Business of Law
Selling Foreclosure Firm’s Back Office Earned $60M for Attorney David Stern
Posted Feb 1, 2011 9:59 PM CDT
By Martha Neil
A Florida attorney known as a foreclosure king earned $60 million last year by spinning off his law firm's back office operations and selling them, as a separate company, to investors.
But that investment hasn't proved nearly as profitable as they hoped. David J. Stern's law firm lost much of its business amidst allegations that it had taken shortcuts around required foreclosure procedures and some 80 percent of the combined enterprise's 1,200 employees have gotten pink slips, according to the New York Times (reg. req.).
Litigation is aswirl around the spinoff, publicly traded DJSP Enterprises, the share price of which has recently plummeted to 50 cents from $14 last summer, and Stern's law office, like other so-called foreclosure mills in Florida, is being probed by the state attorney general's office. The South Florida Sun-Sentinel details the status of the investigation.
Meanwhile, critics say, the Florida Bar isn't doing enough to discipline lawyers at foreclosure firms in general for violations of attorney ethics rules, reports the Herald Tribune.
At the height of the foreclosure litigation boom, Stern's law firm back office was grossing some $260 million annually, the New York Times notes.
ABAJournal.com: "Small Foreclosure Firm’s Big Bucks: Back Office Grossed $260M in 2009"
ABAJournal.com: "Stern’s Law Firm & Related Co. Cut Staff By 70% After Fannie and Freddie Pull Foreclosure Files"
ABAJournal.com: "Ex-Employees Sue Stern’s Foreclosure Law Firm and Related Company Over Hundreds of Layoffs"
ABAJournal.com: "Fla. Appeals Court OKs Class Action Against Stern Law Firm Over Foreclosure Fees"