October 2007 Archives

October 26, 2007

When You Don't Need a Lawyer to Represent You in a DUI Case

The other day in court I saw a person--call him Frank--plead guilty to a first offense "driving under the influence" charge. He received the same standard sentence as the judge hands down in hundreds of other first offense DUI cases. A local pricey lawyer stood by Frank's side when he entered his plea.

From the outset it was clear that Frank would be pleading guilty to the DUI charge. A blood test had shown him to be driving with a blood alcohol content considerably in excess of the limit, which is .08. It's almost impossible to fight a blood test (or breath or urine tests for that matter), thanks to various California statutes that, in effect, make these test results conclusive of your guilt. This same lockstep approach to "over-the-limit" DUI cases can be found in most other states.

It turned out that Frank had paid the lawyer $3,000 for his services, which consisted of appearing for Frank at an arraignment, reviewing the police report, interviewing Frank, attending a status conference where he negotiated with the D.A., talking Frank into taking the deal, and standing at Frank's side while the judge handed down his standard sentence for a first offense DUI. All in all, the lawyer spent about 3 hours, at most, on the case -- none of it really necessary in a first offense DUI case.

Now as many of you know, I'm highly skeptical of the claim that you need a lawyer if you are headed for civil court (divorces, probate, contract disputes, personal injuries, you name it). But what about criminal cases--cases where you can go to jail or receive a substantial fine if you lose? That's a different question. But more specifically, what about DUI cases? How can you tell which category your DUI case fits in--a standard case you can handle yourself or an unusual case where you might benefit from representation?

Simple. Get a copy of Nolo's Criminal Law Handbook, by Paul Bergman and Sarah Bergman Barrett, represent yourself at the arraignment, and obtain a copy of the police report. Take the report to a lawyer versed in DUI defense, pay the lawyer a couple of hundred dollars for an independent consultation, and find out just what kind of case you have.

If it appears that there is something unusual about your case--perhaps you have one of those rare cases where you can defeat the "over-the-limit" charge--you can hire a lawyer to appear on your behalf or perhaps you can qualify for a public defender. Otherwise, from the time you are arrested till the time you plead guilty, DUI procedures are typically sufficiently straightforward to be handled without a lawyer, and you're unlikely to get off any more easily with a lawyer.

For more information on going to court for yourself, try reading  Represent Yourself in Court: How to Prepare & Try a Winning Case, by Attorneys Paul Bergman & Sara J. Berman-Barrett (Nolo).

October 18, 2007

Chapter 7 Bankruptcy Still Affordable Under the New Bankruptcy Law

In 2005, the bankruptcy laws underwent massive changes at the behest of the banks and credit card companies. In advance of the new law's taking effect, the nation's bankruptcy attorneys launched a scare campaign directed at potential filers. The message was, "You better do it now because it will be too late once the legislation kicks in."

Beaucoup bucks flowed to the lawyers. When the new law finally arrived, the public perception was that the bankruptcy safety net was gone forever. Not true. Chapter 7 bankruptcy is alive and well; it's only the attorneys who are suffering because they doubled their fees and nobody can afford them anymore.

In a recent interview with Lisa Scherzer on Smartmoney.com, Henry Somer, President of the National Association of Consumer Bankruptcy Attorneys, said that bankruptcy was no longer an available remedy for most people due to doubled attorneys fees and increased complexity. While it's true that bankruptcy attorneys have priced themselves out of the market, the supposed reason for doing that--added complexity--is horsepuckey. It's just as easy to get rid of debt such as credit card and medical bills under the new law as the old. And, most bankruptcies still are procedurally very straightforward. Somer, however, clearly believes you need an attorney to file bankruptcy, and if you can't afford one, oh well.

Apparently Somer hasn't heard of self-representation or non-lawyer assistance with bankruptcy forms--both of which are perfectly legal. Or maybe he has, but takes the prototypical lawyer position that doing your own bankruptcy is like doing your own brain surgery. Jeez, self-help law has been around for 35 years at least, but you would never know it from the Somer interview. There is help out there for folks who need bankruptcy but can't afford a lawyer.

A bankruptcy petition preparer (a non-lawyer) can prepare your petition for you for about $150. It's true that non-lawyers can't provide legal advice--or alert you to a problem with your petition --but there's nothing to stop bankruptcy lawyers from giving the public a break and providing the necessary legal information while letting the non-lawyers fill in the forms. For example, people doing their own bankruptcies can get all the legal help they need from me for a flat rate of $100. In this manner, self-represented filers can proceed in an informed manner with the help of an attorney and a forms expert (bankruptcy petition preparer)--and pay less than 25% of what they would pay an attorney for full representation.

