Foreclosure Rip-offs – First the Banks, Now the Lawyers?

In prior stories, we’ve covered blatant rule violations by lenders and the lawyers they hired to process foreclosures. Turns out some of the lawyers defending hapless homeowners may also be more interested in money than justice.

We’ve devoted lots of cyber-ink and lots of video tape to our nation’s ongoing foreclosure crisis. Here’s a partial list of the stories we’ve done in just the last six months:

These stories are all different, but they have a couple of things in common. First, they chronicle how our nation’s largest lenders often skirted the rules when dealing with homeowners. They deserved the bad press: In many cases, the acts they committed would have landed mere mortals like us in court and possibly jail.

One other thing linking the stories above is that in each one, the bank is the bad guy and the guy wearing the white hat is the person who represents the homeowner – the foreclosure defense lawyer. Three of the ones I met in putting together the stories above worked in cramped conditions, didn’t appear to make much money, and seemed about as close as you can come to real-life Davids selflessly battling Goliaths.

But I recently met a fourth foreclosure defense lawyer who made it clear that, when it comes to foreclosure defense, maybe that white hat is really more a shade of gray. Check out the story below, then meet me on the other side for more.

As you just saw, this is one lawyer who feels that if he can get a mortgage dismissed entirely, he deserves to collect a fee of 40 percent of that mortgage. And ironically, he’ll put a mortgage on his client’s house to collect it.

In his defense, there are a couple of things you should know that weren’t in the video story. The first is that Tickten claims that his firm was one of the first to uncover many of the defenses (for example, robo-signers and misplaced mortgage notes) that other lawyers are now using to help homeowners. It was his lawyers who years ago started flying around the country, deposing bank employees and bringing bank improprieties to light. Other defense lawyers following in these footsteps wouldn’t have been aware of the defenses now in widespread use unless he and others like him had invested the time, energy, money, and know-how to uncover these issues. He insisted that, until he and a few others came along, foreclosures were basically rubber-stamped, and almost never successfully defended against.

Tickten also points out that having a mortgage dismissed is no easy task, nor is it common. It takes a long time and a lot of legal work, with no guarantee of success. (Tickten’s clients do, however, pay a retainer of $335 to $650 a month. If he doesn’t succeed in getting the mortgage eliminated, the Tickten firm still earns that fee – if he is successful, it’s credited against the 40 percent contingency fee.)

So if he wins, his client has no mortgage: The house is theirs free and clear. In his mind, that warrants a 40 percent fee secured by a new mortgage. And as I said in the story above, he also says if that amount proves onerous to the homeowner, he reduces it.

Tickten further defended his fee structure by pointing out that lots of lawyers charge a contingency fee in similar circumstances. His analogy from the story above: “If I do that in a case where you lose your leg and I get a million dollars for you, I get 40 percent of that. So if I do the same thing in a case where I save you a million dollars on the mortgage on your home, I should be able to get the same amount.”

What you didn’t hear in the story above was my response to his statement. Check out the video below for more of what Tickten said…and what I said back to him.

In the end, Tickten believes that if he saves his client a million bucks, he deserves $400,000. After all, he says, in the land of law, that’s the way it works and that’s what gives him the incentive to take on cases like these. The Florida Bar may not agree: The Tickten Group’s fee structure is now under investigation.

But Tickten is right about one thing: That’s the way a lot of lawyers work. But maybe he should step outside the land of law and take note of the countless people in jobs who make or save millions for their employer and never dream of harvesting 40 percent of the take. If that’s the way it worked in every job, we’d all have the incentive to work harder, but our economy would probably collapse under the weight.

Tickten calls his fee structure fair – I call it a rip-off. What do you call it?

Stacy Johnson

It's not the usual blah, blah, blah

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  • This is not a fair criticism, you should understand the economics of legal representation before you condemn this attorney, his percentage is fairly typical. The important thing you did not mention here is that these must be contingency fee-based cases and, if the attorney loses, he gets 40% of nothing. Depending on the case it is a risky investment for the attorney to take the case, that is why the percentage is so high.

    Anyone is free to pay any lawyer an hourly fee of $250-$500. People with cases but who cannot or do not want to pay attorney fees give a substantial percentage of any judgment or settlement to the attorney who puts up the time and perhaps the expenses to bring the case. If a case goes to trial it will typically require hundreds of hours of work and thousands (or tens of thousands) of dollars in expenses for deposition-related fees, transcripts, experts, exhibits, etc. You also have to factor in the legal exposure, an attorney is just as liable for negligent representation to a contingency fee-based client as he is to any other client.

