Dave Whitener’s “Palmetto Logs”

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SC palmetto state

Two weeks ago, this blog paid tribute to the late, great Dave Whitener, a giant among real estate legal professionals in South Carolina. As suggested in that blog about Dave’s “Top Ten You Betters”, I also wanted to share with you Dave’s “Palmetto Logs”.

Several years before his death, Dave was asked to address the American Bar Association. The issue was whether a successful defense might be mounted if a federal agency attacked the rights now existing in South Carolina for lawyers, and only lawyers, to close real estate transactions. In that talk, Dave cited ten areas of defense that he called the Palmetto Logs. For non-South Carolinians, the palmetto log has traditionally been a symbol of protection for South Carolinians in time of war. South Carolina is nicknamed “The Palmetto State”.

Here are Dave’s suggested protections against an attack from outside our state for closings performed by licensed South Carolina attorneys:

Caselaw

  1. State v. Buyers Service, 292 S.C. 426, 357 S.E.2d 15 (1987). In this case, the South Carolina Supreme Court defined the practice of law in a residential real estate closing to include: certification of the title; preparation of the deed and loan closing documents, closing the transaction and overseeing recording.
  2. Doe v. Condon, 351 S.C. 158, 568 S.E.2d 356 (2002). In this case, the South Carolina Supreme Court reiterated and confirmed that the four protected areas set out in Buyer’s Service would also apply to residential refinances.
  3. Doe v. McMaster, 355 S.C. 306, 585 S.E.2d 773 (2003). In 2003, the South Carolina Supreme Court again reiterated its holding in Buyer’s Service.

Statutes and South Carolina Constitution

  1. C. Code §40-5-310 makes it a felony for an individual to participate in the unauthorized practice of law.
  2. C. Code §40-5-320 makes it a misdemeanor for a corporation or other entity to participate in the unauthorized practice of law.
  3. C. Code §37-10-102 gives a borrower the absolute right to choose the closing attorney in a residential loan closing. The statute provides for a $7,500 penalty if the disclosure is not given.
  4. South Carolina’s Constitution gives the S.C. Supreme Court the exclusive right to define the practice of law within South Carolina

Practical Considerations

  1. The low cost attributable to attorneys’ fees for residential closings in South Carolina. Dave believed the low cost would present a major difficulty if a federal agency argues that South Carolina’s practice is anti-competitive or increased prices.
  2. Major job losses would possibly result from the outsourcing of jobs to closing centers outside of South Carolina
  3. Major risks would be raised in turning over the duties now performed by experienced lawyers to unregulated and inexperienced lay persons.

I’m not sure whether Dave would say differently if he were here to analyze this topic for us today. I fear that the retirement of Chief Justice Jean Toal may have resulted in the loss of the South Carolina lawyer’s strongest advocate in the South Carolina Supreme Court. So far, the Palmetto Logs are holding strong, but some more recent cases from our Supreme Court give me some concern on this topic.

In any event, I am continually thankful for Dave Whitener and his influence, mentorship and friendship to South Carolina dirt lawyers!

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South Carolina lawyers: “Reply All” is not always your friend!

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Don’t communicate with represented parties accidentally!

business woman shocked computer

“Ruh-roh”

There are numerous ways a lawyer can get into trouble with the Supreme Court, but inadvertently communicating with another lawyer’s client can be avoided simply by thinking before hitting “Reply All” in your email system.

Ethics Advisory Opinion 18-04 addressed this concern. The situation posed to the Ethics Advisory Committee was:

Factual Background: Lawyer A sends an email to Lawyer B and copies several people, including Lawyer A’s client. Lawyer A has not previously consented to Lawyer B contacting Lawyer A’s client and does not expressly do so in the email.

Question:  If Lawyer B receives an email from Lawyer A on which Lawyer A’s client is copied, may the lawyer “reply to all” – copying Lawyer A’s client with the response – without the express consent of Lawyer A?”

The Committee discussed Rule 4.2, SCRPC, which provides that in representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter unless the lawyer has consent of the other lawyer or is authorized to do so by law or a court order.

The purpose of the rule is to ensure proper functioning of the legal system by protecting a party who is represented by counsel from overreaching by other lawyers. The rule is also aimed at preventing interference in the lawyer-client relationship.

Two previous opinions discussed whether letters can be ethically mailed to opposing parties represented by counsel. Ethics Advisory Opinion 91-02 advised prosecutors to avoid copying criminal defendants on court appearance notifications without the consent of the defense attorney. Similarly, Ethics Advisory Opinion 93-16 advised plaintiffs’ lawyers to avoid copying defendants on settlement offers to defense counsel without the consent of defense counsel.

