Is Rocket Lawyer the World’s Largest Law Firm?
Less than ten days ago, Google unveiled that it invested $18.5 million into Rocket Lawyer, the self-proclaimed “fastest growing online legal service.” Unlike other internet-based legal repositories such as LegalZoom or Standard Legal, which offer standard legal documents, Google is taking it a step farther. Rocket Lawyer will give paying consumers access to legal documents (using the Google Docs platform), as well as interactions with real lawyers who provide legal advice at no additional cost for certain matters (e.g., document reviews up to six pages, representation in court, etc.). With this huge association of lawyers, this begs the question: isn’t Rocket Lawyer just a really cheap law firm?
I think the answer is yes . . . and I think Google is okay with that. There’s a need for consumers to have access to cost-effective legal services when there’s no complexity and when it’s okay that the “real” lawyer has little “real” incentive to provide above-and-beyond customer service. Rocket Lawyer can be a great tool in this respect. The problem lies in the fact its marketing ignores the reality that legal documents often need to be tailored based on specific needs of the business or individual. It’s painful to think about someone downloading a form and getting advice from a free lawyer to work through a sophisticated transaction. Especially if the person’s business or livelihood is riding on it. Even seemingly straightforward deals can have many considerations and consequences that a form or initial consultation can’t address. Although the Rocket Lawyer mega firm can be very useful for some transactions, I hope the market realizes that it’s not a viable one-stop shop for all legal needs.
Practitioner’s Note - Speaking of Google, it offers a pretty decent and free legal search engine that you can limit to either law articles or case opinions and legal journals. See Google Scholar: http://scholar.google.com/.
By Tennessee Lawmaker Sponsors Bankruptcy Reform Act
It’s common knowledge that New York and Delaware are the preferred choices when big businesses file for bankruptcy - they’ve handled the complex cases and they’re considered “debtor friendly.” I get it, but it still doesn’t seem right that a company gets to file bankruptcy in a district where it has virtually no contacts. The U.S. Code (28 U.S.C. § 1408) allows a debtor to file in the district “in which the domicile, residence, principal place of business, or principal assets” of the person or entity have been located for the 180 days before the petition date, or in a district where an “affiliate” has filed. Since 1979, this has made it pretty easy to get into New York or Delaware because so many businesses are incorporated there.
But, if House Representatives Steve Cohen (Tennessee) and Lamar Smith (Texas) have their way, the Chapter 11 Bankruptcy Venue Reform Act of 2011 (H.R. 2533) will limit filings to (1) the principal place of business or principal assets have been located for the year prior to the petition date, or (2) a district where an affiliate files if the affiliate “directly or indirectly owns, controls, or holds with power to vote more than 50 percent of the outstanding voting securities of such corporation.” The bill is aimed at preventing debtors from using a friendly forum where they have no real presence to make creditors’ lives more difficult. This makes sense - the most affected districts should hear the case. This also seems fair to creditors because presumably it would cut down on the significant transaction costs that would be incurred to fight in $600/hour legal markets like Delaware and New York. Assuming districts will be equipped with the personnel and resources to handle a large-scale reorganization, this legislation should be well-received.
No doubt H.R. 2533 will face opposition from big business. Here’s a link to an opposing perspective: http://www.mofo.com/files/Uploads/Images/110722-Forum-Shopping-Chapter-11.pdf.
Lender Beware: Your Foreclosure Might Be a Preference
Lenders often see foreclosing before a borrower files for bankruptcy as a good thing. They avoid the inconvenience and expense (and perhaps uncertainty) of obtaining stay relief to foreclose on the property, maintain the dream of realizing some upside when the property is sold, and still hope to receive some amounts on their deficiency claim. But, on July 27, 2011, Whittle Development Inc. v. BB&T Co., Adversary No. 11-03150 (N.D. Texas) determined that a Chapter 11 debtor stated a claim sufficient to avoid a pre-petition foreclosure on the grounds that the foreclosure constituted a preference.
NFL’s Greatest Punter Forced to Auction Super Bowl Rings in Chapter 13
Ray Guy was a punter’s punter. He held records in almost every statistical category during his 14 seasons with the Oakland and Los Angeles Raiders in the 1970s and 80s. He was the reason the Louisiana Superdome raised its video screen from 90 feet to 200 feet. Officials confiscated one of his footballs during a game to determine if it contained helium. For his greatness, he played in seven Pro Bowls and won three Super Bowl rings.
Unfortunately for Mr. Guy, the former ability to kick and a $17,858 yearly NFL pension does not equal the present ability to satisfy tax debts and bank loans. As a result, Mr. Guy had to file for Chapter 13 bankruptcy protection. Based on his statements and schedules (available here), the Guys lived modestly and did not have significant assets . . . except for the aforementioned three Super Bowl rings. To get his plan confirmed, Mr. Guy had to auction his beloved possessions to get a fresh start. After auction fees, the estate netted about $80,100. After the sale, Mr. Guy’s comments were those of many bankruptcy filers: “I don’t want to talk about it. I’m not trying to be hateful, but sometimes you’ve got to do what you’ve got to do.”
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