Future blogs will cover such bankruptcy related issues as:

  • best practices for people doing their own bankruptcies

  • why the new bankruptcy laws don't work

  • how bankruptcy can be used to stave off foreclosures

  • why Chapter 13 is only for people who think they'll go to heaven if they repay their debt, and

  • turf wars over non-lawyer bankruptcy form preparation services.

For more information about Chapter 7 bankruptcy and your options, take a look at How to File for Chapter 7 Bankruptcy, by Attorneys Stephen R. Elias, Albin Renauer, and Robin Leonard (Nolo).

October 17, 2007

Let's Reform the Legal System So Everyone Can Use It

When Nolo Press published How to File for Divorce in California in 1971, lawyers and divorce court were cheek to jowl. Now, 36 years later, the majority of divorces in California and many other states are handled without lawyers. Still, for most other types of cases that don't involve small claims, going to court means using a lawyer, and using a lawyer usually means paying a lot of money. According to the American Bar Association, over 100 million Americans are priced out of the system. And many people who can afford lawyers would prefer to do it themselves, if only they could.

One abiding theme of this blog will be to explore ways to bring people and courts together without the need for lawyer representation. In addition to my own contributions, articles will originate from HALT, the leading organization dedicated to enhancing consumer access to the courts, from authors and editors of Nolo's self-help law products, and from various guest contributors.

My basic premise here is that our justice system has evolved to operate in the interests of lawyers rather than the folks who seek its protections. Only when these priorities are reversed will there be the direct access we all deserve. Here are some steps that will take us in the right direction. Each step will be the subject of a separate blog.

Step 1: Remove administrative procedures from the courts.

The vast majority of divorces and probates do not involve advocacy or disputes. Rather, these procedures usually only involve getting the right information in the right blanks and checking the right boxes. These procedures can more efficiently be handled by administrative agencies, in the same manner as social security and unemployment insurance applications. If a dispute does arise, it can be referred to court--which hopefully would operate very differently than do most courts today.

Step 2: Create a robust courthouse mediation system through which all would-be litigants must pass.

If you have a dispute, your first step would be to sign up for court-sponsored mediation, an informal process designed to help people reach agreement. Based on the experience of existing court mediation programs, roughly 80% of the disputes likely would be resolved within several hours.

Should the mediation fail, all statements made in the mediation would be considered confidential and not used in any further proceedings. If the other party to the dispute refuses to mediate, or the mediation fails, the case would be referred to an Early Neutral Evaluator, also provided by the court.

Step 3: Provide Early Neutral Evaluation for All Cases Where Mediation Has Failed

Early Neutral Evaluation is a process in which a legally trained person evaluates the facts and law of a case before it gets very far in the court and offers the parties the benefits of his or her expert opinion. The Early Neutral Evaluator would collect information about the case from the parties and other sources, pinpoint the disputed issues and facts, and offer a written evaluation of the likely outcome should the matter be decided by a judge. A party could request that mediation be reopened based on the results of the Early Neutral Evaluation.

If a party fails to cooperate with the Early Neutral Evaluator, a judge would issue a default judgment providing relief to the petitioner. This default judgment would be set aside if the other party pays a modest penalty and provides an appropriate response to the Early Neutral Evaluator within a reasonable period of time.

Step 4: Disclosing Information (Discovery)

If, after a negative result from the Early Neutral Evaluator, a party still desires to have the case heard by a judge, the matter would be transferred to the court's trial calendar. All requests for pre-trial discovery (procedures designed to get information from the other party) would be submitted to a court-commissioner, who would rule on what information must be provided and in what form. The Commissioner's office also would offer assistance to anyone needing help coping with discovery requests. The Commissioner could refer a case to a judge for a default judgment against a party who stonewalls reasonable discovery requests.

Step 5: Conduct Trials Informally

All states have small claims courts in which informal trials are held. There is no reason why all trials couldn't be conducted informally. The bewildering tangle of trial procedures has been built up over centuries to preserve the lawyer guild. Most of them are unnecessary. Judges would be encouraged to be proactive in eliciting evidence and separating reliable evidence from the unreliable. Jury trials also could be conducted informally. In fact, most of the rules keeping evidence from juries are unnecessary. Juries are as reliable as judges, if not more so, in judging what evidence is and is not reliable.

