Sunday, June 30, 2013

Beware of Bait and Switch Pricing by Foreclosure Defense Lawyers!

In February 2010, I wrote a blog post that explained the four primary pricing methods ( hourly, flat fee, monthly and hybrid) used by foreclosure defense firms.  To read the whole blog post on this subject click here.  I have recently noticed a trend where lawyers and law firms are using marketing strategies that in my opinion are bait and switch tactics. 

If a consumer sees a sign that says SALE – Unleaded Gas - $2.00 per gallon, most consumers know that the price is to good to be true and will be looking for the catch.  Perhaps the price is only good for the first gallon of gas or is only good with purchase of an alignment job at an inflated price.  Gas stations in 2013 can’t sell gas for $2.00 a gallon because it costs the gas station more than $2.00 to buy the gas. 

Unfortunately, many consumers will not know that a the promise of a $1,000.00 or $1,500.00 flat fee foreclosure defense is just about always an offer that is to good to be true.  We are seeing consumers come to our office after either firing their old lawyer or after their old lawyer withdrew from their case.  In many cases the consumer saw advertising material and thought they would pay a one-time fee of $1,000 or $1,500.00 and would never need to spend another dime for the duration of their case.  Once the consumer actually visited the law firm they found out that the $1,000.00 was just an “initial” payment for the first thee or six months of their case.  After the initial period was over the consumer had to “re-hire” the lawyer for another six month or one year term ( it varies by firm) for an even higher fee.  

We think lawyers who advertise a flat fee price should offer true flat fee prices.  Nobody who comes to a lawyer’s office and spends an hour in a consultation thinking the costs is one number should find out when they read the fine print that over a two year engagement the price will be three or four times higher than the price they saw on the web.

At Shuster & Saben, we aspire to have a simple, clear, understandable, and predictable billing method.  The client (on loans of under $500,000.00) pays $495.00 per month for the first hour we work each month and any additional hours we work are on a pure contingency fee basis, where we do not get paid at all unless we win the case and get the fees paid as prevailing party attorney’s fees paid by the losing bank.  Our clients do not have to worry about paying a few thousand dollars to renew for six months or a year when their case is on the eve of settlement or trial and might soon we won or settled in a matter of weeks.  Our clients can predict and budget for their legal expenses.

For the likes of me, I can’t figure out how a lawyer can take a foreclosure case on for $1,500.00 and litigate the case for three years and take the case to trial all for $1,500.00.  Some flat fee lawyers cut corners with short form answers, and do not bother to conduct discovery, take depositions, or engage in trial preparation.  Perhaps other flat fee lawyers can make it work by buying $2.00 gas.