Foreclosure law firm closes doors; 700 workers lose jobs, are told there's no money to pay them
Updated: A real estate law firm handling 60,000 mortgage foreclosure cases nationwide abruptly closed its doors last week.
On May 14, as the day neared its end, 700 employees of Butler & Hosch heard that the 200-attorney firm is closing—and that it lacked the money to cover the payroll and issue scheduled paychecks at the end of that week. The firm has offices in three Florida cities, as well as six other southern states, Maryland and Dallas.
“We were called into a teleconference meeting with all the other offices … and told we wouldn’t be paid for the past three weeks,” Dominique Grant told the Orlando Sentinel. She said she worked at the firm’s Miami office.
In an internal memo to employees the same day, Butler & Hosch CEO Bob Hosch said he was voluntarily stepping down. The firm, which is more than 40 years old, has filed an assignment for the benefit of creditors in Florida to attempt to deal with its debt load, another Orlando Sentinel article reported.
Hosch blamed the firm’s downfall on overexpansion. “Unfortunately, BH grew too fast and could not merge processes from the acquired entities quickly enough to meet our economic forecasts, which resulted in short-term cash crunches,” he said in the memo. The Daily Business Review (sub. req.) provides the full text.
Although an unidentified lawyer told the Sentinel there had been layoffs in the Orlando office in December, the firm was in expansion mode only three months ago. Butler & Hosch added the assets of Atlanta-based Morris Schneider & Wittstadt in February, in what was billed as a “merger of equals,” the DBR article reports.
But Butler & Hosch apparently bit off more than it could chew. Stressed as well by a drop in foreclosure filings and pressure in the Florida court system to reduce a backlog of foreclosure cases, it ran out of money.
Not officially let go, even though they may not be paid, a number of Butler & Hosch attorneys are concerned that they could face legal ethics consequences if court dates are missed, the Daily Buisness Review reported. The firm didn’t send attorneys to several hearings scheduled Monday in St. Petersburg, said Matt Weidner, a foreclosure defense practitioner there.
On Thursday, former employees filed a class action lawsuit against Butler & Hosch seeking back pay and benefits. The suit alleges the firm violated the federal Worker Adjustment and Retraining Notification Act by failing to provide 60 days notice of the mass layoff.
Another ABAJournal.com post and a Housing Wire article provide additional details.
See also:
ABAJournal.com: “PGA star claims law firm stole $3M to help cover shortfall after managing partner embezzlement”
DS News: “Butler & Hosch Acquires Morris Schneider & Wittstadt’s Default Assets”
Orlando Sentinel: “Butler & Hosch collapse stalls foreclosure sales”
Last updated May 22 to note the employees’ lawsuit.
