"There are too many attorneys and not enough lawyers."
Willard Kitts (1919-1982)
Bill Kitts practiced trial law for about 30 years in New Mexico.
He was a chubby, jovial man who was a consummate trial lawyer. He
was also well read and cultured. His annual party to mark the Defenestration of
Prague was an event for those few invited.
He was never part of a big firm, usually practicing solo in
plaintiff's personal injury work. Bill was also proud of being a lawyer.
Judges always knew when Kitts cited a case or a fact that it did not have
to be checked. He also frequently would sit with young lawyers from small
firms alone in their first deposition or first day of trial because Kitts
wanted to encourage lawyer’s skill and ethics.
Despite some big trial wins I doubt he died with a big estate.
When he died the local bar started a Willard Kitts mentoring program,
which has morphed into other programs.
Kitts would have been upset by Judge Allen Malott’s column in the
October 17 Albuquerque Journal was titled, “Lawyers inflating fees, adding to
foreclosure woes”. Judge Malott, a
respected Albuquerque district judge, reviewed the Colorado Attorney General’s
recent actions against two Colorado law firms for violations of consumer
protection laws and antitrust laws. Judge Malott stated that one of the firms
had offices in Albuquerque until it was shut down. Judge Malott also stated that some local New
Mexico attorneys were guilty of inflating their fees and costs. This lead, it was claimed, to deficiency
judgments inflated by attorney related fees and costs. In turn, lenders hounded debtors in foreclosure
cases to recover deficiency judgments, making the foreclosure crises worse. Judge Malott closes also makes the point that
Colorado and New Mexico are in the minority of states that allow deficiency
judgments.
Judge Malott overlooked one
clear difference between Colorado and New Mexico foreclosure laws that
contributes to the need for substantial lawyer involvement in the foreclosure
process: Colorado has an efficient deed
of trust system in which most residential foreclosures are handled without the
need of lawyers, except to file routine notices. The trustee under a Colorado deed of trust is
a governmental public trustee who serves in all non-judicial foreclosures. In the cases brought by the Colorado Attorney
General the law firms were not charging legal fees for the court related work.
Instead, they had captive title companies, agreements with competitors about
notice costs, and other hidden costs.
I have no facts upon which to question Judge Malott’s observation
that unreasonable attorney fees have been sought in New Mexico
foreclosures. Regrettably, Judge
Malott’s opinion is probably correct since when areas of the law—like
foreclosure—become “hot” the hot areas attract attorneys (not lawyers).
However, Judge Malott’s article neglects some important background
that New Mexico bankers might use to their advantage in favorable legislative
setting.
First, many of the abuses of the foreclosure crisis came from the
mortgages securitized and forced into collection in unprecedented volumes. Often the “client” in those cases was little
more than a clerk and no control of attorney conduct and fees came from the
client. In my experience, the local New
Mexico banks pay close attention to the costs of legal representation in
foreclosure cases. Deficiency judgments are
seldom collected in any substantial amount.
Second, currently New Mexico residential lenders cannot use deeds
of trust for non-judicial foreclosure. Texas, Arizona, Utah and Oklahoma permit
residential deed of trust foreclosure. The
New Mexico Home Protection Act blocks deed of trust relief in residential
lending. Forcing every lender to judicial foreclosure with its inherent court delays,
e-filing requirements and pre-judgment mediation (in some districts)
necessarily adds to the attorney fees and other costs. New Mexico should get on board with
neighboring states and permit full relief by deed of trust.
Third, although some states--although not a majority-- do not
permit deficiency judgments in residential judicial foreclosure cases. The ban on deficiency judgments is usually limited to non-judicial foreclosures. In many states a lender has the choice to
seek a deficiency judgment after a judicial foreclosure or proceed under a deed
of trust and forego a deficiency judgment.
In
an enlightened New Mexico the answer to the foreclosure attorney fee and
deficiency crisis (if one exists) is to legalize deed of trust relief in
residential foreclosures and bar deficiency judgments in such cases. If a lender wants a deficiency judgment the
lender should go the judicial route.
Do
Good,
Marshall
G. Martin
Lawyer
505-228-8506
