Recent Bankruptcy Case Offers Creditor-Friendly Holding When Calculating Preference Period

My creditor clients are always in a hurry to get their money.

When a bank levy hits a big account, most judgment creditors go nuts during that 20 day period when the Court Clerk holds garnished funds (per Tenn. Code Ann. § 26-2-407) before disbursement.

Once the funds are paid out, though, I tell my clients to keep their fingers crossed for a bit more time–at least until the end of the Bankruptcy Code’s “preference period.” Until then, a Bankruptcy Trustee can “recover” payments received by creditors in the 90 days before a bankruptcy case is filed.

One of the most unfair creations of the Bankruptcy Code,” I’ve written on this very creditor-friendly blog.

The question I often get is this: Does the 90 day period start when the Clerk receives the funds or when the Clerk disburses the funds?

An August 19, 2022 Minnesota Bankruptcy Court opinion (In re Holbert, 643 B.R. 332 (Bankr. D. Minn. 2022))(from the Eight Circuit) presents pretty compelling reasoning that the clock starts ticking upon the Clerk’s receipt of the funds.

Specifically, this Court held that the “transfer” (per 11 U.S.C. § 547(b)) for property held in custodia legis occurs when the property is placed in escrow / deposited with the court.

The American Bankruptcy Institute has a more analysis of the case here (and a link to the opinion).

It will always be frustrating for a creditor to see the money just sitting there, in the court coffers, for 20 days. The silver lining, of course, is that the preference clock also appears to be burning off during that period.

The Red River Bankruptcy, COVID, and Nashville’s Garbage

What a time for Nashville’s curbside recycling to get disrupted. I’m not sure I bought any Christmas gifts in-person this season. Instead, I relied on Santa’s elves, dressed in FedEx and UPS uniforms, to deliver the gifts in cardboard boxes.

It’s something I’ve been doing since March 2020, when COVID first disrupted everything.

And, based on the Statement of Background Information in the Red River Waste Solutions, LP Bankruptcy Case, all of us staying at home and generating more residential garbage is, basically, why it filed bankruptcy.

The case was filed on October 14, 2021. The full bankruptcy docket can be found here.

The circumstances behind the filing of the bankruptcy are laid out in the Declaration of James Calandra, the proposed Chief Restructuring Officer of Red River, and the Statement of Background Information.

Red River alleges that the COVID pandemic resulted in more residential waste (and less commercial waste), putting additional burden on Red River (which serviced the residential waste, but generally not the commercial). This resulted in more employee costs and additional wear-and-tear on Red River’s equipment and vehicles. The goals of the bankruptcy are to restructure debt and, possibly, sell the business in parts.

In today’s Axios Nashville newsletter, they report that Nashville “is waiting for the bankruptcy court to determine what happens to its contract, and it’s possible Metro will be allowed to search for a new trash collector.” Well, sort of.

Based on my review of the docket, Nashville has hired a local Texas lawyer, but the real shots are probably being called by the Nashville law firm Bass Berry Sims, which was allowed to appear on behalf of the city “pro hac vice” (which means that an out of town lawyer who is otherwise not licensed in a jurisdiction can appear in a case).

After the entry of that Order on November 29, 2021, Nashville hasn’t filed anything to formally press Red River as to whether it will assume or reject the waste services contract. Instead, my guess is that the city’s very competent counsel are in negotiations behind-the-scenes for Red River to decide whether it can continue to provide the services or whether it’s going to walk away from its obligations.

So far, only one party is really pressing this issue. In its contract, Fort Wayne, Indiana required Red River to enter into a $4,900,000 performance bond and took affirmative steps to make sure that bond was renewed. Fort Wayne issued a default under the bond on December 8, 2021, asking for $1,718,569 in damages for missed collections. On December 14, attorneys for the bonding company filed an Emergency Motion to force “the Debtor to immediately assume or reject the Solid Waste Contract.”

Despite initially being set for December 23, this Emergency Motion has been taken off the docket indefinitely. In the Motion, the insurance agency references testimony showing that many of the municipalities that held bonds allowed them to expire (not Fort Wayne, though).

The next round of hearings in the case are set on January 7, 2022, when Red River will ask the Bankruptcy Court to grant a number of procedural and administrative orders. This includes: the ability to use “cash collateral” (i.e. spend money that a secured lender otherwise has the ability seize and retain); to grant its secured lender (probably the same one holding the cash collateral) a “superpriority” lien on post-bankruptcy assets; to hire all the bankruptcy-related attorneys and professionals; and to set the system by which all of those attorneys and professionals get paid.

