Posted Nov 04, 2010 07:11 pm CDT
Updated: A South Florida law firm being investigated by the state attorney general over its mortgage foreclosure work has announced new layoffs today, after Fannie Mae and Freddie Mac pulled their files earlier this week.
Following “substantial” layoffs today, David Stern’s law firm and a related company reportedly will have cut 70 percent of their combined staff, in response to a 90 percent drop in new business referrals over the past six months.
An internal e-mail to employees today gave these figures, the Tampa Tribune reported, and included a comment from the foreclosure titan:
“While we are doing everything possible to guide the company successfully through these difficult times, these developments mandate that we take immediate action to align the business with current realities,” Stern wrote.
Earlier this week, mortgage finance giants Fannie Mae and Freddie Mac pulled their files, reportedly sending employees on Monday to Stern’s law office in Plantation, Fla., to start collecting them in person.
Attorney Jeffrey Tew, who represents Stern, confirmed the layoffs at Stern’s law firm to the ABA Journal but declined to say how many people might have been affected.
“They had a layoff today, they’ve been adjusting their staff over the last couple of weeks, and today they made an additional amount of layoffs,” Tew said of Stern’s operations.
He estimated that the firm and a related mortgage-processing company Stern owns, DJSP Enterprises Inc., now have a headcount of about 400 or 500, down from perhaps 1,100 earlier.
A subsequent Bloomberg article says Tew called today’s layoffs “substantial” and said Stern’s law firm and DJSP have cut about half their staff in recent weeks.
Tew declined to comment when asked by the news agency whether there would be further layoffs. However, he told the ABA Journal today that “they’re not closing and they’re continuing in business.”
As detailed in an earlier ABAJournal.com post, Stern’s law firm and company had made hundreds of layoffs by October because of a slowdown in business.
Asked by the ABA Journal why more layoffs were being made today, Tew said they are directly related to the recent removal of files by Fannie Mae and Freddie Mac.
“Like any law firm, when you have a substantial number of files transferred out of your firm, you have to reduce your staff,” Tew stated.
While the state attorney general’s office has issued a subpoena seeking information from Stern’s firm, it hasn’t made any complaint against the firm, Tew noted.
Reuters: “Freddie Mac, Fannie Mae end dealings with law firm”
Wall Street Journal (sub. req.): “Fannie, Freddie Cut Ties to Law Firm”
Sun-Sentinel: “New questions being raised about court filings in foreclosure cases”
It’s Your Money (Sun-Sentinel): “Foreclosure investigation: AG is looking for evidence of kickbacks”
Last updated at 5:35 p.m. to include information from subsequent Tampa Tribune article.