The mortgage litigation industry is evolving in the US. This article from the NYT describes a litigation industry response to banks mishandling mortgage documents and creating paper nightmares through the various ways they securitized mortgages and/or transferred rights to service mortgages. The response? Lawyers defending mortgage foreclosure cases for contingent fees, instead of hourly fees.
No doubt there will be complaints from Wall Street based lawyer bashers who dislike contingent fees. But the actions of the lawyers are examples of free market capitalism and entrepreneurial behavior, which are usally trumpeted as virtues by the same critics. Apparently lawyers are not allowed to be entrepreneurial. When the lawyer critics emerge, one way to avoid taking them too seriously is to spend a few minutes reading blog posts by the Epircurean Dealmaker, a Wall Street denizen who candidly rips his own kind in wonderful posts. Here’s a classic example of the writing.
Meanwhile, in other developments, this NLJ article by Sheri Qualters describes the growing number of class actions spawned by banks which implemented "robo-signers" as an illegal and immoral fix for sloppy (or worse) internal procedures. Some might say that’s also a classic example of entrepreneurial behavior.
Here is a summary article by Alison Frankel on strategies that bondholders may use.
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