Hiring a lawyer for your business: NY Times December 30, 2010 “In the New Economy, Use New Strategies To Hire Law Firms”

A recession has changed the business side of law.

"…you are really hiring an individual lawyer. ‘Make sure that the chemistry works…ask about the attorney’s experience and the law firm’s prior cases in that area of law. Ask for an estimate of what the costs are likely to be.’" reports James Flanigan, of the NY Times, pursuant to an interview with Brian Davidoff, managing director of Los Angeles law firm Rutter Hobbs and Davidoff.

There is recognized to be a traditional distrust of lawyers by many entrepreneurs, says Sanford I. Millar, a Los Angeles tax attorney: "They see the lawyer as saying ‘no’ to daring business moves. THe truth is, lawyers are there to advise on what has been posible and not been possible in law. No business owner wants to be ignorant on that score."

Last fall, according to the NY Times article, page B6, December 30, 2010, "In the New Economy, Use New Strategies to Hire Law Firms", Concord Law School (Kaplan affiliated) is reported as recognizing that lawyering in small business practice needs some fine tuning, and thus began to offer a two year degree course in busines practice, focusing initially on comercial real estate and employee benefits.

The course "will teach about succesion issues anda bout taxation and protecting intellectual property" with the goal of helping lawyers offer small businesses the services they really need at a price they can afford, according to M. Ellen Murphy, director of the program.

What are “bounce” loans?

Bounce loans are something to avoid. Be particularly aware if your bank uses a "high to low" system detailed below.

Overdraft or "bounce" loans are a form of overdraft coverage whereby banks or credit unions charge penalty overdraft fees when consumers overdraw their accounts by check, at automated teller machines or using a debit card.

Unlike traditional overdraft protection, these services do not require consumer consent and do not provide cost of credit disclosures under the federal lending laws, and do not guarantee that the bank pays the oerdrafts.

The bank pays the amount of the overdraft and charges the customer a fee that ranges from $20 to $35. Some banks also charge a daily fee until the "loan" is paid in full.

These high fees are triggered regardless of whether the overdraft his $5.00 or $500.00, and the bank will generally not notify the customer of the overdraft nor give the option to cancel the transaction.

Borrowers pay triple and even quadruple digit interest rates as a "real" effect of these "bounce" loans.

From the National Consumer Law Center’s publication "Foreclosure Prevention Counseling", pages 68-70, here is an example:

For example, if teh overdraft loan fee was calcualted as an Annual Percentage Rate, a $22.50 fee for an $80 overdraft loan translates into a 1,467% APR for a loan paid back in a week and a 733% APR if the loan is repaid in two weeks.

Even worse, some banks ratchet up the fee income intentionally by using a "high to low" method of honoring checks and debits to the account, as opposed to paying them (and applying deposits) in a chronological order. In other words, according to the NCLC, the bank will pay the largest obligation first each day and sometimes apply deposits AFTER debits. This abusive practice can trigger a cascade of overdrafts if the account does not have sufficient funds to cover all of the small checks.