And, of course, the orders approving the debtor’s attorneys’ employment and fees will be a big part of getting this case moving. And, wow, bankruptcy lawyers aren’t cheap: Red River’s primary counsel are to be paid hourly rates of $800 (Partner) and $575 and $450 (Associates).

My guess is that, until Red River gets (forces?) its lenders to agree to release its cash for use in business operations (and to fund the bankruptcy), Red River can’t meaningfully determine whether it can assume or reject the contracts. The hearings this Friday will be step one in that process.

As an aside, it bodes poorly that it has taken this long for the debtor to get these administrative motions approved. These are generally referred to as “first day” motions and, yes, they are generally considered and approved early in a case.

Aside from that, Red River will also have to show some ability to actually service the contracts in order to retain those contracts. A big part of chapter 11 bankruptcy is the ability to retain (and assume) the good contracts and reject (and walk away from) the bad contracts. Then, the “reorganized” debtor can either continue to perform the profitable contracts or, if it so choses, “sell” those contracts to somebody else.

Here, if Red River isn’t able to perform or provide a reasonable basis to believe it can perform under the Nashville contract, there will be cause for the city to ask the Bankruptcy Court to force it to decide. The fact that Red River isn’t currently servicing these contracts doesn’t make me feel optimistic about their chances.

The longer my cardboard boxes sit behind my house may be the best indication of where it’s all headed. I’ll update this post when I can see the pile over my fence.

2021 in Review: New Lawsuits in Davidson Circuit and General Session Courts were also Down

Last week, I wrote about how Bankruptcy Court debtor filings were at an all-time low in the Middle District of Tennessee.

A few of you asked if there was a corresponding drop in Chancery, Circuit, and General Sessions filings. Maybe that’s why people weren’t running to file bankruptcy.

Given the numbers in Bankruptcy Court, it’d make sense that state court litigation might have also slowed down, but I was a bit surprised by the answer.

Davidson County Chancery Court lawsuits have been surprisingly consistent. The final Chancery lawsuit of 2021 was filed at 11:59AM on December 30. It was case number 21-1324-I, which means that it was the 1,324th case filed last year. It’s an unpaid commercial debt lawsuit.

For comparison, here are the last few years’ numbers on new case filings: 1,299 cases filed in 2020; 1,569 in 2019; 1,413 in 2018; and 1,386 in 2017.

In short, there was no real drop in chancery court litigation, which surprised me. 2021 felt like a slow litigation year for Nashville.

Of the ten stories featured in the Nashville Post’s 2021 “Top Reads: Legal” article, six of them were just about law firm personnel moves not, you know, actual news-worthy litigation.

In general, you’d expect to see the business-minded Chancery Court have cases on this list, but, frankly, it’s a bit boring (no offense, toilet fire lawsuit).

What about General Sessions Cases? This is where it gets more interesting.

As of the end of November, there were 6,551 detainer / eviction warrants filed in 2021, along with 15,404 small claims lawsuits filed. For that same period (end of November) in 2019, there were 10,694 eviction lawsuits and 24,508 small claims lawsuits filed. Long story short, that’s about a 40% drop in filings.

Circuit Court? By the end of November, there had been 1,736 new civil lawsuits filed in 2021. At the end of November 2019, there had been 2,590 civil lawsuits filed, representing a 33% drop.

I’m not entirely sure what to make of this data. A 40% drop in evictions and credit card/debt collection cases would certainly be expected to result in a slower pace of new bankruptcy filings, but, nevertheless, this also shows that the common perception that “courts are closed” and “evictions aren’t happening” is incorrect.

Some credit has to be given to the LEGACY Housing Resource Diversionary Court run by Davidson County Judge Rachel Bell. This program can’t stop the new eviction filings, but it has helped many pending cases get resolved. As of September 20, 2021, $18,799,705.71 had been paid to landlords via this program and, most likely, kept those tenants out of the bankruptcy lawyers’ offices.

In the end, my take is that Middle Tennessee bankruptcy filing numbers are far more impacted by lawsuits filed in Davidson County General Sessions Courts than by the business-litigation dockets in Chancery Court. These numbers offer some part of an explanation.

Year In Review: Is Anybody Filing Bankruptcy in Nashville?

