David

Can a Sheriff’s Execution Sale of Real Property be Continued? (Not Without Court Order or Express Statutory Authority)

A few months ago, I got an unexpected call from a local Sheriff’s Office, late on a Friday afternoon. (Hardly ever always a good thing.)

This Sheriff and I had done a real property “sheriff’s sale” a few years ago that was very successful, and he had one scheduled for Monday that he needed my help on.

“Can a Sheriff’s Execution Sale of Real Property be Continued?” he asked.

The attorneys for the creditor and the judgment debtor were trying to work out a deal, but they were running out of time, but the Sheriff didn’t think he could give them more time.

I wasn’t sure either, so I went with my default answer: “It depends. Let’s talk this out.”

In the end, my advice was: “Under existing Tennessee execution law, he couldn’t: He had to proceed, or the judgment creditor had to call it off. There was no in between.”

It reminded me of foreclosures, before the Tennessee passed Tenn. Code Ann. § 35-5-101(f) in 2011.

Back then, unless the text of a deed of trust expressly authorized a foreclosure postponement, trustees weren’t sure if they could continue a sale. Some trustees included language in their sale notices allowing continuances, making it seem like it was no big deal (but if you if you pressed them on the authority to postpone a sale, they’d usually admit that there was none).

Back then, if a deed of trust was silent on continuance, most prudent lenders tended to proceed with a sale, regardless of whether the parties were negotiating potential resolutions. Tenn. Code Ann. § 35-5-101(f) was enacted to avoid those harsh results and help parties who were trying, in good faith, to resolve disputes and save their homes. It gave them some relief to work out a deal.

So, back to our Sheriff’s Sale. The analogy to foreclosures is apt, because the sheriff’s sale statutes track the foreclosure statutes. If you at Tenn. Code Ann. § 26-5-101, et. seq.–it’s nearly the exact same text. In short, a Sheriff’s Sale is, basically, the same thing as a foreclosure sale, but done by the sheriff.

But, for this blog post, I’ll point out a big difference: There’s no § 26-5-101 “(f)” — the part about the continuances. It’s the same text, except for that section.

Uh oh.

And, of course, there’s never going to be any sort of contract to fall back on, because there’s hardly ever going to be any sort of contract between a judgment creditor and judgment debtor providing any sale terms (as a deed of trust would between a borrower and lender).

Separately, there’s nothing in any other Tennessee statutes–talking about execution, sheriff sales, Tennessee Rule of Civil Procedure 69 or elsewhere–about continuances.

Finally, in talking to the Sheriff, I asked him–in a last ditch effort to see if I could help the parties on his sale get some more time to reach a resolution–whether their case’s Sale Order or Notice of Sheriff’s Sale said anything about ability to continue or postpone the sale? There was nothing at all they could point to.

In a perfect world, we’d have a statute that allows continuances in sheriff’s sales. In a less perfect world, the Court’s Sale Order would allow a continuance. In an even less perfect situation, we’d have a Notice of Sheriff’s Sale that would allow a continuance.

Their sale didn’t have any of that.

Don’t Worry About Party Fowl: Chapter 11 Bankruptcy Isn’t Always a Bad Thing

Bankruptcy doesn’t necessarily mean that a business is shutting down.

You wouldn’t think that, though, based on the reactions online to the news that Party Fowl, a local “Nashville Hot Chicken” restaurant, filed Chapter 11 bankruptcy last week.

Some of it can be chalked up to schadenfreude: The restaurant was the site of a fairly salacious political scandal involving some of Tennessee’s least likeable politicians in recent memory. Whether it’s echoes of that scandal or its location in the party-centric Gulch, Party Fowl tends to get a bad rap from locals.

The reactions also reveal common misconceptions about how Chapter 11 works. Sure, if a company files a Chapter 11 bankruptcy, something has gone terribly wrong, but it doesn’t necessarily mean the end of the company.

