Kevin's Corner
Practice Management Tip:
A Holistic Approach to Relationship Building
"We've talked before in this space about the importance of various aspects of interpersonal relationships in the effective management and marketing of your law practice: connecting with your clients, asking the right questions, understanding the priorities of your employees and more.
"But law professor Joshua D. Rosenberg is taking that idea one step further and suggesting that it's not just particular skills we need in order to practice effectively, but a holistic approach to relationships and relationship skills. And, Rosenberg says, those skills make the practice of law more enjoyable as well.
"In fact, Rosenberg says that studies show that success in the law correlates more closely with relationship skills than with substantive legal knowledge, intelligence, or writing skills. In his recent article, "One Law School Course You Should Not Miss", Rosenberg talks about actively teaching these skills to law students as a foundation, not an adjunct to other subjects.
"But it's not too late for those of us already far removed from law school. Rosenberg digs deeper in Interpersonal Dynamics: Helping Lawyers Learn the Skills, and the Importance, of Human Relationships in the Practice of Law. The premise is simple: our inclination and training as attorneys inclines us to overestimate the importance of reason and logic, when in fact many other factors play in to the human experience.
"Understanding and learning to operate comfortably with regard to the many-factored human reactions, Rosenberg says, won't just help us connect better with our clients, colleagues and staff. It will make us better, happier lawyers. Although he's clear that these aren't concepts to be memorized but skills and habits to practice and develop, he points to several known factors in interpersonal relationships:
- The closer someone is to us physically, the more likely we are to be influenced by that person;
- We tend toward inertia, preferring that things remain as they have always been;
- We are likely to treat others in the same manner we feel they are treating us—an especially dangerous interpersonal hurdle because the way we understand someone to be treating us isn't necessarily consistent with the way he intends to treat us; and
- We seek clarity, and are more receptive to proposals presented with certainty (even if they are wrong) than those which appear to have gray areas.
"While Rosenberg's paper is aimed at filling the gap he perceives in legal education, his ideas are as applicable to experienced practitioners, and his transcript of a class interaction is a fascinating study in just how often we "get it wrong" in conversation."
- Kevin Chern
President, Start Fresh Today
Did You Know.
that consumer confidence is at a new all-time new low?
Well, if you didn't, this hardly comes as a surprise, especially when considering that the economy has been recently compared to that during the Great Depression.
According to a recent AP story, consumer confidence dropped in April to a 29.5 mark on the RBC Cash Index.
The April mark was the worst ever seen on the RBC Cash Index since its inception in 2002 and marked the fourth straight month in which consumer confidence fell to a record low. In comparison, consumer confidence registered at 33.1 in March.
Increasing job losses, high energy prices and the foreclosure crisis were some of the culprits cited for the lack of consumer confidence – but you probably could have spouted these reasons off the top of your head without reading the first part of this sentence, as the following sections further illustrate.
Can Our Fearful Leaders Please State the Obvious? We're in a Recession!
More than 90,000 bankruptcy filings were made in March, representing a 30 percent increase from March 2007 and the highest total of filings since the pre-BAPCPA days, according to a Bloomberg story on court records examined by Jupiter ESources.
In response to these bankruptcy numbers, foreclosure totals and unemployment figures, Federal Reserve Chairman Ben S. Bernanke recently acknowledged that the economy might be facing a recession!
Payday Lenders Striving High during Rough Times
Can someone please cue up the opening music from that hit 70's show "Good Times?"
It turns out that payday lenders are salivating during these rough times as they ratchet up their efforts to take advantage of the slow economy, further illustrating the need for more predatory lending regulation.
If your clients ever inquire about payday lenders, refer them to this excellent resource:
The Great Attorney Income Divide
Why are some attorneys yachting while others are working second jobs? We consider the issue on the Start Fresh Today blog.
Bankruptcy Article of the Week
Supreme Court Ruling Breeds Substantive Problems for Consumers
Recently, the U.S. Supreme Court has been rolling out federal pre-emption rulings as if they were being produced on an assembly line. Even the most destructive for consumers, like the ruling earlier this year in Riegel v. Medtronic that left patients across the country without state court recourse for defective medical device injuries, don't come as much of a surprise.
Despite the impact of that case, the lower-profile Watters v. Wachovia may have a more sweeping impact on consumer protection issues, and on the remedies available specifically to our clients facing credit and collections issues. While University of St. Thomas law professor Elizabeth R. Schiltz argues that the ruling won't necessarily have a negative impact on consumer protection issues, she summarizes the Watters ruling:
- After Watters, consumer protection in banking services can no longer be considered to be primarily the province of state legislatures. After Watters, national banks can be presumed not to be subject to any state law that in any way hinders the efficient exercise of any of their powers.
It's true, certainly, that national banks have been increasingly immunized from state regulation in recent years. Watters may only have been the final nail in the coffin. But it couldn't have come at a worse time for consumers.
Credit card delinquencies are on the rise; mortgage foreclosures are sweeping the country. And across the country, states have been stepping up to protect their citizens in a variety of ways. While the level of protection varies, while the specifics are inconsistent, many of those state measures have one important characteristic in common: they provide more protection than the federal government.