A few days ago, a lawyer from Oklahoma City called to refer me a new case, and, at the end of the call, he asked “Is anybody filing bankruptcy in Nashville? There’s just nothing going on here. Are you hearing anything about when it’s coming back?”

It’s a conversation I’ve had about 100 times over the last year, especially with local bankruptcy lawyers.

As of this moment (December 29), there have been 3,923 debtor bankruptcy cases filed in the Middle District of Tennessee in 2021. Compare that with 2011, when 12,546 debtor bankruptcy cases were filed. How on earth, in this economy and in month 21 of a global pandemic, has there been less than a third of the new cases we saw a decade ago?

For reference, here are the numbers for the past decade (plus):

  • 2021: 3,923
  • 2020: 5,616
  • 2019: 8,263
  • 2018: 8,577
  • 2017: 8,710
  • 2016: 9,198
  • 2015: 9,290
  • 2014: 10,089
  • 2013: 10,092
  • 2012: 11,827
  • 2011: 12,546
  • 2010: 14,063
  • 2009: 14,940

It’s clear that 2021 brought a historically low number of new bankruptcy case filings. It also shows that the Middle Tennesseans aren’t necessarily disinclined to file bankruptcy (or unable to, since so many of the past filers are not time-barred or ineligible under 11 USC § 109 or otherwise). So, why aren’t more people and businesses filing bankruptcy?

Some people refer to the influx of federal relief money and high wages, but I’m not seeing many debtors doing financially better now than they were in years past. 2021 appears to be as big a financial struggle as any of those years before it.

My guess is that the federal and local moratoriums on foreclosures and evictions are a big factor, since so many potential debtors aren’t being forced into a filing to save a imminent threat to their home. For many residential and commercial lenders, even though the moratorium may not apply to their loan, the creditor is nevertheless taking no action, for a number of reasons.

From all over the creditor realm, I have heard for months to mark my calendar for “January 1, 2022,” which was when many of the “big” lenders were planning to turn the foreclosure machine back on. Of course, that was before this latest COVID variant completely reshaped the status quo.

I’d guess that the January 1 date is being moved farther out, especially since we’re back in the throes of an ever-evolving pandemic. While it’s impossible to predict what COVID has in store for us, it’s easy to see that all of the same factors and circumstances are present to keep mortgage lenders at bay.

As awful as it sounds, then, we won’t see more bankruptcy filings until–strangely–the economy gets back to normal and people return to regular life (which, if you ignore my prediction that filings would spike in June 2020, is basically what I said in this old post).

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.”

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)?

Where are all the bankruptcy filings in Nashville?

Many years ago, I got a call from a bank attorney who was in the middle of a 4 day trial in Williamson County. It was a lawsuit by a bank to collect its post-foreclosure deficiency balance. The lawyer called me to tell me that the debtor’s attorney had printed out my very own blog post and had introduced it into evidence as a learned treatise under Tennessee Rule of Evidence 618 in order to cross-exam the bank’s expert witness.

While I was flattered (my initial reaction was to ask if the Chancellor was impressed), it was also strange–given my long allegiance to banks and creditors in litigation–that Creditor Rights 101 would be used against a bank. (Also, that debtor’s counsel must have been desperate if he resorted to using my blog post as his Exhibit 15).

Regardless, man-o-man, beware of using this law blog as learned evidence of anything, because I can be really wrong sometimes.

Like, on April 3, 2020, when I boldly predicted that bankruptcy filings in the Middle District of Tennessee would hit an all-time high in June 2020.

It didn’t happen. Not even close. Literally, the opposite happened.

As of today, October 29, 2020, there have been 4,820 bankruptcy cases filed in the Middle District of Tennessee. That sounds like a lot, but, for comparison’s sake, consider that the 4,820th case was filed on the following dates over the past decade: July 30, 2019; July 20, 2018; July 18, 2017; July 6, 2016; July 15, 2015; June 17, 2014; May 31, 2013; May 23, 2012; May 11, 2011; and May 4, 2010.

Not only are we not hitting a record high, but, instead, new bankruptcies are being filed at a record low pace.

As late as July, we were still wrong about the future of bankruptcy (I say “we” because the Nashville Post joined me on the bad predictions).

So, today’s news brings more predictions (but, this time, far less bold) via this American Bankruptcy Institute story, which predicts that the new bankruptcies are coming…in 2021.

“As stimulus checks and other forms of temporary relief run out, experts are projecting an increase in personal bankruptcy filings, which have so far been muted during the coronavirus pandemic,” the Wall Street Journal reports. “Only a new stimulus program targeting individuals or government actions forgiving or deferring student loans can keep individual filings from rising.”