Step 6: Implement Common Sense Appeal Procedures

Appeals in regular court typically involve an unbelievable number of rules and format requirements that discourage all but the most industrious--and well off--lay people from appealing judgments they disagree with. Appeals from small claims verdicts are, on the other hand, typically simple to file and prosecute. Why not make all appeals simple? While it's clear that lawyers would have an important rule to play in appeals, it's also clear that many people can't afford lawyers. The picky procedural requirements for appellate briefs--including the format, the color of covers and the way the legal arguments must be expressed--would be simplified and the court would offer legal coaching services to people who are handling their own cases.

These six straightforward steps would go far towards de-lawyering the justice system. You may think I oversimplify. Perhaps I do in some respects, but future articles will show that most of these suggestions have already been put into practice in various parts of the country--usually in small claims or limited jurisdiction courts.

Although state bar associations will fight to keep these reforms from spreading to the regular courts over which lawyers hold sway, it's time to make sure that our court procedures serve the interests of the people seeking justice and not their paid mouthpieces. It's time to use what we've learned about mediation and informal small claims court procedures and make them the bedrock of our entire justice system.

And for a more in-depth look at mediation in lieu of litigation, read Mediate, Don't Litigate: Strategies for Successful Mediation, by Peter Lovenheim and Lisa Guerin (Nolo).

October 16, 2007

Eviction Procedures Allow Tenants Inadequate Response Times

In most states, eviction laws are designed to remove the tenant as soon as possible. Expediting evictions sometimes makes sense--who has not seen " Pacific Heights" and Michael Keaton's portrayal of a tenant from hell? But in many other cases the process is so rushed that the tenant is unable to marshal an adequate defense or find new shelter. For the most part the timing of the eviction procedures is inflexible. In California, for instance, if a tenant is late on even one rent payment, the landlord can serve a notice requiring the tenant to pay the rent within three days or get out. Even if the tenant comes up with the rent on the 4th day, the landlord is entitled to obtain an eviction order.

Unlike the usual 30 days that people have to answer other types of court petitions, tenants must respond to an eviction petition within the given five days. If a tenant fails to meet this deadline--which is frequently the case--the landlord may obtain a judgment and an eviction order without giving the tenant a chance to be heard. A few days after that, a deputy sheriff shows up at the tenant's door and orders the tenant to be gone within five days. After that, the sheriff will physically put the tenant out in the street.

With a few tweaks to the law, many more tenants could either remain in their dwelling, assert their legal remedies, or at least have more time to find new housing. For example, the 3-day notice to pay rent or quit, and the 5-day period to respond to an eviction complaint, both include weekends and holidays. This means that if the tenant is served with papers on a Friday afternoon (which not surprisingly is very common), he or she will effectively only have three business days (Monday through Wednesday) to fashion the appropriate response. If the three and five-day notice periods excluded weekends and holidays, the tenant would at least have five business days to get their response in order. And if the landlord were required to include with the eviction petition a blank form for tenants to complete and file--so they would have their day in court if they couldn't find legal assistance--so much the better.

Even assuming that the tenant ultimately loses in court and is forced to leave, the law should authorize judicial flexibility regarding the ultimate move-out date. For example, if the tenant is a family with two or more children, the court might allow 15 or 30 days for the tenant to move out--instead of the five days that currently applies to everyone regardless of their circumstances.

For more about the rights of tenants during an eviction, check out Every Tenant's Legal Guide, by Janet Portman & Marcia Stewart (Nolo).

October 15, 2007

How Bankruptcy Can Be Used to Deal With Foreclosure

The media is full of stories about the skyrocketing rates of foreclosure. Often, people believe they can save their home and they scramble to find the best possible way to prevent their home from being taken away. Not uncommonly, however, the handwriting is on the wall--the home will be lost--and the homeowner's chief concern is how to move on without causing further harm to his or her economic status. In either situation -- keep the home or move out -- bankruptcy can be an incredibly useful tool in dealing with foreclosure.

What is foreclosure? In California and most other states, a foreclosure starts when you fall behind on your payments for several months. Your lender sends you a Notice of Default giving you a period of time to cure the default--typically three months. If you haven't caught up by the end of the default period, you are notified that the property will be sold at public auction--on a date scheduled roughly 20 to 30 days later. If you still haven't adequately dealt with the problem by that date, the property is sold and you can't get it back unless your state laws provide a redemption period--one last grace period for you to recover the house by paying off the loan being foreclosed on.