The goal in Chapter 11 is rarely to simply shut down, but, instead, it’s to reorganize and stay in business. This generally involves freezing payments to creditors (unless it’s post-bankruptcy vendor payments), restructuring the company’s debts (i.e. extending the payment terms and, sometimes, paying only a fraction of the amounts owed), rejecting leases (i.e. undoing bad business decisions), and, generally, cut operations and expenses going forward (i.e. downsizing).

At the end of this process, a chapter 11 debtor will propose a plan of reorganization (based on a realistic budget it can handle) to keep its business alive and pay creditors over time.

Most companies continue operations after filing Chapter 11, and the customers will never notice any difference. Party Fowl filed bankruptcy nearly ten days ago, but they’ve been selling hot chicken continuously over the past two weeks.

Party Fowl appears to have some good reasons for filing. Based on their Company Profile (copy below), the debtor told the Bankruptcy Court that COVID was a big disruption with awful timing: They started a bold expansion in March 2020, and those new locations have struggled and drained resources, impaired cash flow, and led them to take out some fairly onerous and high interest merchant lender loans to bridge the gap. The bankruptcy filing allows the debtor stop paying those sky-high rate loans and use the income to right-size the business.

This is a Creditors Rights blog, written by a creditor rights lawyer, so please don’t think I’m going soft here. Based on the pretty extreme “Party Fowl, we hardly knew thee” reactions, I thought a little bit of background could be useful.

And, don’t worry, I’ve got lots of criticisms about the chapter 11 process, but I’ll save those for a later post. (Just wait until I tell you the story about the mega-bankruptcy case that paid the lawyers $100s of millions of dollars in legal fees and costs over 5 years, and the check my client received last month for 1.04% of his claim…)

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Smaller Law 101: Advice from Taylor Swift about Bad Client Intake

When I think about my least favorite cases, it’s generally because the client is terrible in some crucial way.

I remember the day I got my own all-time least favorite case. It was about 20 years ago, and my day started with a simple matter in Williamson County General Sessions Court. While I was waiting for my case, there was a dramatic hearing on the docket right before mine.

A contractor had filed a pro se collection lawsuit, and, during the trial, the contractor came with a wild energy, ready to fight. He got into an argument with the lawyer on the other side, threatened the homeowners, had no documents to support his case, and ended the trial by yelling at the Judge (who had ruled against him and told him to hire a lawyer and appeal it, if he thought the decision was wrong).

As the contractor stormed out of the courtroom, yelling at everybody, I remember thinking “I would hate to be that guy’s lawyer.”

In the two hours that it took for me to get lunch and make it back to my office in Nashville, my boss had a new case for me. Yes, it was that guy. He had told his cousin about how he had gotten screwed over by a biased judge and needed a lawyer for the appeal in Circuit Court. The cousin–a client of my firm–recommended my boss, who handed the file directly to me.

I told my boss what I saw in court that day and begged him not to take the case.

I’ll spare you all the details, but that client never got less angry and more reasonable. He was mad at me for asking for paperwork and proof. He didn’t understand why we needed evidence. He was mad at the bills we sent him. He refused to participate in any meaningful aspect of the process. He hated me and questioned everything I said to him about the case. Settlement was never an option. We were going to fight this to the end. My boss took a “hands off” approach.

In the end, he showed up for the trial in Circuit Court, but it was only slightly less wild than the first trial. We lost spectacularly, and my memories of that trial are as vivid to me as my memories of my wedding day and the births of my children.

I tend to think about that case during the holiday season, because, after that trial, I went directly to a real estate agent’s elaborate holiday party in a 6,000 square foot model home in Brentwood (this was the good times, pre-Great Recession). I drowned my PTSD in eggnog.

I was reminded of it all, when I saw Matt Margolis‘ tweet about how better the practice of law can be when you get to choose your clients. Matt recently started his own law firm, Margolis PLLC.