In light of all this, I’m not making more predictions, because these are unpredictable times. Our General Sessions Court shuts down evictions and collections dockets, then re-opens them, then drastically limits them, and then reopened them again. People are afraid to leave their houses. Banks are afraid to foreclose on those houses. Lawyers are afraid to go to their offices.

The bankruptcies are coming. But who knows when.

Finally, to all you crafty debtor lawyers out there: I can edit any these blog posts on a moment’s notice.

Should the Bankruptcy Code be changed to provide rent relief? Maybe, says the New York Times.

I represent a lot of landlords all over Tennessee. I also represent a lot of Tennessee small businesses who are, invariably, tenants.

Since COVID-19 hit, I’ve probably read 60 different leases. Sometimes, I’m looking at force majeure provisions or for ambiguities that would provide an argument against payment of rent. Other times, I am reading those same provisions (different leases) hoping for the opposite outcome.

Over the last 4 months, when scheduling my client calls, I’ve joked that “I do all my calls with my tenants in the morning, and I do all the landlord calls in the afternoon. I need to remember which argument to make.”

Even by lawyer standards, it’s rare to see such a equal distribution of misery on both sides of an issue.

So, today, when I read this New York Times Op-Ed, “The One Change That Could Save Your Neighborhood Stores,” I appreciated the generally even-handed approach to this nuanced topic.

The issue facing tenants?

[T]here’s no blueprint for how small-business owners should deal with their landlords during an economy-toppling pandemic.

Here’s one option: ignore your landlord and plan on resuming rent payments when sales hopefully improve, and try to not get evicted in the meantime. Another option? Stay current on rent and pray that the economy recovers before you run out of cash.

Neither one of these options are really good, but the tenant doesn’t have any better options. Making matters worse, the Bankruptcy Code isn’t much help, unless the lease assumption statute gets changed, to provide relief to tenants:

One possible solution is that Congress temporarily change bankruptcy law so that small businesses can be allowed to pay their landlords more reasonable amounts until the pandemic is behind us.

Some quick background: Under the Bankruptcy Code, a Chapter 11 debtor can generally stop paying its creditors during the time the case is pending and, even after a plan of reorganization is confirmed, that plan may provide drastically modified (reduced) payments to its creditors.

That’s not the case with landlords, though: Under 11 U.S.C. Section 363 of the Bankruptcy Code, landlords are entitled to demand their full monthly rent due the entire time, and, in order for a lease to be included in a bankruptcy plan, the landlord must be paid current. Long story short, a tenant’s bankruptcy filing is a temporary speed bump for landlords, but the path to payment in full for a landlord is pretty direct.

As a result, many landlords have been aggressive during the pandemic, emboldened by state and federal law. The article mentions that many landlords are starting to see the writing on the wall (and that, maybe, there aren’t any replacement tenants) and are considering “pay what you can” agreements.

States have offered limited help to tenants, in the form of moratoriums on evictions (though such efforts are not reducing or stopping the financial payment obligations for the accruing rent). Plus, deep-pocketed large retailers are cooking up some innovative legal arguments (the article cites Valentino and Victoria’s Secret, but it could have also cited the Nashville lawsuit filed by The Palm Restuarant against the Nashville Hilton).

To the landlord’s defense, the article notes that landlords, themselves, may be small entrepreneurs with mortgages of their own and who depend on the rental income stream. The article advocates for tax cuts for commercial lessors.

Again, the article presents a fairly even-handed consideration of a “no win” situation. If the landlords win, then thousands of small businesses go under in the next 6 months.

As for the landlords, it’s just one of many problems facing them during the pandemic. This Reuters article’s title says it all: Who still needs the office? U.S. companies start cutting space.

341: Bar Exams, Change of Plans, Buy a Bankruptcy Code

The Bar Exam has been canceled (sort of). July is usually bar exam time in Tennessee (as well as all over the country). Like nearly everything else about our lives, the bar exam is going to be drastically different in Tennessee in 2020.

As a result of this Order, Tennessee bar applicants now–for the first time ever–have the option of taking a private, online exam. As you can see from the responses to the Tennessee Supreme Court Justice’s tweet (really, people?), no decision is going to please everybody.

It’s either too much of a departure from tradition (for the older crowd) or too little of a change to the status quo (for the progressives).

Twitter can be pretty awful.

