Three months into the COVID-19 pandemic, more than 40 million Americans have lost their jobs. 4.2 million homeowners have placed their mortgages in forbearance. Hundreds of thousands more are in default and have not yet worked out agreements with lenders to fend off foreclosure. Rent, credit card, student loan, and other bills are clogging the mailboxes of working-class families.
While many working-class people feel helpless in the face of all this, socially conscious lawyers can provide a meaningful line of defense, protecting working-class consumers and homeowners and making an honest living in the process.
Both consumers and lawyers missed a similar opportunity during the 2008 recession, when the vast majority of defendants in foreclosure, collection, and eviction cases went without legal representation and many lawyers were unemployed or underemployed. Not only did individual consumers miss the chance to bring consumer protection claims against predatory lenders, they and the lawyers who might have helped them missed the opportunity to reshape the conduct of those bad actors.
My profession mostly stood down in the last recession. One notable exception were
lawyers who graduated from Max Gardner’s Consumer Defense Academy (where I
learned the trade). The overworked lawyers at Legal Aid did what they could, but the private bar has mostly ignored working-class Americans in financial distress. Legal Aid funding has been constantly attacked by Congress, and because many states fund Legal Aid with the interest on attorney escrow accounts, the low interest rates that got many consumers into trouble also undercut poor and working-class people’s access to legal services. Federal law also prohibits Legal Aid from collecting fees from defendants in most circumstances, and that keeps lawyers from pursuing consumer protection claims for their working-class clients.
In many ways this economic crisis could be way worse than 2008. As America’s working class is hurled into the 2020 recession, the Trump administration has disarmed the Consumer Finance Protection Bureau and other federal consumer protection agencies. More than ever, working families need lawyers to help them fight back.
Consumers who can’t pay their bills, rent, or mortgage also face some new dangers. More than 60% of mortgages are being collected by thinly capitalized non-bank mortgage servicing companies. National banks realized that the way they handled mortgages during the last recession hurt their reputations, so most have stopped servicing all but the safest and most secure loans. This leaves the 2020 homeowners facing foreclosure in the hands of unknown companies with insufficient capital. Decisions about throwing people out of their homes or modifying defaulted loans will be left to poorly trained, poorly supervised, and poorly paid customer service agents. They will almost certainly do worse than Wells Fargo, Bank of America Citicorp, and smaller regional banks did in the last crisis. And those larger, more sophisticated institutions failed miserably.
If consumers aren’t defended, the pandemic will turn into a housing crisis for working-class families. Millions could end up homeless and will lose their largest asset.
In Evicted, sociologist Matthew Desmond lays out a compelling argument that one of the best things society can do to prevent homelessness and to ensure stability for working-class families is to provide them with lawyers if they face eviction. I’m proud to say my hometown of Cleveland has done just that through a public/nonprofit partnership that provides lawyers for every tenant facing eviction. The program will pay and train lawyers to represent tenants who often have defenses to eviction and claims against abusive landlords.
Cleveland’s effort began not a moment too soon. While many places have banned evictions during the COVID crisis, once those stays are lifted upwards of 3 million Ohioans could face eviction proceedings. To ensure high-quality representation, those families and millions more across the country need the support of paid — not pro bono –lawyers.
For all the ways that federal and state governments have undermined protections for consumers, some strong consumer protection statutes remain in place, including some that shift responsibility for legal fees to lenders. From the Fair Debt Collection Practice Act to the Fair Credit Reporting Act to the Real Estate Settlement Procedures Act and more, literally dozens of policies provide fee shifting remedies. Fee shifting allows working-class people to bring claims without having to pay legal fees, and that makes it easier for lawyers to accept those cases.
Almost 20 years after Barbara Ehrenreich made visible the challenges of working-class life, our clients continue to be “Nickeled and Dimed” every day. Even those who are lucky enough to be current on their rent or mortgage payment face daily abuse from unscrupulous debt collectors, payday lenders, and even their own doctors and hospitals — all seeking payments that working-class people cannot ever afford.
Lawyers need to step up to meet this need. Those of us who practice consumer law need to train and mobilize an army of colleagues to fight for the working class. Litigating Fair Debt Collection and Equal Credit Opportunity claims or defending foreclosures or evictions may not be glamorous, and it won’t make lawyers rich. But many of us went into law to pursue justice, not wealth. Standing up for the working class in a time of economic crisis gives us a chance to do good while also doing well. And it will let us look at ourselves in the mirror every morning without shame.
Marc Dann, DannLaw
Marc Dann served as Attorney General of the State of Ohio and now leads DannLaw, which specializes in protecting consumers from various forms of predatory financing.
This is a really useful article and I hope it gets around two the people who need to see it. Also being UK I wonder how much this idea relates to the UK and whether anyone is working in a similar direction.