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| Anticipating Legal Needs In An Economic Depression |
By:
Gibson Sebastian |
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It is January 21, 2008, and not only is the word "Recession" being used more and more frequently by analysts, we are now starting to also hear the word "Depression" as a possible outcome of this economic crisis facing the United States and possibly the rest of the world.
As this article is being written, the stock markets around the world have started to fall more precipitously with most of the markets in Europe, Asia, China, Latin America and Canada falling from 5% to 8% overnight. U.S. markets are expected to fall over 500 points when the U.S. markets open again for business on the Tuesday following the Martin Luther King holiday.
Clearly as others have already stated, we are already in a housing depression. If indeed the recession in the U.S. causes other countries to similarly suffer a recession and if the U.S. then falls into a depression not seen since the 1920s in this country, what type of legal ramifications can lawyers expect to see in the U.S.?
In a depression when money is scarce and job security is non-existent, lawyers can expect new legal business to all but dry up. That is almost a given. Hiring a injury lawyer to pursue a legal remedy except on contingency, will be far down on any person's list of priorities. Money for food, rent, and other necessities will take a much greater priority in people's lives.
Not being immune to a depression, California lawyers themselves will also be less willing to expend their own limited resources in such times to pursuing all but the most sure of cases. But what will be a sure case in a depression? And what will the attitudes be of insurance companies being asked to settle such cases in a depression?
It is very possible that in a depression, one if not more than one insurance company may declare bankruptcy. Insurance companies routinely invest their assets in stocks, both in the U.S. and in emerging markets. If all such markets fall as they are currently all falling, one or more insurance companies may find that they have lost millions of dollars if not billions of dollars. Once that occurs, they can lose their top credit ratings, and after that, the road is a slippery slope downwards for them.
If one or more such companies fail, the others will likely become extremely cautious in their dealings. They will probably initially become both far more willing to settle all their cases as quickly as possible in order to take their loss reserves off of their books and avoid incurring any more defense legal fees.
If the depression lasts, however, for any length of time, and more insurance companies find themselves at risk of bankruptcy, at some point lawyers may find insurance companies stalling and refusing to settle cases at all in order to preserve what few assets they have left.
As financial matters strain more and more marriages, divorce lawyers may find the number of people seeking divorce rising while fewer and fewer people have the money to pay for legal fees.
Businesses suffering steep losses will similarly be unable or unwilling to hire attorneys to stand up for their legal rights.
Criminal activity is likely to increase throughout the stages of a depression, again with few of those caught having the money to pay for criminal defense attorneys.
With a depression already here in the real estate field, real estate attorneys are already fielding hundreds of calls from panicky real estate investors trying to get out from under mortgages that are dragging them into bankruptcy. They are looking for anyone to sue to get out of their mortgages, from the real estate agents to the mortgage lenders to the sellers of the real estate who they now feel misled them into buying the depressed property. Unfortunately, these investors and homeowners have little extra cash to pay for an attorney to assist them in these real estate situations, even if they had a leg to stand on.
Perhaps the one area in which there may be more demand than ever in such a depression, may be in the field of bankruptcy. With the new bankruptcy laws making it harder than ever to file bankruptcy much less understand how to go about it, people will still likely find a way to scrape together the cost of hiring a bankruptcy attorney to get them out of the financial mess that people are finding themselves in.
No one can tell at this time if the likely recession turns into something far worse, a full-blown depression, but with real estate moguls now starting to use the word themselves, and with words such as "financial freefall," "global train wreck," and "global credit crisis" just a few of the words to be found only this evening on one of the most respected internet financial web sites, it is a real possibility.
Lawyers may soon find themselves in the same predicament as real estate agents, just waiting and waiting for the phone to ring, and finding that it doesn't ring at all anymore. Just as companies begin to cut back on expenses, lawyers may also begin to face some hard decisions when it comes time to renew advertising contracts for yellow page advertising or even worse decisions, such as whether or not to file bankruptcy themselves.
Sebastian Gibson is the senior personal injury lawyer with the Law Offices of R. Sebastian Gibson Business Lawyers Serving San Diego.
http://www.sebastiangibsonlaw.com/
Source: ArticleNova.com
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