Boy, is there! The Great Recession has been good for business if you’re lawyer. According to a Valerie Miller-reported story in the Jan. 13 edition of the Las Vegas Business Press, not only did bankruptcy filings climb in 2010, they are expected to rise even higher this year. Last year, 17,888 Chapter 7 bankruptcies were filed. That’s only a 4% increase but business bankruptcies shot up 20%.
True, Chapter 13 personal-bankruptcy filings were down almost 15% but that silver cloud hides a dark lining. "People are saying, 'To hell with it,' and just walking away" from their mortgages, UNLV bankruptcy-law professor Nancy Rapoport told Miller. Added attorney Anthony DeLuca (founder of DeLuca & Associates), "If you are not going to try to save your house, there is no reason to file for reorganization … We see it a lot in condominiums, where you owe $180,000 and the condo is worth $60,000. It’s just not worth saving when you are 50% or more underwater."
Short sales and foreclosures are also fueling the legal industry as never before. According to Rapoport, "attorneys advise people who do short sales to file for bankruptcy to protect them from deficiency judgments." As of last January, Las Vegas led the nation in its rate of foreclosure: "One out of every 9 homes in Sin City received some kind of default notice in 2010, according a report released Thursday by RealtyTrac. That’s five times higher than the national average," declared CNNMoney. The majority of the housing inventory on the market right now, according to NuWire Investor, are foreclosed and bank-owned properties.
But the lawyer-on-TV boom is the also the latest manifestation of an ongoing problem. KLAS-TV investigate reporter George Knapp tells LVA, "A few years ago, when I first started investigating the story that became the Medical Mafia scandal, the insurance folks told me that the overall effect of lawyer advertising is that Las Vegas has one of the highest per capita costs associated with auto accidents. Our residents file more claims, report more ‘soft tissue’ injuries, are more likely to hire attorneys to settle otherwise routine matters, [and] are referred by their attorneys to chiropractors more often than almost anywhere else in the country."
Insurance companies – of whom Knapp says he is no fan – tell the veteran reporter "that Nevadans have developed sort of a ‘jackpot mentality,’ in their words, where people who have a not-so-serious fender bender automatically expect to cash in for a big settlement. One factor in that could be the ads that bombard us --- print, radio, TV and Internet -- with personal anecdotes from people whose accidents were turned into big money. One fact is hard to ignore. Statistics show that people who live here end up paying more for insurance than all but a handful of other cities in the country … I think it is fair to include the glut of lawyer advertising as one possible factor in our high insurance costs."
Knapp warns against drawing the conclusion that a lawyer’s ability to buy TV time is an index of his skills. "The opposite is often true." These attorneys, he says, owe their millionaire bankroll and celebrity status to their advertising, not their accomplishments. Those ad blitzes "are often underwritten by investors/business partners whose objectives and motives may have little to do with obtaining justice for clients" who wind up with "perfunctory, assembly line service," according to Knapp.
Against such deep-pocketed firms, what are smaller, possibly more hands-on law offices to do? Knapp sees a pushback in the form of firms who "have carved their own niche in the marketplace by advertising that they will accept smaller pieces of the settlement pie so that their clients get to keep a larger percentage."
Bottom line: The economic winds of the Great Recession have formed a perfect typhoon, putting Las Vegas at the eye of the storm. With the need for legal representation blowing at gale force, we’re not likely to see a slackening in the hailstorm of TV commercials for lawyers anytime soon, perhaps not for years.