That may be the greatest benefit of running your own firm. At my old firm, you got handed cases, whether you wanted them or not. Some clients are unreasonable. Some have bad claims. Some can’t afford a lawyer. In a big firm, often you don’t always have a choice. It’s too bad, though, because taking on bad cases or bad clients is an easy way to create unhappy lawyers.

Don’t get me wrong: In your own firm, you will absolutely take on bad cases and bad clients, but it’s different when it’s your own choice. At worst, it’s a lesson you (hopefully) learn from. Having recently closed the last of what I referred to as “The Sinister Seven,” I can assure you that it’s a learning process (ask me about the sequel, “The Terrible Two”). Taylor Swift and I both can benefit from some honest self-reflection.

After three plus years of running my own firm, you would be shocked at how picky I have become (I call it The Client Decision Tree, and I’ll do a full post on that soon). Some lawyers see those initial client calls like a job interview, and I do too: But it’s usually me doing the vetting.

I refer out about three times as many cases than I accept, and it’s been a revelation. Some clients simply make things more difficult, and that can impact your entire practice.

To this day, my engagement letters say “the attorney-client relationship is one of mutual trust and confidence,” and it’s not just filler to distract the client from the hourly rate and retainer. If I get a sense from a potential client that she doesn’t respect my role, the legal process, or trust me (i.e. listen to me), that client never gets an engagement letter.

Life is too short and reputations are too fragile to do work for clients who aren’t a good fit with my firm. Say yes to too many bad clients, and you’ll find you have less time, patience, and space for the awesome clients.

Plaintiffs Counsel Beware: Tenn. Court of Appeals issues new opinion on “finality” of general sessions judgments

If you’ve ever filed a lawsuit involving multiple claims or multiple parties, you probably already know how Tenn. R. Civ. P. 54.02 works. If you don’t, here’s a primer that I wrote in 2017.

Yesterday, the Tennessee Court of Appeals issued a new opinion on this topic, which is a must read for sessions lawyers.

The case, Mary Bradley v. Catherine A. Pesce, W2023-00583-COA-R3-CV (Tenn. Ct. Ap. Dec. 19, 2023)(full copy here), involves a lawsuit against two defendants, filed in general sessions court in 2020. Plaintiff served one defendant, but never got the other served. After taking a judgment in June 2022 against the served defendant, plaintiff nonsuited the claims against the never-served defendant in January 2023.

Using the date of the dismissal, the judgment defendant filed an appeal of the June 2022 judgment. The issue, of course, was whether her appeal was timely under Tenn. Code. Ann. § 27-5-108, which provides “[a]ny party may appeal from a decision of the general sessions court to the circuit court of the county within a period of ten (10) days.”

Wasn’t the defendant required to appeal within 10 days of the June 2022 judgment?

Looking to Tenn. R. App. P. 3(a), the Court of Appeals first asked whether a ruling in a matter is “final” where other claims (like a cross-claim) are still pending. The Court noted that the “finality rule” is applicable even in general sessions cases, citing other opinions that “the time for filing a notice of appeal [does] not begin to run until every claim raised in the general sessions court [is] adjudicated.” Further, the Court considered the 2018 amendments to Tenn. Code Ann. § 27-5-108, which provide that one party’s timely appeal takes all issues to the circuit court, even when other claims remain pending.

In the end, the Court concluded that because “the general sessions court action …was against two parties: Appellant and Ms. Weaver,” then “[t]he judgment against Appellant was not final and appealable until all the claims of all the parties were adjudicated,” and “[t]his occurred on or about January
5, 2023.” As a result, the appeal of the June 2022 ruling was not a final order until the dismissal order was signed.

In short, the concepts behind Rule 54.02 apply in Tennessee General Sessions Court, and litigants should keep this opinion in their mind any time a case involves multiple claims and parties.