Speaking of how it’s impossible to make everybody happy. As law firms are trying new models as they pivot into the new world, this tweet spoke to me on a DNA level:

This is absolutely true. A law firm is generally full of highly critical (in a good way), smart, risk-adverse know-it-alls (in a bad way). I’ve seen hotly contested arguments about what soda to stock in the law firm kitchen. Good luck with your nimble pivots, managing partners.

Diversity Matters. The past few months have provided eye-opening lessons about privilege and opportunity for so many of us. Especially those in leadership positions at law firms.

In early June, I started to receive all the Black Lives Matters marketing e-blasts, so I know that many law firms recognize the PR benefit of supporting this movement.

But, I also know these law firms and judge them on their actions (as well as their words).

Law firms, what are you doing about diversity? And not just the 2020 associate class. I’m talking about the future years’ classes too. What support are you providing to nurture and provide opportunities to current law students? What about college students from non-privileged backgrounds who want to be lawyers? What about your staff (both present and future)? What educational or institutional policies are you introducing to your practices in response? What are you doing to support the movement in your community?

Separately, am I–personally–doing everything that I can? Are you?

Bankruptcy, Bankruptcy, Bankruptcy. I posted last week about the starring role that bankruptcy lawyers will play in the coming months. Others agree:

Bankruptcies are heating up in the Middle District of Tennessee. Every day, I’m getting calls for representation on a new creditor bankruptcy case filed in Nashville.

Buy a Bankruptcy Code book, young lawyers.

Nashville Post: The Bankruptcies are Coming, but Where are the Bankruptcy Attorneys?

If a creditor rights attorney appears in a movie or TV show, he is generally the bad guy who galvanizes the stars of the movie to assemble a dance competition to save the community center from foreclosure.

In fact, for a long time, my LinkedIn bio described my creditor’s rights bankruptcy practice as:

This is an area of law they don’t make movies about. In fact, the only movie about creditor bankruptcy attorneys that I know of is Heart and Souls, a 1993 movie starring Robert Downey, Jr. In that movie, his childhood guardian angels come back to Earth to re-visit him as an adult and are horrified by what he does for a living. Well, that’s my job.

As a result, insolvency attorneys tend to be slightly self-conscious about our role in the legal ecosystem. When our law firms’ clients host open houses at their glitzy new facilities or shiny, over-budget restaurants, it’s the bankruptcy attorneys standing by the bar who eyeball it all and wonder how much all it cost and whether they can pay for it.

(Note: I’m actually kidding about this…the bankruptcy attorneys actually never get invited to grand openings or fun events. Kidding.)

So, in light of all that, you can imagine how proud I was that the Nashville Post ran a magazine article this week showcasing the starring role to be played by bankruptcy attorneys in the coming months and years.

Step aside, corporate mergers and acquisitions counsel, this is a job for a Bankruptcy Lawyer.

It’s a well-done article, with spot-on analysis of the issues facing our local economy. This quote from local debtor counsel Nancy King really nails the current mindset:

Most companies right now are either in the stunned phase, or they’re in the ‘I want to work it out with my bank’ phase, or possibly the ‘I’ve gotten a PPP loan, I think I might make it’ phase. … When all that comes to an end, I think Chapter 11 is going to end up being an option for a lot of those companies.

One of the most interesting aspects of the article is the narrative that there aren’t enough bankruptcy lawyers in Nashville.

It’s absolutely true.

Nashville is widely known as having a sophisticated bankruptcy bar, due to the wide range of complex cases that get filed in our district (both consumer and commercial), our really smart judges, and a deep roster of sophisticated bankruptcy lawyers.

Nevertheless, when the Middle Tennessee economy rebounded so quickly from the Great Recession, local law firms simply didn’t restaff their bankruptcy practice groups. Instead, from 2013 to 2019, the smart young lawyers went into real estate, development, and corporate work.

As a result, most Nashville law firms have bankruptcy practices that are, basically, composed of the same bankruptcy lawyers who steered the ship in the last recession. Sort of like the 2012-13 Boston Celtics–a good team, but lots of veterans and hardly any young prospects.

We’ve known this is coming for a long time. In fact, at the 2019 Bankruptcy Lawyer Holiday Party (yes, it’s a real thing), the three most popular party guests were the three new faces (all under the age of 30). They were subjected to an endless barrage of business cards, lunch invites, and recruiting pitches that night.

