Don't pick an attorney out of the phone book. Do some hard research to find a lawyer to handle your bankruptcy the right way.
By Bankrate.com
What's worse than declaring bankruptcy? Hiring the wrong attorney for the job.
Handling bankruptcy filings has become a volume business for many lawyers, leaving some of them overworked and unable to attend to the details of all their cases.
Bankruptcy mills -- storefront operations offering cut-rate services -- have set up shop in many places. All this activity means that individuals facing the ultimate financial decision too often find themselves with legal services that are inferior to what they expect or need.
"I've seen cases where the lawyer hired to represent the client didn't show up at the bankruptcy hearing," says Vince Slusher, a shareholder and attorney with Davis Munck, a Dallas-based law firm.
Nobody wants a no-show or incompetent attorney, especially when it's your financial future in the balance. That's why you need to do some research before hiring a bankruptcy lawyer.
Get going on your research
Here are 13 tips to help you find the best attorney to handle your bankruptcy filing.
1. Don't dawdle.
"Contemplating hiring a bankruptcy attorney has all the allure of selecting your mortician," explains Ray R. Graves, who served 20 years as a federal bankruptcy judge for the Eastern District of Michigan. He now works for BBK Ltd., a business consultancy headquartered in Southfield, Mich.
"People don't want to deal with it. They put it off beyond the last minute when the wolf is at the door."
Waiting until the last minute won't give you the time you need to find a good attorney.
And it won't give a good attorney enough time to adequately prepare for your case.
2. Don't ask friends for referrals.
Unless your fellow churchgoer or golf buddy has gone through a bankruptcy, he or she won't have any leads for you. Asking will just waste time, says Graves. "This is a closed club," he explains.
3. Do ask for suggestions from legal professionals.
Consider who among your circle of acquaintances might know a bankruptcy lawyer. If you have a personal attorney, start there. Keep in mind, however, that bankruptcy law is a specialty, so if your lawyer offers to handle the case as part of your usual retainer, make sure he knows his way around bankruptcy court.
Also check local or state bar associations or professional organizations. Good places to ask include the Association of Consumer Bankruptcy Attorneys, the American Bankruptcy Institute and your local legal aid society. (Legal aid societies won't handle bankruptcies, but many keep a running list of bankruptcy attorneys.)
4. Investigate certifications.
Attorneys who are certified by the American Bankruptcy Institute have had to meet additional standards. See if your prospective attorney has this added training.
5. Spend a day at bankruptcy court.
Observing the attorneys in action can give you an idea of the lawyer you want representing you. At the court you also can find out which locals specialize in this form of law. And you can get a chance to talk to the debtors and can ask them whether they felt their lawyers did a good job, says Rick Mitchell, partner with Iseman, Cunningham, Riester & Hyde in Poughkeepsie, N.Y.
6. Find out who sits on local bankruptcy court panels.
Mitchell says to check out the trustee panel. "These are attorneys who are regularly in bankruptcy court and are well enough respected to be put on the panel," he says.
Graves recommends you also get the names of lawyers on the local bankruptcy court's debtor or creditor committees. "People on these committees do it to attract business, but they also take their work seriously," says the former judge.
Look around and pose the right questions
7. Check out the law firm's offices.
You're not looking for how tastefully a lawyer's office is decorated, but how well-organized an office is, as well as the general environment. This office appraisal can give you vital clues as to how a lawyer would handle your case.
"Look around the office and see how well organized it is. Is it neat, or are there 25 folders spread around the floor?" asks Judge Graves. "You wouldn't go to a doctor with a dirty examining room and you don't want to go to a lawyer with a disorganized office."
8. Ask questions.
Once you have some candidates, interview them or someone at the law firm. Be sure to ask:
- How many bankruptcies do you handle in a month or in a year?
- How many of those bankruptcies are consumer or personal rather than business filings?
- How much access will I have to an attorney during my bankruptcy filing?
- If I'm not working directly with you (the lawyer), who will I be working with?
- Can I interview the person with whom I would be working?
- What time frame do you have for this bankruptcy?
- How will the procedure work?
This is a critical decision, so if you get evasive answers, it's probably a red flag that this is not the firm for you.
9. Evaluate the responses.
Because bankruptcy law is a volume business, the time you'll actually be working with a specific attorney may be small. In fact, with most consumer bankruptcies, the client works with a clerk or a paralegal; your actual attorney won't come into play until your day in court.
"In the end, 90% to 95% of people who file for bankruptcy don't have complicated issues and their filings can satisfactorily be handled by most attorneys or their paralegals," says attorney Mitchell. That's why, he says, it's important to use the interview process to determine whether you can work well with the whole firm as well as a particular attorney.
Consider whether candidates answered you fairly and in enough detail so that you can make an informed decision on who to hire.
Make sure the attorney (and firm) has the expertise that you need. Someone can be a great attorney who handles 60 business bankruptcies a month, but that probably isn't the attorney you want to handle your personal bankruptcy.
And while you want an experienced lawyer, you want to make sure the attorney doesn't have too much work. "You have to make sure that they are not spread too thin," says Vince Slusher, a shareholder and attorney with the firm of Davis Munck in Dallas.
10. Understand your role.
Go over time frames and filing requirements with the firm, says Rick Hoagland, a partner and shareholder with the CPA firm of Moore, Ellrich & Neal in Palm Beach Gardens, Fla. Make sure you know what is expected of you because if you do your part, you'll increase your chances of a successful filing. So a lawyer who briefs you on your role is probably a keeper.
Avoid the bargain-basement bankruptcy
11. Don't hire the cheapest lawyer.
You're obviously filing because you don't have a lot of cash to spare. But like most things in life, taking the cheap route in bankruptcy could cost you even more in the end if a bargain attorney makes mistakes.
"When it's all said and done, you want a lawyer who knows the system and will do the best job of representing you," Graves says. That may end up costing a little more.
Verify what the going rate is in your area. Your local bar association probably can help you determine whether a proposed fee is fair and in line with local standards. Anybody who charges too much or too little probably shouldn't be your lawyer of choice.
12. Get fee specifics.
Find out exactly what the costs of bankruptcy are. What's included in your lawyer's fees? What's not? In some complicated proceedings, for example, a forensic accountant may be needed, says Hoagland. If that's the case, is it included in your charges or is it an additional fee?
13. Stay involved.
Once you hire a lawyer, don't be content to let him or her handle it alone. Double check all filings. Did any of your creditors get dropped off the list? Staying on top of your bankruptcy filing will help ensure that the proceedings go smoothly and will keep your lawyer on his or her toes.
"When you're hiring a bankruptcy attorney, you should remember that it's not just who you know, but what you know and what you're willing to learn," says attorney Slusher. (For more on surviving a bankruptcy, read Liz Pulliam Weston's column, "Bounce back fast after a bankruptcy.") |
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