Here, it seems like the judgment debtor acted out of necessity (and not by design). Frankly, the safest course of action would have been to file the appeal in June 2022 and be entirely certain that the appeal was timely (which would have, by operation of Tenn. Code Ann. § 27-5-108, taken the entire matter to circuit court).

On the other side of the aisle, an experienced plaintiff’s lawyer knows the incredible challenges that an evading or difficult-to-serve defendant presents, and that lawyer should take precaution to make any partial judgment final (and executable) as soon as possible.

This could be done in a few easy ways. The plaintiff could ask for text in the sessions judgment that tracks the language of Rule 54.02, making it clear that the order is a final order. The plaintiff could, at the time of the entry of the initial judgment, dismiss the other claims and parties. Or, if the other claims and parties were simply too crucial, the plaintiff could delay all relief or, at worst, live with a bit of ambiguity as to the finality of the partial judgment.

The appellate court’s reasoning is sound, but a savvy plaintiff has a number of ways to protect their client.

A more pressing question is this: If the “partial” sessions judgment isn’t final in a situation like this, then shouldn’t the Court Clerk refuse to issue execution? (Spoiler: Most will issue execution, but, based on this case, they shouldn’t.)

Nashville Has a Bankruptcy Lawyer Problem

There are hardly any bankruptcy lawyers in Nashville under the age of 40.

With three law schools in the Middle Tennessee area, you’d think there’d be more than enough lawyers in Nashville to satisfy any and every conceivable legal need.

If so, you’d be wrong. In my recent experience, Nashville is an under-lawyered city, if you judge from the number of new calls I get (across the legal spectrum) and, as result, the difficulty I have finding a lawyer to refer these callers to.

(As an aside, it might just be that the clients are calling their old lawyers at their new firms and are stunned by the new hourly rates.)

Having said that, I’m really concerned about the lack of young bankruptcy attorneys.

I wrote about this 2020–“The Bankruptcies are Coming, but Where are the Bankruptcy Attorneys“–and my bold March 2020 and April 2020 prediction about the looming wave of bankruptcy filings was totally wrong. In fact, the opposite was true: Bankruptcy filings in Middle Tennessee hit a historic low mark during that time.

As the country braces itself for an economic dip and you hear about law firm layoffs, I repeat my old advice: Learn Bankruptcy.

A bankruptcy practice is one of the best kept secrets in the profession. It’s all based on the Bankruptcy Code, which you can read cover-to-cover in an afternoon. It’s a small, collegial and sophisticated bar (the fact that it’s so small tends to prevent the shenanigans lawyers pull in the broader legal universe).

Plus, starting in a bankruptcy practice exposes you to nearly every legal issue imaginable, since so many state and federal law issues end up in bankruptcy court. Many complex transaction lawyers cut their teeth doing 363 sales in bankruptcy court.

During the last recession, Nashville was lucky and recovered quickly, with real estate prices rising, corporate growth, and a robust commercial lending base in the immediate years after the downturn.

The downside of that is that we’ve lost a generation of bankruptcy lawyers to corporate, commercial lending, and other (more sexy) practice areas. Today, in the year 2023, the lawyers who file debtor bankruptcies are largely the same ones who were filing those cases fifteen years ago. You can count the firms who file small/medium corporate chapter 11 cases on one hand.

I expect to see more national and local bankruptcy filings in 2024. If you’re a law student or recent grad trying to differentiate yourself from the pack, learning a little bit about bankruptcy law may be a smart move.

Borrower Beware: The Growth of the Loan-To-Own Lender in Middle Tennessee

I have a question I ask clients when they ask me to foreclose on a property.

“Do you want the money or do you want the property?”

Some clients are baffled by the question. They are banks, they’ll tell me, and what are we going with a property? Who is going to evict the tenants, change the locks, make sure the pipes don’t burst, cut the grass and so on? The banks don’t want all that trouble. They want the money back, plain and simple.

But, in a hot real estate market like Nashville, I’ve noticed a new type of lender. I refer to them as “loan-to-own” lenders. They are making loans secured by real property, but they sometimes act like property investors.

