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BAPCPA's Success in Driving Lawyers from Bankruptcy Practice

posted by John Pottow

Susan Thurston, Clerk of the Bankruptcy Court of the District of Rhode Island, had an insightful piece in last month's ABI Journal, "Behind the Numbers: The New Workload of the U.S. Bankruptcy Courts."  It is not a random national sample or anything so methodologically sophistated, but it is one clerk's reflections on the patterns in her courthouse.  She finds, which should surprise no-one, that while case numbers have gone down, the clerk's work per caseload (and, indeed, the number of motions per case) has gone up.  Here's what's even more interesting (and distressing): "So too, we have experienced an increase in the percentage of pro se filed cases from pre-BAPCPA days. . . .  [A] substantial time investment is required by clerk's office staff both at the intake counter as well as on the telephone to impart filing and procedural instructions to individuals who are overwhelmed by the complexity of the process . . . ."

So we find that as BAPCPA succeeds in driving lawyers out of practice, more people have to file pro se.  I'll leave aside the cynical suspicion that by driving debtors' lawyers out of practice, creditors were hoping to improve their distress negotations lot.  I'll also leave aside the serious issues of proceeding unrepresented in bankruptcy -- an already unenviable time.  What I want to underscore is that there's no such thing as a free lunch.  The BAPCPA proponents who celebrate scaring off part of the debtor's bar have just shifted costs onto overworked goverment clerks who continue to provide yeomen's service.  Yet another reason why my taxes are too high....

Comments

There is indeed a modest increase in workload for the clerk of court, at least on a per case filing basis. But have no fear that it will result in increased taxes any time soon. Already, the AO is considering dramatically decreasing the budget allocation for bankruptcy clerk operations nationwide because of the reduced overall filing numbers.

So Congress actually gets to claim credit for cutting government spending in some small but meaningful way by passing a law structured to make bankruptcy less likely to be employed by people in financial trouble. Driving lawyers out of the practice, by a combination of increased costs, increased risk of professional liability, denigrating regulations ("debt relief agency" for example), and other traps for the unwary achieves the end of dropping the absolute numbers of persons who file in the simplest possible way -- it increases the absolute cost of using a lawyer (especially in chapter 7 cases), and decreases the number of law firms available to handle bankruptcy cases in an effective manner. Most people do not lightly embark on proceeding pro se -- it's just too darned scary. Many that do find themselves quickly tripped up and out of the system.

Cynically, Congress decided to declare war on the bankruptcy bar (without any empirical data to justify their doing so, other than the absolute number of filings -- and relying on filing rates alone for reaching their conclusion violates the logical fallacy "post hoc ergo propter hoc"). Their decision is "paying off," albeit at the expense of people losing their homes across the country. Have no fear -- Congress won't be paying the piper in the form of increased costs of bankruptcy administration at the clerk level any time soon, I suspect.

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