice such as student loan law, FDCPA, FCRA, or collection lawsuit defense;
  3. Reduce your overhead through the use of technology, outsourcing and increased productivity so you need less income to get by;
  4. Learn how to bring in business by strengthening your online and offline networking and promotional efforts (a good place to start is my Google+ video course);
  5. Remember that you can invest money or time – but that success doesn’t come unless you are willing to do one or the other;
  6. Treat your law practice as a business rather than using a, “build it and they will come,” mentality; and
  7. Recognize the importance of outstanding client service in an era of online reviews and increased word-of-mouth.

You do have a choice. If you’re not up for the challenge of The New Normal, you should consider an exit strategy from the practice of consumer bankruptcy law. Because for the foreseeable future, you won’t be able to feed yourself without making these changes.

My greatest impact in the foreseeable future is to be a voice in this industry, to help make it easier for you to thrive in The New Normal.

I’m not necessarily in favor of more people needing to file for bankruptcy though; behind each filing is a person, and bankruptcy is never a happy decision to make. Rather, I’m in favor of giving help to more people who what bankruptcy provides. To greater public education. And to more effective ways of reaching those who need us most.

It’s not easy, though it is simple. And it’s not an overnight formula. But it’s effective, and it’s profitable.