The Committee opined that copying an opposing party on email is prohibited in the same way sending a letter is prohibited, absent consent of opposing counsel. The question then became whether consent must be express or may be implied. The Restatement (Third) of the Law Governing Lawyers indicates the consent may be implied: “An opposing lawyer may acquiesce, for example, by being present at a meeting and observing the communication. Similarly, consent may be implied rather than express, such as where such direct contact occurs routinely as a matter of custom, unless the opposing lawyer affirmatively protests.”

The North Carolina, Alaska and New York City Bar Committees had previously opined that, while this consent may be implied, the mere fact that an attorney copies a client on an email sent to opposing counsel does not, by itself, constitute implied consent to a response sent to both opposing lawyer and the opposing client. South Carolina’s Committee agreed.

The Committee stated, however, that consent to a “reply all” may sometimes be implied. The Committee indicated that whether the matter is adversarial is an important factor. Additionally consent may be implied if the email is about scheduling under circumstances whether the client’s availability is at issue along with counsels, if email conversations among counsel and sophisticated clients together are the normal course of dealing, or if the lawyer initially cc’d the client expressly invites a “reply all” response.

The Committee cautioned that the practice of copying a client by either “cc” or “bcc” when emailing opposing counsel poses the risk of revealing confidential information. The Committee said that the recipient of an email might not recognize all the names in a group email and might communicate with opposing client’s client inadvertently by using “reply all”.  For these reasons, the Committee said that it is generally unwise to “cc” a client on an email communication to opposing counsel.

The Committee summarized its opinion: “Absent consent of Lawyer A, Lawyer B may not communicate with Lawyer A’s client about the subject of the representation either directly or by copying Lawyer A’s client in an emails sent in response to Lawyer A’s email on which the client was copied. The mere fact that a lawyer copies his own client on an email does not, without more, constitute implied consent to a “reply to all” responsive email.

My advice? Use caution when hitting “reply all” in all circumstances! “Less is more” is a generally good rule to follow in email communications. I have actually heard that one lawyer may set up another lawyer by coping a client in email communications. Don’t be a victim!

Let’s collectively start a trend in South Carolina: Shifting home closings away from the end of the month

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I’m going on the record with a strong second to my friend, Gary Pickren’s blog!

end of month calenda NOPE.

Gary Pickren, an excellent residential real estate attorney with an outstanding law firm, Blair|Cato|Pickren|Casterline, here in Columbia posted a blog on May 12 entitled “Save Yourself a Huge Headache!!!!” You can read Gary’s blog in its entirety here.

Gary was apparently reacting to a crazy month-end for his office in April. He reported 25 closings on Tuesday, April 30 as opposed to 3 or 4 on Wednesday, May 1. And the closings that occurred on May 1 were a result of late loan packages from lenders. He was asking his real estate agents to save themselves headaches by scheduling closings throughout the month.

Closings at the end of the month are not a new phenomenon. As far back as I can remember (and that’s a long way back), real estate agents have scheduled closings at the end of the month. Why? Because interim interest has to be paid for only one day, reducing the funds the buyer has to bring to the closing.

Does closing at the end of the month save the buyer money? No! Interest will be paid from the date of the closing regardless. The only difference is the amount of the interim interest, the funds brought to the closing table. If interest is not brought to the closing, it is paid with the first payment.

I sent Gary’s blog around to my office members and got some unexpected strong reactions!

TAnderson

Troyce Anderson, who was formerly a closing paralegal in Greenville, said scheduling closings throughout the month would probably reduce claims because law firms would be able to close with less stress and avoid common mistakes.

 

MTucker

Melissa Christensen, who was formerly a closing paralegal in the Myrtle Beach area, said her daughter, Savannah, was born on May 30, and the family always has to schedule birthday parties in early June.

 

SSigwart 2018

Speaking of birth issues, Sara Sigwart, who was formerly a closing paralegal in Hilton Head and Charleston, said that one of her fellow closing paralegals successfully searched for a doctor who would schedule a delivery of her child on the 20th of the month so she could celebrate birthdays with her child on the actual birth date.  Sara’s other reply to Gary’s blog was “PREACH!”

 

DSeay

 

Denise Seay, who was formerly a real estate paralegal in Hilton Head said, “Oh good grief-we used to say Realtors only knew one day in the month!”

 

If our office staff reacted this strongly, imagine how strongly your paralegals, who are currently in the closing trenches, would react. Think about how much easier it would be to manage your office and everyone’s schedules! Your holidays and vacations would even be more manageable.