    A typical contingency fee structure is 25% if the case settles, 40% if it goes to trial and more if it goes on appeal. How much is a “fair” percentage is of course based on the likelihood of success on the merits (which a lawyer has to guess when agreeing to take the case on contingency). And Mr. Tickten seems to be a pretty shrewd attorney with the novel defenses he has come up with –he must have done some pretty intense investigation. If I had no money and

    Contingency fee payment arrangements for legal services are a way for those without sufficient means to bring their cases to court, as they have here. A 60% discount on a bad mortgage balance than 100% liability. Again, anyone is free to hire an attorney on an hourly basis but this is an attractive alternative for those who can’t afford it. Again, the attorney may have to put in substantial work and risks that any reward may be paltry or lose altogether and have to eat the expenses and those hundreds of hours. So showing a single $400,000 win as an example of unfair gouging is a half truth.

    The real abusers of the contingency fee arrangement are insurance settlement law firms that take pretty much whatever case walks in the door and submits them to the insurance company, hires a paralegal to put up a little argument, then scoops up 25% of the settlement. You see them on TV, the ‘Have you been injured” law firms; they rarely do more than that, go to court for instance as Mr. Tickten had to battle it out.

  • Collecting 400k on a million dollar settlement is outrageous. Mr. Tickten is not the one with a missing leg and will not need that money for the care that is required for a patient with a missing leg. Sounds unethical.

    If Mr. Tickten is able to remove a mortgage on a home, then someone is getting ripped off and it isn’t Mr. Tickten or the homeowner. This is a case of a good (the home) being obtained without it being purchased. Sounds like legal thievery. Somewhere along the line the public winds up paying.

    There are individuals in our society, who have overinflated ideas of what they are worth. Please don’t bother me with explanations of fee structures. I attended two Ivy league schools and would never think of charging anywhere near that amount for my services.

    • It appears that you are annoyed with the money a client has to spend on a recovery. Yes, I agree, but that has nothing to do with lawyers, that is a defect in our system of justice: sometimes you have to litigate your case for what is yours and that is expensive. Someone has to pay for the lawyer for his work, is that okay with you?

      In other countries you also win attorney fees but we don’t do that here because then people would be afraid to bring good cases for fear they would have to pay the other side’s attorney fees if they lost.

      Unless a client wants to put up perhaps $80K in billable hours to fight his case no lawyer would risk this amount without there being some kind of payoff to make it worthwhile. Anyone can always litigate it themselves (good luck). What “lawyers think they are worth” is irrelevant, its a free market and you can shop around for a better deal, it’s what people are willing to pay and lawyers are willing to work for –the market– that sets fee rates. I’m sorry it is a shock to you but yes, taking a contingency case is risky for a lawyer, most lawyers would not take it for a smaller percentage.

      You are right about someone getting screwed though, this guy did not pay his mortgage and the lender got screwed. I don’t know the details but courts rarely allow windfalls like this, it is unjust enrichment, so the plaintiff must have done something pretty bad to get cut off completely. Perhaps Tickten’s careful work proved that the plaintiff didn’t own the loan at all so they had no right to bring the case to be compensated, something like that.

  • Anonymous

    Lawyers like this are leeches, scavengers, looters. But the problem begins much further upstream than them, they’re just the trash at the bottom of the pile of manure, but who happen to make the most money, dirty though it is.
    The problem is that American society considers home ownership a privilege, not a right. People like this guy feel it’s their RIGHT to charge fees like they do, even though they constitute a luxury to him. But it’s a PRIVILEGE for the rest of us to own our own shelter, one of the basic needs along with food and clothing. People like him feel it’s their RIGHT, by virtue of their economic status, to trod on the downtrodden. But it’s a PRIVILEGE for the rest of us to have a job, especially in our current economy. Guys like this feel it’s their RIGHT to have the upper hand in our 2-tier legal system where those with money have no rules, ethical or legal, but the poor are fodder for the machine that, coincidentally, keeps lawyers in business.
    Words from William Shakespeare’s Dick the Butcher from ‘Henry VI’ ring in my ears.

  • I don’t know where to begin, as to the cheap insults, hey you’re dumb and your mother dresses you funny.

    As for “rights” and “privilege” home ownership is a “property right,” the rest of what you are saying about lawyers having some right to step on the little people is gibberish. Anyone is free to shop around and go to any lawyer they want to get the best deal, it’s a free market and lawyers don’t somehow force people to buy their services.

    The wealthy DO get better justice because they can afford lawyers better, but that is hardly lawyers fault. Unless you want something the government paying all lawyers to represent everyone or something like that, an arrangement like this gives the little guy access to representation.

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