My hunch is that, when making the decision to extend credit, the prospect of ending up owning the property is part of these lenders’ motivation in doing the deal. Hence, the “loan-to-own” nickname I give them. When their loans go bad, these lenders are happy to foreclose and take ownership of the land.

These are often lenders of last resort, for a property developer who can’t get credit (or more credit) from a traditional lender. These loans are often at far-above-market interest rates and usually on pretty short repayment terms. The typical customer is a developer who just needs a little bit more money or a bit more time, and who, out of desperation or arrogance, believes that the “big” sale is just 90-120 days away and is willing to overlook the costs and risks.

When the sale doesn’t happen or a payment is missed, these lenders pounce. In some cases, maybe the property developer can figure something out and the loan (and the hefty interest and fees) gets paid.

Or, worst case, the lender presses forward with a lender-advantageous foreclosure, i.e. one in which the lender who wants to win at the sale is the one who gets to set and enforce the sale terms.

Over the last few years, I’ve seen more lenders from Texas, Las Vegas, and California loaning money on development deals in Middle Tennessee. I’ve also noticed more of these lenders foreclosing, taking ownership, and then offering the properties for sale.

Having said all this, I don’t expect (or offer) much sympathy for the cash-strapped property prospectors. It’s simply an interesting development in the gold-rush ecosystem of the modern Nashville real estate market.

Smaller Law 101: My 2023 Holiday Gift Guide for Disgruntled Lawyers

It’s holiday party season for lawyers, and, man-o-man, have I spent a bit too much time around tipsy lawyers over the past few weeks (disclaimer: I’ve been to 2 parties).

It’s also the time of year for: all-nighter transaction work; squeezing files for extra billable hours; year end bonuses; meetings with compensation committees; and polishing up resumes for when all of the above go wrong.

Long story short, these are stressful, uncertain times, and I seem to be answering a lot of the same questions about leaving Big Law and starting a law firm.

So, for those of you who have stressed-out lawyers in your lives, I offer these suggestions as my 2023 Gift Guide for Disgruntled Lawyers.

Want to start your own firm, but have no idea where to start? Buy your lawyer a year subscription to Clio, a comprehensive online practice management platform that offers everything needed to run a law firm: time tracking; billing; online payments; document management; contacts; case and matter management; and everything else. Clio integrates with hundreds of third-party apps, and it’s designed to be the central hub through which all operations run. It’s awesome and costs about $1,000 per year. And, of course, it’s fully online (and secure), so there’s no need for that $25,000 on-site server that makes those strange buzzing noises behind the locked door at the old law firm.

What about everything else? That’s where an annual subscription to Microsoft365 comes in. For about $150, you get e-mail (Outlook), Word, Excel, Powerpoint, Teams, OneDrive, Sharepoint, and about 25 other programs that you’ve never heard of, but are awesome and useful (Bookings has changed my life). Plus, unless you’ve been living under a rock, you probably know that Microsoft is an industry leader on AI research, and you’ll get to be on the frontlines of Microsoft Copilot. That weird picture at the top of this post? It was AI generated by Microsoft Designer.

I haven’t seen anything about phones yet. Here, you’ve got two good options. The industry standard for video communications, Zoom, is now offering VoIP phone services (with pricing starting at $120 annually). Since you will have to get Zoom (all of the remote court appearances and conferences are on Zoom), this is worth looking into. (I use Ringcentral for phone, fax, and business texting, and it’s a bit wonky, but it works).

What about copies, printing and scanning? Most lawyers probably use some high-capacity printer, which is rented from a third party service (and the firm pays a monthly fee and a per page quota each month). You don’t need that. Find a good, mid-quality print/copy/scan machine from HP, which will cost you about $500.