Gary’s blog calls the end of the month in a residential closing office “organized chaos”.  It might also be termed a huge “traffic jam” for lenders, real estate agents, closing attorneys, paralegals, abstractors, and even buyers and sellers. Let’s follow Gary’s advice and spread closings throughout the month!

You don’t have to be the “bad guy” by using your own words to pass this thought on to real estate agents. Send them this blog!

ALTA’s Board approves revision to Best Practices

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Change would require ALTA ID

alta registry

The Board of Governors of American Land Title Association approved a motion on February 21 to revise the Title Insurance & Settlement Company Best Practices to include a requirement for companies to be listed in the ALTA Registry. The amendment is under a 30-day review period ending April 12. Comments may be sent to bestpractices@alta.org.

The proposed amendment to Pillar 1 of Best Practices includes the following requirement:

  • “Establish and maintain a unique ALTA Registry Universal ID (ALTA ID) using the ALTA Registry platform for each settlement office location (subject to those business entity types supported by the ALTA Registry).

ALTA, the national trade association of the land title insurance industry, formally launched the national ALTA Registry in 2017, allowing title insurance agents and settlement companies to communicate with underwriters to confirm their company name and contact information.

Using the ALTA Registry, lenders and their vendors are able to identify title agents, title underwriters and other participants in the closing process and communicate in a timely and consistent manner throughout the mortgage transaction.

Because there has been no unique ID number used across the industry to help match provider records in different databases, communication has often been difficult and costly for the title industry and its customers. This is especially important with new regulations driving vendor oversight requirements and the need for collaboration.

The ALTA Registry is a free, searchable online database of underwriter-confirmed title agent companies and underwriter direct offices. The registered information includes the title agent’s legal entity name, location and contact information. ALTA offers a unique 7-digit identifier, the ALTA ID, which is automatically assigned to each new database record as a permanent ID number and is never changed, reassigned or reused. ALTA ID numbers are available free of charge to title agents and real estate attorneys.

ALTA’s Best Practices is designed to assist lenders in managing third-party vendors. Pillar 1 requires title companies (closing attorneys in South Carolina) to maintain licenses for doing business in the title industry. This includes the license required by the South Carolina Department of Insurance and the ALTA policy forms license. The registry helps lenders determine they are working with legitimate title providers.

The Power of a System

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How to build the law practice of your dreams

power of a systemReaders of this blog know it includes a random book report from time to time, and this is one of those times. I read John H. Fisher’s The Power of a System; How to Build the Injury Law Practice of Your Dreams last summer and I have bought it for more than one real estate practitioner. Today, I recommend it as excellent reading for the readers of this blog.

At the beginning of his medical malpractice firm, Fisher wished for a step-by-step manual for running a profitable practice because, like the rest of us, he was not taught strategic planning, goal setting, business metrics, managing employees, managing clients and marketing in law school.

The author has developed that manual for a personal injury law firm, not just technical systems for running a business, but also the managerial and entrepreneurial principles to keep a constant stream of new cases and clients coming down the pipe.

The three parts of the book, The Technician, The Manager and the Entrepreneur, are based on Michael E. Gerber’s classic book, The E-Myth Revisited, another favorite of mine for law firm management. Gerber’s message is that every lawyer should set aside time each day to work on the business through strategic thinking instead of only spending time working in the business through technical legal work. Fisher’s book provides systems for all three roles the law firm owner must play.

Mr. Fisher provides us with a glimpse into his daily work life through his office rules. Those rules are based on the theory that staff members should handle every aspect of a practice that don’t absolutely have to be handled by the attorney. In the residential real estate practice, the functions the attorney must handle would include the closing, the second review of title, and the resolution of legal issues that arise in connection with conflicts, title and closing. Rules in a residential practice would be in writing and would make it clear that staff members are responsible for keeping attorney time free to touch those matters that only the attorney can handle.

The author’s rules deal with dress code, internet use, cell phone use, personal errands and timeliness, how to avoid interruptions and completing assignments. He has “scripts” in place for handling telephone calls, and insists on answering the phone with a smile. My favorite is his “no-gossip rule”. His rules are robust and demanding. But putting those guidelines in practice and enforcing them would ease day-to-day conflicts and stresses that arise among staff members.

This law firm outsources manual tasks by using companies such as Elance.com (now Upwork.com), Your Man in India (YMII) and Brickwork. The author believes that outsourcing has allowed his business to become a 24 hour/day law firm.