Some people facing foreclosure manage to work out a settlement with their lender under which the payments they've missed get tacked on to the end of the loan period. Others get their lenders to agree to a short sale--that is, you sell the property for whatever you can get for it and the lender writes off the difference between what you owe and the sale proceeds. Unfortunately, the short sale--and a foreclosure sale if it comes to that--can make you liable for taxes on the debt written off by the lender. In other words, the IRS may consider the debt you don't have to pay the lender as income subject to taxation.

Bankruptcy may provide some relief. At the point you are faced with the forced sale of your property, you will undoubtedly start thinking about bankruptcy if you haven't before. Bankruptcy may help you keep your home or, if that's not in the cards, at least get you out from under your mortgage free of tax liability for debt write offs. By delaying the foreclosure process, it can also help you save some money to deal with the aftermath of your bankruptcy.

When you file bankruptcy, the foreclosure process comes to a halt (called the "automatic stay") and remains that way until your bankruptcy case comes to an end or the lender obtains court permission to proceed (called "lifting the stay").

There are two types of bankruptcy--Chapter 7 and Chapter 13.

Chapter 7 bankruptcy. Chapter 7 is the most popular type for getting rid of debts. However, a Chapter 7 bankruptcy typically lasts for only four months--after which the foreclosure can resume. And if the court grants the lender permission to continue the foreclosure while your bankruptcy case is pending, you have even less time. In short, Chapter 7 won't prevent an ultimate foreclosure--although for the time the process is delayed you can live in your home for free and amass a savings that can help you find a new dwelling. In addition to getting rid of unsecured debt, such as credit card and medical debts, Chapter 7 bankruptcy will also get rid of your mortgage debt and exempt you from tax liability for the loss incurred by the lender in the foreclosure sale.

Chapter 13 bankruptcy. Chapter 13 bankruptcy is a different animal altogether. You can actually defeat the foreclosure by proposing a plan to pay off mortgage arrears over time. For example, assume you are $10,000 behind on your mortgage. You file a Chapter 13 bankruptcy and propose a plan under which you will make current paymnts on your mortgage and additionally pay off the $10,000 arrears at a rate of $277 per month over three years, thereby keeping your home and avoiding the foreclosure sale.

While Chapter 13 bankruptcy may seem like an ideal solution, you may not be able to propose or afford a plan that the court will approve. This is because certain debts such as child support and back taxes must be paid in full during the life of the plan, and you must have enough steady income to meet your daily expenses as well as the arrears and other debts you are required to pay off under your plan.

Since a repayment plan under Chapter 13 plan isn't always practical, and since Chapter 7 will only provide a temporary delay from the foreclosure sale, how should you proceed? If you come to terms with the fact that you'll have to move--a bitter result to be sure but sometimes unavoidable--you can at least view bankruptcy as the best way to get out from under your mortgage debt and tax liability as well as a way to save some money that will help you weather the psychological and economic shocks that lie ahead.

To read further, check out my latest article in the Nolopedia, Nolo's free encyclopedia of legal information.

October 14, 2007

How to Amass a Nest Egg During Bankruptcy

The combination of a downturn in the real estate market and aggressive lending policies has caused millions of homeowners to find themselves in one of these situations:

  • You are current on your mortgage payments but your ARM is about to go up and you won't be able to afford payments in the future. You try to renegotiate the ARM but with no luck.

  • You have a little equity in your home that you would like to pull out, but you can't get a refinance loan and you are having great difficulty in making your payments.

  • You can no longer make your mortgage payments and you are "upside down" on your home--you owe more than the property can be sold for.

The bad news is, in all of these situations you are facing foreclosure. The good news is you may be able to use bankruptcy to delay foreclosure and remain in your home for a year or more without paying one cent on your mortgage. If you are able to save all or a portion of the mortgage payments that come due during this period, you can emerge from bankruptcy with a tidy sum that will help you start over financially. Let's see how this works.

Assume you can no longer afford your mortgage payments or you are upside down on your house. You've accepted the fact that you'll need to find another place to live--but you hope to put if off as long as possible. In California and many other states, you can typically fall three months behind before a statutory foreclosure process begins by your being served with a Notice of Default--which states that your home will be sold after three months if you don't get current or otherwise deal with the problem in that time. This means you can go a total of six months without paying your mortgage before you are faced with the prospect of an involuntary sale of your home (that's three months before the Notice of Default is mailed to you and another three months before the foreclosure sale itself is scheduled). This six months' delay will allow you to save up some money from not paying your mortgage--money that will allow you to rent new quarters.

