Why Don’t Attorneys Like Our Debt Workout Strategies

We talk with our clients’ attorneys all the time. Frequently, clients want the “ok” from their trusted legal advisors to engage in our strategies. Our strategies for stripping off debt and reducing personal guaranties are creative business strategies and sound similar to various legal strategies, however, let me be very clear: there can be no victory in a workout if one is following a legal line of defense or, heaven forbid, an offensive strategy. The personal guaranties as well the commercial liens prevent any possible workout conclusion if left in the hands of attorneys following traditional legal strategies.

This is not the fault of the attorneys at all as this has nothing to do with legal skill or competence, it is simply recognition of the fact that attorneys think legally, and legally speaking, there is no exit strategy or option. Therefore, from a legal analysis, our strategies will fail. I agree, if evaluated from a legal point of view, especially when considering an SBA guaranteed loan in default, as the banks are charged with exhausting their legal remedies in converting the collateral to cash. In other words, their marching orders to their lawyers are foreclosure and liquidation of the assets and then pursuit of the guarantors. It is both easy and appropriate for lawyers to apply typical legal standards and find fault with our strategy from a legal perspective. This is what they are trained to do.

What they do not get is that we are proffering a business strategy, controlled by different standards, guidelines and objectives, outside of the personal guaranties and other legal anchors hung around the defaulting borrower’s neck. We avoid these traps and issues all together as if they were not there and certainly not controlling us.

We can accomplish goals and reach objectives through a business path impossible to achieve if attempted from a legal position and strategy. Lawyers occasionally see our strategy as a failing strategy because it would fail if attempted with a legal procedure. Their reluctance to support our efforts is therefore understandable, as few lawyers can envision our strategies with a business eye; their legal vision does not work in these situations.

Of course, there are many attorneys-the majority-who see the clarity, power and effectiveness of our strategies and support us completely. Those that are controlled by their legal vision and who fail to see our strategy from a business point of view cannot lend support. It’s unfortunate for their trusting clients… what other choice do they have?