In fact, one of those young lawyers has already been poached away by an out-of-state law firm that has one of the largest bankruptcy practice groups in the country.

So, my advice to young law school graduates (or students)?

Learn Bankruptcy. Read the Bankruptcy Code. It’s literally an inch thick. There’s always another recession around the corner.

You’ll have a great (and long) career.

Also, while you’re quarantined at home, watch Heart and Souls. It really is a fun, under-appreciated movie.

COVID forces old-school lawyers to embrace new technology

Tennessee Courts get yanked into the 21st Century. This week, I’ve had two telephonic court hearings.  They’ve both been a little strange.

On one, I called the Clerk’s office, who then gave me the Judge’s cell phone number. When I called the Judge on her cell phone, she was pretty clearly on a walk outside.

On the other, the court set up a call-in line for the docket call, with about 25 attorneys waiting for their specific matter to be called. When my matter was called, about 6 attorneys all spoke at once.

When my matter was over, I stayed on the line and listened to the next argument (on mute) to see how it flows and to plan for when I have to conduct my own complicated hearing. I learned that there is definitely an art to effective presentation via a phone call.  Also, it was weird, just silently lurking. A Bloomberg news reporter listened in on a similar court hearing, and she described it as “uncomfortable and oddly voyeuristic.”

I think all this can be figured out, but there’s definitely going to be learning curve.  The Tennessee Supreme Court conducted oral arguments via video this past week, and those went well.

Although, if I were one of the lawyers arguing, I would have 100% had to stand up for my presentation.

tn sup cort

Personally, I’m not looking forward to more telephone or video hearings. I go to court a lot, and there’s so much you pick up by physically present in the courtroom, whether it’s a good read on the judge’s demeanor that day, on opposing counsel, or just the ability to be physically present when you’re making a huge argument for a client.

There is simply so much that goes into oral argument, and there’s so little of that in a phone call.

Zoom. Maybe we don’t need to see each other.  Speaking of how technology maybe doesn’t always make things better, when all this first hit, everybody wanted to do a Zoom call. But, then, after a week of seeing the decorations in everybody’s guest bedroom, we sort of figured out that all this could have been done via conference call.

Personally, I can’t decide where I look: at who is speaking; at myself (which I’m usually doing); or directly at the camera. Bonus points to the participants who just leave their camera off the whole time.

Either way, I guess I fall in the middle on this app. In some situations, it makes sense to be able to see the person and get a read of their social cues or to establish a rapport. For example, I represent a large class of clients on a matter, and I like to communicate with them via video so they can see me and my team.

Slack.  I acknowledge that I sound like a curmudgeon.  So, to counteract that, I’ll provide a whole-hearted endorsement of Slack, the real time messaging platform.  It seems like a really effective and well-done way to manage work teams.

Side-note: If you’re navigating all of this, I can’t recommend the Lawyerist website enough, as well as the Lawyerist podcast.  It’s run by a group of very smart lawyers, and they constantly talk about remote work, law firm management, and law tech and innovations.

I really enjoy all that they do on that site to educate lawyers.

New Developments versus Custom and Habit. It’s hard to tell how much of this is temporary or here to stay. Some part of that answer will depend on the Court leadership forcing all counties to fully embrace the new rules, policies, and technology.

Yesterday, we were figuring out how to get a garnishment form notarized with all of us spread out over town.  One of the lawyers on the e-mail chain correctly pointed out that Tenn. R. Civ. P. 72 and the brand new Supreme Court Orders allow for /e/-signatures and declarations in place of a notarized signature.

This was a garnishment, though, in a very small county, one that probably hasn’t read the Order from last week, and where the front desk clerk would take one look at the form, see the lack of a notarized signature, and potentially reject the filing.

This is what makes collections so different than other aspects of the law. Once you get the judgment, instead of dealing mainly with a judge, you’re mostly dealing with court clerk staff. You can be technically and legally correct, but, if you don’t follow their habit and custom?

Long story short, we got it notarized. Our goal wasn’t to be right. It was to get our garnishment issued.

My hope for all of this is that the Administrative Office of the Courts establishes a commission to look at all these issues and to anticipate as many of these issues that could arise in the future. And I hope that they don’t just pick the usual same people from the usual same big law firms to participate. Those lawyers don’t talk to clerks. They don’t file e-file documents. They don’t go to court on all kinds of matters.

The decisions that are being made today may set the policies and procedures across the state for years, and it’ll be interesting to see what changes implemented during this pandemic become the new custom and practice.