Month: January 2021

Legal Tech, but for lawyers who miss the camaraderie of docket calls

Last week, I had to go to the Davidson County Courthouse to file some garnishment pleadings. With the adoption of e-filing and suspension of in-person court proceedings, filing garnishments is really the only reason I set foot in the building.

Once upon a time–well, about a year ago–I’d spend nearly every Friday morning there, on the fourth floor, checking in on all of the Chancery Court dockets.

Some days, I’d have a case in every courtroom, carefully timing my arrivals so that I could cover all four. On other days, I might just have one case, but I’d linger and roam the halls to see who was there and what cases they had. It was a great way to catch up with other lawyers, talk about our cases, watch interesting hearings, observe how the judges handled issues, and, really, just stay connected to what was going on (i.e. gossip).

But, last week, it was so strange, to be back in that building and it all be so quiet.

Continue reading “Legal Tech, but for lawyers who miss the camaraderie of docket calls”

341 Stories: Lawyer Compensation Week, the modern business obituaries

Welcome to January 21, 2021, the first full day of the Joe Biden administration. It’s also an interesting time for law firms…

Most law firms announce compensation plans this week. The first week of the year is generally spent winding down last year’s financials. The following week is spent distributing bonuses.

This third week, though, may be the most important. It’s when the new year’s salaries are announced. Associates and partners alike sharpen their advocacy skills, to explain away last year’s billables and to demonstrate how this coming year will be the biggest one yet. And, of course, that they deserve a big raise.

If you’re a lawyer in a “discretionary” system (i.e. you advocate to a “compensation committee” for a higher salary), you have limited arguments available. In fact, the presentations generally focus on two metrics: (1) I promise to bill more hours; and/or (2) I am raising my billable rate.

Neither of these are particularly good outcomes for clients.

Unless there was some external factor that limited hours (illness, leave of absence, COVID), where can a lawyer find 100-200 more billable hours in 2021? Is the lawyer simply going to work harder? Maybe. In other cases, the lawyer will just pad their time and that letter that took a “0.3” in 2020 now becomes a “0.5” letter.

And, sure, inflation or more experience can justify an increase in an hourly rate, but is the increase really based on that, or has the lawyer just figured out that a $15 increase multiplied by 1,800 hours equals $27,000 more in profit?

When a rate increase is based only on a new calendar year, it can lead to unjustified results.

Law firm leadership has no incentive to push back on these issues. More hours and higher rates mean more money to them too. In short, the fox is in charge of making sure the barn door is locked.

All I’m saying is, clients, watch your bills next month.

Despite the pandemic and overall concerns about the economy, legal rates are going up. In March, we all talked about how commercial real estate, transactions, and law firm profits were dead. But, locally, that hasn’t been the case.

In general, law firm hourly rates are rising. The pessimist would say that law firms are increasing hourly rates to offset the reduction in actual hours billed. The optimist would say that the commercial economy is as strong as it ever was and that rising rates reflect the market.

Get your insolvency news from McLemore Auctions. I love getting the weekly emails from McLemore Auctions that show all the cool stuff being auctioned, usually via a going-out-business liquidation. In fact, one of the biggest mistakes I made during the pandemic was to show my children the website, which has resulted in a few really strange family purchases.

A few weeks ago, I noted the concept of “funeral by auction” after seeing how frequently the fixtures and assets of many Nashville restaurants end up being sold on the McLemore site. In fact, based on my review of today’s Nashville Post, it seems like the McLemore website may be the earliest public notice that some local businesses have closed.

And, yes, it really stinks to be shopping for deals on gaming chairs, and you see the cafe where you proposed to your wife being sold off, piece by piece.

Remember to shop local. I cringe when I see a local restaurant on the McLemore website. It’s often because I hate to see a small business owner give up, and I feel a little guilty thinking about the last time I spent my money at that local business.

This restaurant closure really hurt. Yesterday, the Nashville Post reported that Woolworths on Fifth was closing. Woolworths was a beautiful restoration of the historic lunch counter where many brave African American students and leaders took a stand to demand equality in our city.

I frequently took guests there for lunches over the years, and I was always proud to share that history. I also worry what’s next and whether the future operators will respect the history of the site.

There’s no stay in judgment appeals (unless you ask for one)

There’s a bit of confusion about appellate bonds, particularly when it comes to money judgments from a court of record.

“Is what I’ve filed good enough to protect my client from an immediate garnishment?” That’s not a legal question that any attorney wants to learn after a client’s bank account gets hit.

In every appeal, the Appellate Court Clerk’s office charges certain filing fees for the Notice of Appeal. At the same time, the appellant must file an Appeal Bond for Costs, which is a bond (generally signed by the attorney) to cover the court costs in the appeal (generally, a nominal amount).