What about the fancy offices? Don’t sign a 5 or 10 year lease for commercial office space. Instead, call one of the 5-7 fancy coworking spaces that have opened in Nashville. I use WeWork, which has been awesome (and has accommodated me in Austin, Chicago, and Seoul). Other options on Music Row include Ampersand Studios, Industrious, Kennect, and e-spaces. These spaces are all “turn key,” meaning they offer printing, internet, limited staffing, and package handling for a low monthly membership fee, generally ranging from $200 to $350.

What about websites and marketing? Some lawyers do this themselves. I don’t recommend that because branding is too important. For all of my various iterations of my own law firm, I’ve used Huckleberry Branding. They’ve designed my logos, helped with color schemes, designed a custom website, helped with content, and also all the incidentals that come with it all (including letterhead, envelopes, and business cards). While I’m embarrassed to have done this 3 times, I’d hire them again if there were a 4th time. They are awesome, and getting started with good branding is too important to do on your own.

What about staffing? You may wonder about who will do all the “little things” to keep the new firm running. (At my old firm, there was a person dedicated to making sure there were cold Cokes at all the meetings.) At a small firm, the lawyer will do all these little things, as well as the medium and big things. To make it a little easier, I’d recommend hiring a phone answering service. I use Abby Connect, a 24/7 answering service whose goal is serve as an extension of my own firm. I’ve used others (Posh) in the past, and the main differentiating factor tends to be pricing and frequency of use. These services cost range from $200 to $500 per month.

What about everything else? Stamps.com for everyday mail. Simple Certified Mail for certified mail. Simplifile to record documents (state-wide) with Register of Deeds’ offices. Lawpay to accept credit card payments (and, yes, Clio offers Clio Payments). If you’ve got lots of documents and need to super-charge document management, the biggest player in the market is NetDocuments (which I use) and is about $75.00 per user per month. I use Minnesota Lawyers Mutual Insurance as my malpractice carrier, and I can’t tell you if they are any good because I hope to never call them ever (about $150.00 a month for robust coverage).

What if this is still too complicated? Buy them a one-hour “Ask an Expert” call with Adriana Linares, of Law Tech Partners, a lawyer-turned-legal-technology consultant who takes a no-nonsense approach to coaching up entrepreneurs on making the early-firm decisions, as well as the late-firm decisions (I had a call with Adriana a few weeks ago).

It’s wild to think that you can run a fully functioning law firm for under $1,000 a month, but it’s entirely possible. It’s also lots of fun to explore all the innovations in legal technology. It’s an unprecedented time for growth in legal tech, and a lawyer with an entrepreneurial spirit has more options now than ever before in how she can practice law.

If there’s a lawyer in your life who believes her law firm isn’t giving her the freedom to nurture that entrepreneurial spirit, I hope this Gift Guide is the first step to a fruitful and lucrative 2024.

If any of you are thinking about making this jump, reach out with any questions, fears, or complaints. I’m happy to help. If I’ve left anything out or if you have any other questions, let me know, and I’ll respond.

Tennessee Court of Appeals questions “reasonableness” of contingency fees in collection judgment

Many collections lawyers handle cases on a contingency basis. They don’t bill by the hour, but, instead, they keep some percentage (usually 33%) of the money they actually collect for the clients. Sounds fair, right?

A recent study showed that a Nashville lawyer’s average rate exceeds $500 per hour, and that adds up pretty quick. With lawyers being so expensive, it makes sense that some clients would ask their attorney to share in the success (or, maybe, frustration) of the collection process.

(As a quick disclaimer, I rarely take collections cases on a contingency and, when I do, I’ve done my advance homework and am confident that, candidly, we’re all going to make a lot of money.)

Because the contingency fee attorney is not sending bills that track every minute of his time, a down-side is that he may not have a clear measure of how much in fees he has expended on a case. This is important in breach of contract cases, when the lawyer asks the judge to add an award of attorney fees to the creditor’s judgment. Under Tennessee law, a trial court must consider whether the fees requested are “reasonable,” using very specific guidelines established by the Tennessee Supreme Court.

