Stop the California's Bar's Support of SB 94 & AB 764

FOR THE IMMEDIATE CONSIDERATION OF ATTORNEYS IN CALIFORNIA

Please Sign This Petition to Compel an Emergency Meeting of the California Bar Association
In Order to Reconsider Its Position on Senate Bill 94 and Assembly Bill 764

The California Bar Association is supporting legislation that will make it illegal for licensed attorneys in California to require clients seeking legal representation related to obtaining loan modifications from their lenders or servicers to pay an upfront retainer. Attorneys who represent these clients who are seeking to avoid foreclosure would be prohibited from billing clients until after a successful resolution.

Obtaining a loan modification for a client requires an indeterminable amount of an attorney’s time. While some clients may receive a modification agreement in a couple of months, others take six or even nine months before obtaining agreement from their lenders or servicers, while others require bankruptcy filings, short sale agreements, or other arrangements that avoid foreclosure. The evidence of lender and servicer misconduct and noncompliance with the administration’s program is now abundant, and it is clear that homeowners require legal representation if they are to protect their rights and achieve a desired outcome.

Homeowners at risk of foreclosure have a right to legal representation. By preventing attorneys from accepting a retainer in advance of a successful resolution, the State of California will effectively prevent homeowners from hiring a lawyer, as few attorneys will offer to represent such clients under such a restriction. The result will be more foreclosures, causing further harm to the housing market in California.

Lenders and servicers have lobbied to suppress the involvement of attorneys assisting homeowners with negotiations that might keep them in their homes since the housing crisis began. The same interests have lobbied successfully to prevent judges from being able to modify first mortgages in bankruptcy. It is crucial that California’s attorneys stand for the rights of homeowners to retain legal counsel, and yet the California Bar is supporting the legislation that would effectively stop attorneys from representing these clients.

The Bar’s position is that many California attorneys have acted improperly in their representation of clients related to loan modifications, but the fact is that enforcement of existing statutes would address this issue, and thus far, the number of offending attorneys is quite small as compared with the number of homeowners who have obtained representation and successful outcomes. And with the number of foreclosures certain to rise over at least the next two years, the need for legal representation is certain to increase.

The precedent being set by this legislation is a dangerous one. For one thing, it sends the very clear message that attorneys… all attorneys… cannot be trusted. That attorneys, if not restricted by statute, are the kind of people that would defraud a homeowner in distress. To malign the entire legal profession in this way because of the actions of a small number of unethical attorneys is both wrong and dangerous. People need to trust attorneys and this will establish that even the State Bar doesn’t trust lawyers as a whole.

Further, if the legislature is allowed to affect attorney compensation practices in this instance, what will they attempt to limit next? Homeowners have the right to representation before losing their homes to foreclosure. Attorneys have the right to charge for services in such a way that they are assured payment. The California Bar needs to examine this issue in greater depth and hear from attorneys involved in this area of the law before committing to a path that harms consumers, the legal profession, and our economy.

The Bar formulated its position at the beginning of July, and has been unwilling to change its position to-date. However, new evidence of servicer misconduct and insight into the cause of the complaints being submitted to the Bar should have an impact on that position.

We need 500 attorney signatures on this petition to compel an Emergency Meeting of the California Bar Association in order to present all of the facts. Please join us today and sign this petition… there is no time to spare. The legislature is close to bringing the SB 94 and AB 764 legislation to a vote and with the Bar’s support, it is likely to pass.

Enforce the existing law. Punish those in violation of that law. But don’t impose irrational limits on legitimate attorneys that will prevent homeowners from obtaining legal representation, leaving them on their own when negotiating with their financial institutions.

Please sign this petition asking the California Bar Association to hold an emergency meeting to more fully consider their support for SB 94 and AB 764, the bills that will prohibit attorneys from accepting retainers when representing clients seeking loan modifications.