Fisher’s emphasizes treating new clients with “shock and awe” to demonstrate that he “shows up like no one else”. His package includes his book The Seven Deadly Mistakes of Malpractice Victims. Each book is personalized and signed, for example, “Dear Mary”. The package also includes audio informational CDs and a binder of office policies including a “Client Bill of Rights”. Each client should understand communicating with his or her lawyer from the outset of the relationship.

Mr. Fisher believes in setting goals and measuring everything. Measuring law suit time frames reduces costs and increases profitability. Real estate lawyers should set goals and measure time frames for closings. By measuring time frames for title work, surveys, termite letters, receipt of closing numbers, receipt of lender closing packages, commitment preparation, closing document preparation, recording, disbursement, satisfactions and distributing final documents, a real estate practitioner would ascertain where systems are routinely bogged down and would be able to work toward fixing those pressure points.

The author believes in marketing to the “ideal client”. While I usually have to translate books like this for real estate practices, Mr. Fisher did the translation for me in this regard. This is his paraphrased message to us:

If you are a real estate lawyer, are your ideal clients the homeowners buying a new house? No! The homeowners will use your services one time for a fee of $750, and you will likely never hear from them again until they buy another home. You will be broke by the time the homeowners need you again. The ideal client for a real estate lawyer is the real estate agent who refers a steady stream of new homeowners. The goal is not to make money on a single transaction. Rather, the goal is to develop relationships with your ideal client that will generate new clients and a steady stream of income for the rest of your career. The lifetime value of your ideal client is far greater than the value of a single transaction.

The book outlines three simple marketing rules that the author says will place a lawyer ahead of 98 percent of the competition:

  1. An informational-powerhouse website that provides killer content on a daily basis;
  2. A monthly newsletter targeted to the ideal client; and
  3. Regular seminars and workshops that provide valuable content to the ideal client.

He gives details on producing the monthly newsletter and establishing regular event marketing in the form of seminars and workshops.

We could all use an entire school-year class in law office management including each aspect of the work Mr. Fisher emphasizes. Since that class doesn’t seem to exist, I will do my best to obtain and communicate the information dirt lawyers need in this regard. As a favorite political pundit routinely says, “watch this space.”

Forgive me for repeating myself

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But practitioners really need to read The Lean Law Firm

In October, this blog discussed a book I had just read,  the 2018 ABA Law Practice Division book, The Lean Law Firm, How to run your firm like the world’s most efficient and profitable businesses.  Now that I have attended a South Carolina Bar seminar by the authors, I am even more convinced that the methodology this book embraces is exactly what residential real estate practitioners need to adopt to assist them in reducing stress and growing value in their practices.

lean law firm4

One of the authors is Columbia consumer lawyer Dave Maxfield, who happens to be the brother-in-law of my co-worker, Dorothy Boudreaux. The other lawyer, Larry Port, is CEO of Rocket Matter, the cloud based legal practice management software company. The January 31 seminar made an impactful initial point: most law firms are in survival mode. They won’t progress unless the lawyers step back and take a look at the business to gain perspective.

What is a lean law firm?  In the words of Larry Port, being lean is not about cost cutting. “It’s more about creating systems and then finding the constraints and inefficiencies that impede them. Lean lawyers believe in measurement, reducing waste, and producing as much value as they can for their clients. And more than anything else, Lean is about experimentation and continuous improvement.” The processes set out in this book are intended to teach lawyers how to increase their income while they are reducing their stress.

Unfortunately, most lawyers have little or no awareness of the value of creating systems. We are not taught to run businesses in law school. The lawyers I know and love are so busy practicing law that they don’t take the time to modernize, to focus on processes, and to create the systems that will allow them to run their firms like efficient and profitable businesses.

Wouldn’t your closing process be improved if you were able to figure out and reduce or eliminate those matters that cause delay? I was in an office recently and noticed a great deal of foot traffic by staff members. I asked where everyone was heading and was told they were all probably looking for files. Wouldn’t that office’s process be improved by using closing software that makes every file constantly available to every person involved in the closing? I was in another firm with multiple branches and learned one branch had templates for the title work for each subdivision, but the other branches didn’t have access to the templates. Sometimes, just stepping back to take a look will reveal small tweaks that can vastly improve systems.

One of my favorite suggestions from the book is the use of Kanban boards, a project management tool used to visually depict work at various stages. The simplest Kanban boards would have three columns: “to-do”, “doing” and “done”. A Kanban board for a residential closing office might have these columns:  “file opening”, “pre-closing”, “title”, “document preparation”, “closing”, “recording”, “disbursement” and “post-closing”. Each closing would be depicted in the appropriate column. By paying attention to this workflow tool, a closing attorney would learn quickly where work bottlenecks, and improvements could be made efficiently.

