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56 Legal Industry Update National Focus NATIONAL THE MORE THINGS CHANGE: Law Firm Management in the Face of Regulatory and Industry Challenges By: Jeff Raff, Trott & Trott, P.C. Mortgage servicing professionals are keenly aware of the turbulence that has been an unavoid- able industry reality for the last several years. It seems that key features on the legislative landscape are changing from one week to the next: Regula- tory mandates, precedent and practice all evolving at a rapid pace as the industry continues to seek an equilibrium in the wake of the 2008 mortgage default crisis. Managing a law firm in the face of these regula- tory and industry challenges can be a complex and tricky proposition. To be successful, firms need to stay aware of and ahead of legislative changes, be able to respond quickly and efficiently to those changes, and understand what it takes to effectively counsel clients as they try to evolve and adapt. Understanding how to respond effectively—and how to help clients respond effectively, as well—re- quires a familiarity with accepted best practices for operating in this fast-changing industry: Stay Engaged and Informed It is essential that any law firm stay engaged and informed. Participating in an array of industry organizations is an ideal way to do just that. Firsthand engagement not only makes it easier to keep an eye on emerging legislation, proposals and important developments, but it also makes it possible for attorneys and other experts to use their practical knowledge to help ensure that any legisla- tion that is ultimately passed is crafted in a way that accomplishes what it is intended to accomplish. While attorneys may not have any direct say in the creation of legislative action, they can contribute some valuable perspective if they are involved from the earliest stages of the bill, and can be particularly helpful when it comes to considering the practical applications of the proposed language in the bill. Perhaps the greatest benefit of being involved throughout the process of creating and considering new legislation is that it helps legal professionals achieve a working understanding of a bill's intended purpose—making it possible to get a head start on preparing for any significant changes. Talk the Talk e reality is that, for every piece of legislation that ends up passing, a great many bills are pro- posed, written and debated that do not become law. For legal professionals, this dynamic lends urgency to a fundamental question: When do you engage your clients? Because state and local legislatures can potentially change a law with very little lead time before it becomes effective, and because the current high-tech and high-compliance environment can necessitate lead time in order to make sure every- thing is working correctly by the effective date, early warning can be invaluable. At the same time, however, you want to be re- spectful of your clients' time and resources—taking care to avoid alarming them unnecessarily. Be proactive, but do not overreact. Making these determinations and striking that bal- ance is more art than science, but part of the decision-making process of when and how to engage a client should be based on preparation time required in terms of IT, compli- ance, and other complex changes. Legislation that will require more modest shifts and changes that are procedural in nature may not require quite as much advanced notice. Experienced attorneys can predict with a fair degree of accuracy whether a piece of proposed legislation is likely to pass. ey frequently rely on those individuals who are in touch and involved in the process to provide additional guidance with that predictive process. Attorneys should be vigilant about analyzing the language to determine not just when a bill will be passed, but also to assess poten- tial implications that will result when the legislation is enacted. Provide Comprehensive Counsel Beyond simply alerting clients and professional partners to important new legislative developments, law firms can and do play a critical analytical and advisory role. While the initial outreach to the client should be a basic update or alert, clients should be provided comprehensive legal analysis once concrete details emerge. Make sure your clients understand what the passage of a piece of legislation means—not just on a practical level, but also logistically, legally and financially. Do not rush to judgment, however. Make sure you understand all the layers, complexi- ties and nuances before making a final recommen- dation. Consider how new legislation might impact the marketability of a client's title down the road—bearing in mind that a legal opinion and an underwriting analysis/risk assessment might not always mesh. Legislative language is famously (or perhaps infamously) unclear, and clients will be looking to legal counsel to help them provide some much needed clarity. Understand Context and Prepare Accordingly An attorney's advisory role is especially important when there is room for interpretation in the language of a bill. Vaguely defined terms will require clarification and recommendations for clients as to how to proceed. Keep in mind that clients may prefer to receive a range of options, and will likely seek guidance on what constitutes a reasonable interpretation versus a more conservative approach that minimizes the potential for liability and exposure. Context is critically important when it comes to evaluating legislation and providing those recom- mendations. A bill could be adding an entirely new element that transforms the foreclosure process—as we saw in Michigan in 2009 with the passage of the Michigan mediation law—or it could simply tweak existing language or require a minor procedural shift. e extent of the changes—and the lead time you and your clients have to respond—will play a significant role in your response strategy: clients may need to start implementing changes ahead of time (before the bill is even passed), while other times you can afford to wait and see. Once new legislation is passed, make sure that you have your recommendations ready to go. Take appropriate steps to educate clients on what the new law entails. at will likely mean conference calls and detailed written explanations, but group or personal educational sessions, on-site visits and hands-on training may also be required—what- ever is necessary to communicate, set up new processes, answer questions, and generally help clients understand and prepare for the implications of new legislation. In a fast-changing industry, that understanding and preparation will make all the difference in providing quality client counsel. It is essential that any law firm stay engaged and informed. Participating in an array of industry organizations is an ideal way to do just that.

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