To buy more time, if, just before the foreclosure sale you file a Chapter 7 bankruptcy, the sale will be stalled while your case is open--roughly three to four months--unless the lender files a request with the court seeking permission to proceed with the sale. Either way, it's safe to assume a Chapter 7 bankruptcy will get you an additional three months delay before you have to leave your house. Another chance to add to the nest egg that will prove useful in adjusting to your new fresh start.

A way to buy even more time is to initially propose a feasible Chapter 13 plan (which requires a steady income that exceeds your expenses by the amount necessary to meet the Chapter 13 repayment requirements) and then convert your case to a Chapter 7 bankruptcy. This will probably delay the foreclosure for at least six months.

And here's the kicker. Even after your home is finally sold at foreclosure, it may just sit there for several more months--with you in it--before the new owner finally gets around to getting you out. If you really want to stay to the bitter end, know that the new owner will have to first serve you with a 30-day "notice to quit" before going to court to obtain an eviction order, and the court eviction process typically takes a couple of months before you absolutely have to move.

But it's not a good idea to have a judicial eviction action on record when you'll be seeking to rent a dwelling--so to be conservative, figure filing for bankruptcy will give you an additional three months of free housing after the foreclosure sale. All together, through a combination of your state's foreclosure laws and federal bankruptcy law, you can live in your home "rent free" for about a year and save up a financial cushion so you won't get into this position again.

To take full advantage of the bankruptcy laws in the manner described here, you will likely need the services of a bankruptcy lawyer. While you can normally file bankruptcy without a lawyer, and you always have the right to do so, a good knowledge of the bankruptcy laws is called for if the primary reason you are filing is to amass a nest egg in the manner I suggest. For example, whether you can keep all of the money you save before you file for Chapter 7 bankruptcy will depend on your state's property protection laws (exemptions). A lawyer is likely to charge a lot for orchestrating this type of strategy--typically between $2,000 and $4,000. However, because you are paying nothing for your shelter for up to a year, it may be worth your while, and you'll probably gain more time in your home than if you do it yourself.

To find out more about attempting to save for retirement while simultaneously trying to get out of debt, try reading Solve Your Money Troubles: Get Debt Collectors Off Your Back & Regain Financial Freedom, by Attorney Robin Leonard (Nolo).

October 10, 2007

Beware Tort Lawyer Scams

Many of the law firms you see advertised on TV, the internet, and billboards operate under a standard retainer contract designed to produce hefty fees for themselves and associated medical providers, and little or nothing for their clients. Here's how it works.

You have been injured in an accident--usually one involving automobiles--and are seeking a recovery from the responsible person's insurance company. You contact that flashy law firm you saw on TV. You are presented with a retainer agreement that gives the law firm 1/3 of the total recovery and you 2/3 of what's left after medical costs incurred during the course of your case are paid.

Once you are signed up, the law firm sends you to a cooperating medical provider--a medical doctor or chiropractor depending on the nature of your injuries--for diagnosis and treatment. After the medical costs have been run up to the maximum possible level, the insurance company is approached for the purpose of obtaining a settlement offer, typically a percentage of the medical costs, and any lost wages.

To see how this settlement works under the standard retainer agreement, assume the insurance company offers you $10,000 based on $4,000 in medical costs run up by a cooperating chiropractor. If you accept, the law firm will get $3,333 (1/3 of the total recovery), the chiropractor will get $4,000, and you will get the rest ($2,667).

So, what's wrong with this picture? Few if any people would anticipate that their attorney would get more than them for what turns out to be just a few hours of work to obtain most settlements. In some cases the client gets nothing because the medical costs equal or exceed the amount left over after the lawyer is paid.

While these retainer agreements give the client the right to reject the settlement offer and go to trial, the law firm will typically downplay the value of the case, obtain another offer that throws a little more money the client's way, and psychologically coerce the client into settling.

The entire subject of contingency fees and how to reform them will be treated in an upcoming article. At the very least, however, a personal injury fee agreement should either:

  • provide a warning in upper case bold letters, at the top of the agreement, that the attorney will be paid 1/3 of any settlement even if the client ends up with nothing because of the medical costs, or

  • provide that the client will receive at least one dollar more than the attorney in any settlement negotiated by the attorney.

For more information about personal injury lawsuits, check out How to Win Your Personal Injury Claim, by Attorney Joseph L. Matthews (Nolo).