I believe the advice I once heard:  every time you touch a closing file after the closing, you lose money. A Kanban board might reveal whether reducing the numbers of post-closing touches in your office would increase the income from each closing.

Does the book sound like dry reading to you? It is not that at all. In fact, it is the first book published by the ABA to employ the graphic novel approach. It is written in the form of a story about Gray Law Firm, a small struggling firm, it’s newly-hired, former big law lawyer, Carson Wright, who wants to help  “fix” the law firm, and Carson’s friend, Guy Chaplin, who runs an extremely successful racing bicycle manufacturing and distribution company.  Guy slowly teaches Carson the business principles that make his company successful. And Guy helps Carson figure out how to apply those principles to his law firm.

I have to warn you that the book contains a lot of math. I am not a math scholar by any stretch of the imagination, and I was able to follow the formulas and to see how they would work well in a law firm that handles real estate, especially residential real estate. In fact, my only complaint about this book is that it is not geared specifically to real estate practitioners.

The book gives very specific advice about the basics of management, standardization, written procedures, checklists, marketing, goal setting and technology. A South Carolina real estate lawyer might find that some of the advice doesn’t apply, but I’m betting that most of it does apply, and I am encouraging everyone to order a copy of this book at www.ShopABA.org and to take its advice to heart.

I am now in the process of twisting Dave’s arm to translate “Lean” to residential real estate. If I am successful, I will certainly share his wisdom with my friends who practice residential real estate in South Carolina who are probably battling survival mode as they read this.

Dirt lawyers: here’s a book you need to read!

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A lot of time has passed since I’ve written book reports, but I felt compelled to write this one after just completing the 2018 ABA Law Practice Division book, The Lean Law Firm, How to run your firm like the world’s most efficient and profitable businesses.

I learned about this book from, of all places, Facebook, when my friend and very techy Columbia lawyer, Jack Pringle, expressed anger that he hadn’t written this book himself. And I was thrilled to learn that one of the authors is also a very techy Columbia lawyer, Dave Maxfield. I don’t know Dave, but I’ve told his sister-in-law, my co-worker Dorothy Boudreaux, to warn Dave that I will be reaching out to him at some point to pick his brain, to ask him to speak at a seminar, and to otherwise figure out how I can relay his very creative and valuable ideas to the dirt lawyers in South Carolina who need the advice this book sets out so well.

lean law firm4

What is a lean law firm?  In the words of Larry Port, the other author, from the book’s foreword, being lean is not about cost cutting. “It’s more about creating systems and then finding the constraints and inefficiencies that impede them. Lean lawyers believe in measurement, reducing waste, and producing as much value as they can for their clients. And more than anything else, Lean is about experimentation and continuous improvement.” Would you like to increase your income and, at the same time, reduce your stress? The processes set out in this book are intended to teach you how to accomplish those goals simultaneously.

Unfortunately, most lawyers have little or no awareness of the value of creating systems. We are not taught to run businesses in law school. The lawyers I know and love are so busy practicing law that they don’t take the time to modernize, to focus on processes, and to create the systems that will allow them to run their firms like efficient and profitable businesses.

This book explains in detail how the science of management can be translated to law firms.

Does this sound like very dry reading to you? It is not that at all. In fact, it is the first book published by the ABA to employ the graphic novel approach. It is written in the form of a story about Gray Law Firm, a small struggling firm, it’s newly-hired, former big law lawyer, Carson Wright, who wants to help  “fix” the law firm, and Carson’s friend, Guy Chaplin, who runs an extremely successful racing bicycle manufacturing and distribution company.  Guy slowly teaches Carson the business principles that make his company successful. And Guy helps Carson figure out how to apply those principles to his law firm.

I have to warn you that the book contains a lot of math. But I am not a math scholar by any stretch of the imagination, and I was able to follow the formulas and to see how they would work well in a law firm that handles real estate, especially residential real estate. In fact, my only complaint about this book is that it is not geared specifically to real estate practitioners. Thus, my need to pick Dave Maxfield’s brain.

The book gives very specific advice about the basics of management, standardization, written procedures, checklists, marketing, goal setting and technology. A South Carolina real estate lawyer might find that some of the advice doesn’t apply, but I’m betting that most of it does apply, and I am encouraging everyone to order a copy of this book at www.ShopABA.org and to take its advice to heart.