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44 YOUR LEGAL STRATEGY AND BUDGET: 10 THINGS INVESTORS SHOULD CONSIDER Over the last nine months, the magic words have been "new normal" or "when things return to normal." With how the default industry has been proceeding (and the world for that matter), "new normal" is the actuality. A "new normal" has meant wearing masks and social distancing in the everyday world. In bankruptcy litigation especially, a "new normal" means planning for very involved and complicated litigation. As bankruptcy filings are down, debtors' attorneys are searching for ways to generate billing. Litigation on any little nuance which would have been overlooked in the past is a source for that billing. e following are critical points investors should keep in mind when consulting counsel. Bear in mind, this list is but a starting point; it could be a never-ending list based on very specific facts. 1) IS THE LITIGATED ISSUE WITHIN THE BANKRUPTCY CASE OR AN ADVERSARY? Whether the litigated matter is within the bankruptcy case or filed as a separate adversary speaks to the potential degree of difficulty. In turn, it impacts the amount of time that counsel will invest in the matter. Typically, an adversary is a more complicated litigation. However, there are always exceptions: for instance, in Washington, a motion to strip or cramdown a lien is an adversary. e reverse is true as well. Most motions for sanctions or OSCs such as Stay Violations are within the bankruptcy case but tend to be complicated. Generally, an adversary proceeds much like a state court matter with discovery and other expensive time-consuming work. In addition, the issues tend to be more complicated or are high-risk. 2) WHAT CHAPTER IS THE BANKRUPTCY? As with the prior section, there are exceptions to the rule. e Chapters that are most filed in this industry are 7, 11, 12, and 13. Chapters 11 and 12 tend to be the most complicated because of the ability of the debtor to modify the loan terms and the very nature of the cases i.e., reorganizing a business. Moreover, they are heavily litigated because each issue or step in the reorganization process involves a motion. Oftentimes, this can also generate discovery much like traditional litigation. Next in line are Chapter 13 cases. Litigation in a Chapter 13 tends to be moderately complicated or involved. Most matters can be quickly resolved with a stipulation or agreed order. Chapter 7 cases fall last on the list of complication. 3) WHAT ISSUES ARE BEING LITIGATED? As mentioned in the prior sections, there are exceptions to the rules. Frequently, the exception is related to the level of complication of the issues being raised. A more routine matter that has limited complexity is a cramdown or motion to value. At the other end of the spectrum is a matter in which the debtor alleges origination issues or improper practices regarding application of payments and the like. While issues may be straightforward such as an allegation that a modification had been offered and accepted, the process of obtaining the evidence to support or deny the allegations may be drawn out and time consuming. It may involve written discovery, depositions, or subpoenas. 4) WHO ARE THE PARTIES? e identity of the parties impacts the strategies and budget because it directly impacts the availability of the evidence. In addition, it impacts the complexity of the issues presented. Further, if a loan is involved that has a history of being transferred from investor to investor or servicer to servicer will be much more complicated than one that has remained with the servicer where it was originated. Piecing together loan histories from multiple transfers can be time-consuming and difficult. Legal Industry Update NATIONAL FOCUS By: Kristin A. Zilberstein