If the lawyer hasn’t kept track of her work, then what amount does the attorney ask for? Generally, contingency-fee lawyers simply ask for their contingency-fee amount to be added to the judgment. That is generally allowed.

Not so fast, a September 2023 Tennessee Court of Appeals opinion says.

In that case, after they were awarded $50,000 on their breach of contract claim, the plaintiffs asked for attorney’s fees “in the amount of one-third of the total Judgment, or sixteen thousand six hundred and sixty-six dollars and sixty-six cents ($16,666.66).” See Fulmer v. SARCO, GP, No. M202201479COAR3CV, 2023 WL 5787082, at *2 (Tenn. Ct. App. Sept. 7, 2023).

In questioning the attorney fees, the Court of Appeals wrote that “[w]hile a one-third fee may have been what [plaintiffs] agreed to pay their counsel, it is not what [defendants] agreed to pay in the Note” (which only referenced “reasonable attorney fees”). Id. The defendants were not party to the contingency fee agreement, and “what [plaintiffs] agreed to pay their own attorney is not dispositive of what constitutes a reasonable fee under the circumstances of this case.” Id.

Instead, the trial court must have some proof substantiating the fees and services provided, consistent with the factors listed in Tennessee Supreme Court Rule 8, RPC 1.5. Id.

I understand the reasoning here, but I disagree with the general premise that a contingency fee is, per se, not reasonable.

As an example, consider my practice. If I accept one of my no-brainer, “we’re all going to make a lot of money” contingency fee cases mentioned above (and my homework is correct), I could possibly make a $333,333.33 fee on a lawsuit that lasts two months. Does that the fact that I got the matter resolved quickly and efficiently necessarily mean that my fee violates the Tennessee standards for reasonableness? This opinion suggests it might.

In my limited contingency practice, I lean really heavily on my skills, expertise, and homework (i.e. the “novelty and difficulty” referenced in the Rule) in picking my cases. In short, on those cases where I hit a grand slam, it can occasionally look easy, but a lot goes into that. It’s like the ship repairman, who charged $2.00 for tapping the engine with a hammer one time and $9,998.00 for knowing where to tap. He is worth every penny.

In the end, the Court of Appeals remanded the question back to the trial court, and there’s some chance that the plaintiffs make these same arguments in defense of their contingency fee.

WeWork Bankruptcy says more about Pre-Covid leases than about coworking (I hope)

Bankruptcy law is back in the headlines: WeWork filed Chapter 11 bankruptcy yesterday. This hits close to home, since WeWork is my landlord.

In fairness, since I wrote that post in 2021, my love for WeWork has waxed and waned in stretches.

When I started my firm and wasn’t sure how much office I needed (and for how long), flexible space and term options saved me tens of thousands of dollars. When my family took a 3 week trip to the other side of the world, WeWork Euljiro in Seoul kept my firm running. Plus, as a solo, being around noise and people can be a good thing.

On the other hand, “noise and people” can be bad when it’s mostly “22 year tech bros in shorts and flip flops making loud sales calls.” Don’t get me started about the constant battle to get squatters out of the conference rooms. And, despite what you might think, a dedicated office in a WeWork is surprisingly small and very expensive.

Having said all that, I don’t take this as an indictment of the viability of coworking office space. In fact, the Nashville Post recently ran a great story detailing the growth and innovation in this segment of the market in Nashville.

Instead, it’s probably an indication that all those leases signed by WeWork at pre-COVID lease rates (back when the company had a $47 Billion valuation and a “money ain’t no thing” vibe) were simply unsustainable in our new post-COVID reality.

The Bankruptcy Code has a unique tool available for commercial debtors to fix this exact issue. Under 11 U.S.C. § 365, a debtor has the ability to “assume” or “reject” any of its leases. In layman terms, the debtor gets to keep the leases that are useful to keep and cancel the leases that aren’t useful and it doesn’t want to keep. The mere threat of rejection often spurs a conversation between a debtor and a landlord about modifications to the lease to reflect a more realistic rate of rent.