Are we comfortable leaving consumer protection in all areas related to national banking—that includes mortgage lending, credit card issuance, gift card regulation, interest rates, disclosures and much more—in the hands of the legislature that brought us BAPCPA? The federal government mandates credit card disclosures, but provides almost no substantive regulations on the consumer credit industry. The federal government restricts debt collection practices, but limits those restrictions almost entirely to third party collectors. The federal government has fallen woefully short in addressing the current mortgage foreclosure crisis, introducing a "plan" that allowed mortgage holders to re-negotiate the terms of a loan if they felt like it.
The federal government, in short, has been more about deregulation than about regulation in the banking and credit industries. Now, with financial crisis growing all around us, the federal government—through the Supreme Court—has decided that some serious restrictions are in order after all. Unfortunately (though perhaps unsurprisingly), the government's aim is off: instead of placing those restrictions on the industry that's created the mess, they've opted to tie the hands of the state governments that took a more active role in the protection of their citizens.
March Foreclosures - "In Like a Lion, Out Like a Lion"
March foreclosures were up 57 percent as compared to a year before, according to an April 15th Bloomberg story on recent RealtyTrac Inc. findings.
According to the story, March saw more than 234,000 properties in some stage of foreclosure. That translates to one in every 538 households in the United States being in some part of the foreclosure process.
While foreclosures have reportedly been tamed in one Baltimore, Maryland neighborhood, the news hasn't been as good in Nevada, California or Florida.
- Nevada had the highest foreclosure rate in March. Approximately one in every 139 Nevada households was in foreclosure – that's four times the national average!
- California was second when it comes to its March foreclosure rate (one per every 204 households) but had the most foreclosures for the month at 64,711.
- Florida averaged one filing per 282 households (the third highest rate) and had 30,254 foreclosures (second in total filings).
Access some more of these disturbing figures in the Bloomberg story.
Student Loan Congressional Hearings
On Tuesday, April 15th, Congress heard testimony from five industry experts on how to address the problems presented by the state of the student loan industry in the United States. The credit crunch, combined with decreased government subsidies for student lenders, has made student loans more expensive and more difficult to get than ever.
CNNMoney.com reports that Sarah Flanagan, Vice President for policy development at the National Association of Independent Colleges and Universities, spoke in relatively positive terms about the current situation. Flanagan evidently noted that there is no crisis yet, thanks to large banks filling the lending gaps left by the exit of some smaller banks. But testimony from others was reportedly less optimistic.
John Remondi, CFO of Sallie Mae (the biggest provider of student loans nationally), apparently noted that every loan the organization currently makes is at a loss, thanks to unfavorable terms in credit markets. And, as he pointed out, there's a limit to how many lenders will continue providing Sallie Mae money on those terms. Sources indicate that Remondi predicted a large-scale exit of lenders from the market in the next three to 12 months.
According to Reuters, Senator Chris Dodd echoed Flanagan's view that while the situation is not currently a crisis, it could easily devolve into one. He urged Congress to take action, and avoid making similar mistakes to those that allowed the subprime market to spiral out of control.
Dodd reportedly plans to petition Treasury Secretary Henry Paulson to buy student loans with the Federal Financing Bank (which can buy any debts issued, sold or guaranteed by the US government) and Ben Bernanke to take action now to prevent a breakdown in the market. Sources report that Remondi agreed that involving the FFB would be a fast and simple, if temporary, solution.
Meanwhile, Senator and presumptive Republican presidential nominee John McCain has unveiled his economic plan for the country, which includes provisions for how to handle the student lender shortage, according to the Wall Street Journal. McCain reportedly advocates requiring the federal government to fund loans issued by student lenders, basically calling for the same solution as Dodd and Remondi.
In the News - Legislative Roundups
Here are some of the major legislative dealings that have taken place since our last newsletter.
- U.S. Senator Dick Durbin (D-IL) saw his bankruptcy legislation that would have expanded the power of bankruptcy judges to modify the mortgage terms of homeowners facing foreclosure—as discussed here in Issues 5 and 9—voted down by the U.S. Senate.
- The Senate later passed its own stimulus package to address the housing and foreclosure crisis currently afflicting the country.
- President Bush said that he intends to veto the Senate's housing stimulus package and also announced his own plans to help struggling homeowners by expanding FHASecure with the goal of refinancing as many as 500,000 borrowers with FHA-backed mortgages by the end of 2008.
"A Debtor World" Is Just Weeks Away
Time is running out to register for "A Debtor World: Interdisciplinary Symposium on the Phenomenon of Debt" taking place at the University of Illinois at Urbana-Champaign on May 2-3.
If you haven't already done so, register today!
To learn more about "A Debtor World" and who will be speaking, catch up on what we've written in newsletters 28 and 29.
For Your Information
Our next newsletter will be sent out in three weeks on Wednesday, May 7th. We will then return to our normal two-week schedule.
Feel free to shoot an email with any questions that you may have to newsletters@startfreshtoday.com. Thanks.