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For bankruptcy lawyers, recession good for business

Filings up 31 percent over a year ago

With the economy¹s steep slide over the past 18 months, bankruptcy law attorneys are in high demand.

Milwaukee-based attorney Richard Check specializes in bankruptcy and debt relief issues for individuals and small businesses. An Indiana native who was admitted to the Indiana and Wisconsin bars in 1988, Check opened his practice in Milwaukee in 1998 on the corner of Water and Michigan streets.

Now with seven locations, Check moved to his main office, 757 N. Broadway, in 2006. He has opened three new offices — in Sheboygan, Oshkosh and West Bend — in less than two years. After starting the firm on his own, Check now has four other attorneys working with him, a full-time support staff of five and two part-time employees.

Check said he has grown his business primarily through referrals from other attorneys and word-of-mouth recommendations from previous clients.

”That¹s worked out really well,” he said.

Also driving Check¹s business growth has been the dramatic increase in bankruptcy filings in the state. Statistics from the American Bankruptcy Institute show that Wisconsin bankruptcy filings increased 31 percent in the first two quarters of 2009 compared with the first two quarters of 2008. In comparison with the first two quarters of 2006, in which there were 5,156 bankruptcy filings in the state, the first half of this year has seen a 171 percent increase.

Check said the bankruptcy filings he has handled from roughly the same point last year are up 44 percent. He projects gross revenue for 2009 to grow from last year and be in excess of $1.5 million.

Many of the individuals who are filing bankruptcy with him have lost their jobs, seen a significant decrease in their employment hours or are overwhelmed by medical bills, Check said. A lot of the small businesses that have closed their doors, meanwhile, have been directly or indirectly connected to the housing industry, he said.

Check said there are some attorneys with limited or no experience in bankruptcy filings who are taking on cases simply because their area of law is not doing well during the economic downturn.

He cited a July article in Wisconsin Lawyer published by the State Bar of Wisconsin that considers whether taking on a bankruptcy case is worth the financial risk. The article¹s author works for an attorney malpractice insurance company.

Check said he had seen several instances of issues that matched ones discussed in the article, including a debtor¹s assets being potentially taken away because the attorney didn¹t exempt the assets through pre-bankruptcy planning, debtors being in the wrong bankruptcy chapter and bankruptcy protection not occurring because correct paperwork was not filed.

"They are not properly trained and therefore are making mistakes," he said.

Claire Ann Resop, a Madison-based attorney with the firm von Briesen & Roper SC and Chapter 7 trustee for the Western District of Wisconsin, also has seen mistakes by inexperienced lawyers in bankruptcy filings.

"I would argue that experienced bankruptcy attorneys have also made (similar) mistakes," she said.

Resop said the types of problems cited in the magazine article also happen in other law specialties.

She agreed that business is currently going well for many in the specialty, but attributed the influx of newer bankruptcy lawyers to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which was designed to decrease the number of bankruptcies by individuals and businesses. Many lawyers quit taking bankruptcy filings rather than adapting to the changes brought on by new regulations, she said.

Check said it took nearly an entire year for his practice to recover after the bankruptcy act passed Congress. He dismissed the act as poorly written and already forgotten by the "next generation of filers."

Check said it might take another two years before the economy completely recovers in terms of employment levels, but he believes his firm will continue to prosper.

"Bankruptcy was here before the economy crashed and it will be here after," he said.

Source: Milwaukee Business Journal, October 4, 2009