Judgment enforcement is automatically stayed for thirty days after entry pursuant to Tenn. R. Civ. P. 62.01. But, here’s the key: The filing of an appeal and posting that initial “cost bond” do not automatically stay enforcement of a creditor’s rights under a judgment.

You’ve got a valid appeal, but you don’t have any stay on enforcement.

In order to obtain a stay of collections after the appeal is filed, the appellant must file a motion with the trial court. Ultimately, this is done by filing a “stay bond,” but, until the trial court grants such a motion and approves the amount of the bond, there is no stay of judgment enforcement. See Tenn. R. Civ. P. 62.04. Tenn. R. Civ. P. 62.05 requires that the bond be in an amount sufficient to pay “the judgment in full, interest, damages for delay, and costs on appeal.”

In short, just filing an appeal and posting a cost bond does not stay the enforcement of a judgment. Bank levies, wage garnishments, all of that can still happen.

And, if you’re a litigant or attorney who doesn’t understand this issue, then there’s a good chance that you’re in for an unpleasant surprise during your appeal. Don’t be that lawyer.



United States Supreme Court: Post-bankruptcy possession doesn’t violate automatic stay

It’s rare the the United States Supreme Court decides a legal issue that affects everyday consumer bankruptcies, but today was one of those days.

In City of Chicago, Illinois v. Fulton, the Supreme Court ruled unanimously that a creditor who repossesses property prior to a bankruptcy filing is not required to release that property after the bankruptcy filing. Per today’s opinion, “mere retention of property does not violate the [automatic stay in] § 362(a)(3).”

This case has real-world implications for creditors, mainly car loan creditors. In the past, if a lender repossessed a vehicle and the borrower filed a bankruptcy case, the debtor would then demand immediate release of the car.

The argument has been that the secured creditor would be in violation of the automatic stay, unless it immediately released the vehicle to the debtor. In our Nashville bankruptcy local practice, the creditor attorney would generally ask for “adequate protection,” meaning proof of insurance on the car and proof that the debtor was proposing a reorganization plan that would pay for the car.

But, in short, if the car creditor tried to keep the car after a bankruptcy was filed, the creditor was swimming in risky waters. That continuing exercise of possession, most of our bankruptcy judges would say, was an action to collect a debt and a stay violation.

Justice Alito’s opinion walks a fine line, noting that 11 U.S.C. Section 362(a)(3) “prohibits affirmative acts that would disturb the status quo of estate property.” The opinion says that simply holding property is not affirmative act; it’s just maintaining the status quo.

While it’s true that that Section 362(a)(3) prohibits “exercising control over estate property,” Alito wrote that this text “suggests that merely retaining possession of estate property does not violate the automatic stay.” The words used in §362(a)(3) “halts any affirmative act that would alter the status quo as of the time of the filing of a bankruptcy petition.” An automatic stay is not “an affirmative turnover obligation.”

In the end, the Supreme Court wrote that “We hold only that mere retention of estate property after the filing of a bankruptcy petition does not violate §362(a)(3) of the Bankruptcy Code.”

You can read the full opinion here Download

This case creates as much trouble as it resolves, honestly. In practical application, where the creditor has repossessed the car, when does the creditor turn it over? In its discretion? After negotiation of plan repayment terms? Never (i.e. the creditor keeps the car and files a motion for stay relief to take an affirmative action–a sale)?

Law Students: Law School Grades Will Not Define Your Career

Over the long New Years holiday, I found my law school’s “Lawyers of the Future” picture book in a box while cleaning out my basement.

This was a booklet all University of Tennessee College of Law students were given at the start of a school year, with pictures and biographies of all the law students.

My plan had been to throw all of this stuff away, but I just couldn’t. Instead, I strolled down memory lane, looking at all the faces of the people who I’d assumed would be part of my professional life forever, as opposing counsel, judges, and law partners.

Twenty years ago, though, I looked at those faces with less sentimentality. Back then, I looked at those people and their prestigious backgrounds, mainly, as competition. Competition for grades. For law review. Moot Court. Summer Jobs. Clerkships. Associate positions.

Lawyers, do you remember how much you agonized over your first semester 1L law school grades? I mean, it felt like everything in your life depended on Criminal Law, Contracts, Civil Procedure, Legal Writing, and Torts.

Law school grades just absolutely consumed our lives.

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Unreliable 2021 Predictions for the Nashville Legal World

2020 wasn’t a great year for predictions for me.

Remember when I boldly predicted that June 2021 would see an all-time spike for consumer bankruptcy filings in Nashville? (Note: That time period actually saw local bankruptcies hit a 10 year low.)

Remember when I joined an out-of-town law firm with the express goal of creating the “perfect law firm”?

Remember when I bought a boat? (Note: Yes, I was quoted in USA Today calling it all a big hassle.)

So, with that grain of salt, here are my predictions for 2021:

Continue reading “Unreliable 2021 Predictions for the Nashville Legal World”