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Attorneys need to know, as a Special Assets Officer, it is important to draft action plans for senior and/or executive management. Included in the action plans are legal recommendations that will include the estimated cost to complete the ligation. The key is “Estimated” cost.  

 

When lenders draft action plans, it is important to have a law firm that will offer fixed fee rates. A fixed fee rate is based on certain criteria, which includes non-contested litigation. If the borrower opposes the litigation, the fixed fee rate will turn hourly.

 

However, depending on the matter, a fixed fee rate can be modified to include opposition. Again, it depends on the matter. Seasoned attorneys can guestimate, based on the facts, how many hours it will take to represent the lender on the matter to the end. However, other issues can evolve, such as claims against the lender that is hard to determine because of depositions, moving papers being reviewed and/or filed.

 

As lenders, we should know our borrowers. Is there a possibility of them filing a counter suit or assert some ridiculous lender liability claim that will increase the legal costs. If there is any possibility that the borrower can, you will need to address the issues with your attorney prior to any litigation. Remember, the attorney doesn’t know your borrower or the entire facts that have led to the litigation.

 

Sometimes, it may be best to forward the monthly or quarterly report to the attorney so (s)he can review the matter first.

 

Bert T. Simons recommends Tom Normandin.

Prenovost, Normandin, Bergh & Dawe (Tom Normandin)