What Client’s Need To Know to Avoid Hiring A Bankruptcy Mill

Bankruptcy mills are high volume law practices that advertise aggressively and provide poor quality legal services.  Typical attributes of a bankruptcy mill are as follows:

a)  rely heavily on poorly supervised non-attorney staff; b) lack adequate controls over workflow (correspondence to 3rd parties & clients) and court deadlines; c)  cut corners both ethically and substantively; d) minimal attorney involvement; e) routinely fail to file necessary documents, and frequently show up to hearings unprepared, and f) Have usually been admonished by the court on more than one occasion.

Unfortunately, with bankruptcy filings soaring, many unaware consumers have turned to “bankruptcy mills” for help with their financial difficulties.  Most “bankruptcy mills” advertise heavily on television and radio while flooding homeowners in foreclosure with direct mail.  When a consumer chooses a “bankruptcy mill” they assume that they will be working closely with a lawyer on their case.  However, with bankruptcy mills, this is often not the case.  The economics are such that with a mill they have a very high ratio of cases to attorneys.  I have seen “bankruptcy mills” that literally have hundreds of open cases for each attorney working at the firm.

While the consumer might initially meet with an “attorney intake coordinator” who will sign them up, the intake coordinator rarely spends more than a few minutes with the client.  Rather their focus is to get a down payment with a signed retainer agreement. Once the retainer agreement has been signed the client is handed off to a “prep team.” The “prep” team usually consists of poorly supervised staff consisting of paralegals, law clerks and secretaries.

The “prep team” will gather necessary documents (usually with little or no attorney review) and prepare the bankruptcy petition and schedules to be filed in a cookie cutter fashion often omitting important disclosures and details.  The client will then be asked to come in and sign the often deficient papers.  Frequently the final signing is not supervised by an attorney.  This means that last minute questions or issues brought up by the client often go unaddressed.

The case is then filed and assigned to an attorney.  Often the attorney assigned to the case has never met the client. Frequently, In a Chapter 7 case the client goes to their 341 meeting of creditors only to find that they and their assigned attorney are playing “blind man’s bluff.”  In other words, the “bankruptcy mill” attorney will wander through the crowded hearing room trying to figure out which of the attendees are his or her clients.  Similarly, the “bankruptcy mill” clients will be looking for the attorney that they have never met while wondering whether they have been abandoned.  When the case is called, often the trustee is asking questions for which the assigned “mill” attorney is completely unfamiliar.  Many of these cases are continued for no other reason than the client was poorly prepped for the hearing or that  their assigned attorney is unprepared to answer obvious questions that should have been apparent if there had been continuity from the start of the case.  In other cases, clients lose their property or wind up charged with nondisclosure and felony bankruptcy fraud because of a break-down of communication with their attorney.   For an example of serious problems that arise from inadequate bankruptcy representation see my blog article “I Wish I had a Time Machine.”

As problems frequently arise with “bankruptcy mill” attorneys in Chapter 7, similar problems also arise in Chapter 13.  In a Chapter 13 case the problems and objections also often arise because of the lack of continuity in the way the case was prepared.  Inherently, without adequate communication between attorney and client the “bankruptcy mill” staff will have made many assumptions (often cookie cutter) rather than annoying a hopelessly over-burdened “mill” boss.  These assumptions along with an improper application of the law will often prompt a Chapter 13 trustee’s objection to confirmation of the client’s bankruptcy plan.  In some cases these problems can be fixed causing only inexcusable anxiety for the client and in other cases they cause the case to be dismissed with serious consequences for the client.

In conclusion it is important that you hire a firm where you can reasonably expect that you can get to know your attorney.  Your attorney should be reasonably available to answer your questions, review your documents and the preparation of your case, and to represent you at all trustee and court hearings. In many cases a consumer in need of personal bankruptcy case will get better representation with a well experienced attorney with a strong reputation and a manageable volume of cases.