WeWork’s messaging has been clear. They call this a “strategic reorganization process.” That’s a fancy way of saying “bankruptcy” but without saying “bankruptcy.”

That’s surely intentional. The term “bankruptcy” suggests failure or that the company is shutting down.

In reality, a corporate bankruptcy of this magnitude isn’t really a bankruptcy in the traditional sense–it’s a restructuring process that, incidentally, favors the debtor and incentivizes negotiation and cooperation and, as a result, reorganization. I suspect that, when the business people took over from WeWork’s founder in 2020, the first item on their “to do” list was what to do with so many of these terrible leases. Bankruptcy was always a viable option to fix the company’s troubles.

In short, this is a good thing, and this process will probably allow WeWork to shed some of the mistakes of the past and emerge a more viable company going forward.

As a tenant, I’m hoping they succeed. To that end, I’ll vote in favor of any Chapter 11 Plan on the following condition: They have to create some penalty for the squatters in the conference rooms and phone booths. Every single time I book a conference room, when I open the door for my meeting, it’s filled to capacity, with people in shorts and flip flops. We have to fix this next.

Good lawyering is mostly great paperwork: A reminder to include all the details in your Judgments

It looks very exciting on TV, but success in the legal profession is often a matter of being really good at paperwork.

Proof-reading and getting the details right are essential….

But what makes great lawyers really great is the knowledge and foresight to know which details to include.

On TV, cases tend to end after a passionate closing argument, and the lawyer and client walk out of the courthouse victorious. In reality, most of my cases end with me pouring over the details of a single document–the Order that the Judge will sign–and victoriously e-filing it with the Court Clerk.

When I prepare an order for a Judge’s signature, I try to think through every possible scenario where I’d enforce the terms. When I type the judgment debtor’s name, I make sure I’ve spelled the name the same way it’s spelled on the debtor’s old checks or property deed. If there’s some special request or relief I’ve asked for in my motion, I make sure to recite that in the order and have the order expressly grant it.

A trend I’m noticing lately is that lawyers leave out critical details in their orders, and the omissions hurt their cases.

A good example relates to post-judgment sheriff sales. Sheriff’s sales confuse courts, clerks, lawyers, and sheriffs. The law is tricky and draws on 2-3 separate statutory bases (Tenn. R. Civ. P. 69.07 ; Tenn. Code Ann. § 26-5-101, Tenn. Code Ann. § 35-5-101). County sheriffs are good at a lot of things, but they really dislike having to navigate confusing Tennessee statutes on their own.

A good creditor attorney will think through the entire process, starting at the end (i.e. what will the title company need to insure title on this sale), anticipate all the questions, and have the Order address any possible question that could arise.

Who owns the real property? (Look at the Order.)

What are the liens that are impacted by this Sheriff’s Sale? (Look at the Order.)

Who will prepare and publish the Notice of Sheriff’s Sale? (Look at the Order.)

What’s the minimum price pursuant to Tenn. Code Ann. § 26-5-115? (Id.)

Will there be a deposit? What happens after the sale? When does the buyer get a deed? Will there be a sale contract? What happens with the redemption rights? And so on…

I recently saw an Order Authorizing Sheriff’s Sale that said, basically, “the relief granted in the Motion is GRANTED.”

And that was it. The Order had no specific reference to relief described in the Motion and provided no guidance to the sheriff. Instead, to enforce the Order, the lawyer had to also send a copy of the Motion and hope that the sheriff would connect the dots between the two pleadings.

The lawyer’s job is make the process run as smooth as possible, and that includes anticipating issues and preventing them. One strategy to make the process work is to think through all the issues in advance and, before the Judge signs the order, include it all in the document the Judge signs.