My wife and I downsized earlier this year, to save money, reduce debt, and put money into the beginning of a rental empire we hope to build. We have good cash flow, income, and excellent credit. And yet, maybe because we earn money as a small business – read: law firm – the underwriting process was hellish.
This wasn’t our first time on the rodeo. We have bought and sold – having moved a number of times, once from Phoenix to North Carolina, and several times in each state. But it seems as thought these last two mortgages were the most difficult to get, even though we are in the best spot financially we’ve ever been in.
My wife, who did most of the legwork in tracking down last-minute documents requested by the bank, remarked that if they made it this difficult on us to close, imagine how difficult it must be for an average buyer.
I suppose part of the problem is that we are self-employed, and so there is quite a bit of (understandable) concern about the stability of our income. But, having filed and reported above-average incomes for 5 years straight, you’d think a mortgage company would take those seriously – after all, we aren’t exactly excited about paying high taxes to Uncle Sam, and it would be stupid just to do that in order to show good “income” to a future mortgagor.
Any thoughts?3 comments
Taking this moment to give this brief lesson on how not to message:
Neil Siegel, a former special counsel to Joe Biden and supporter of ObamaCare/Affordable Care Act, was on WUNC’s The State of Things on Wednesday discussing recent appellate litigation involving the subsidies authorized by the Act. The DC Circuit ruled Monday that subsidies are illegal in states that did not set up their own insurance exchanges. North Carolina is one of those states. The Fourth Circuit, in which North Carolina is located, found otherwise.
Back in January, I wrote here about taking private pilot lessons. My post was inspired by one Greg wrote in December about mastering something difficult this year. Earlier this month I took an oral exam and then check ride with an designated examiner for the FAA, and I passed!
The next day, I piled my wife and a little bit of luggage into my Piper Cherokee, and took off for the coast. An hour and 15 minutes later, I was down at Ocracoke, part of the Outer Banks that would ordinarily take someone 6 hours or so to get to by car from Raleigh.
My wife and I got a lift to the local pub – really, the only one worth considering on Ocracoke – where I ordered a non-alcohol beverage and we got some shrimp and burgers, before flying south/southeast along the coast to Beaufort, North Carolina.
It was a ton of fun.3 comments
Greg has a nice post on mastering something difficult this year. I’m not sure it counts as a truly difficult task, but I started taking private pilot lessons in August, and was hooked. It turns out that flying in a small plane is fun, especially when you can fly most places you want with comparatively little hassle.
In October, I bought an airplane – a Piper Cherokee 140 that was built in the 1960s, and refurbished in the 2000s with new avionics and electronics.
It’s not particularly speedy. It flies about 130 to 140 mph in calm weather. With a headwind, you’ll get no better speed than a fast car, though you do always have the advantage of flying directly from point to point and avoiding traffic.
There are two aspects of flying. There is the purely intellectual and mechanical task of operating the plane, and of inspecting it and fixing it (which I’m looking forward to learning.) That is exciting. I started landing the plane well, consistently, last week. Something just clicked and I’ve got a good sense now of how to fly the plane to a stop.
I’m also excited about mapping routes, avoiding hazards, making sure the plane is operating safely.
What is a terrible bore is that flying has got to be one of the most regulated ways to travel. I am able to avoid most of the TSA because I can walk right out to the plane on the ramp.
But everything is highly regulated, from the actual certification of the plane and all repairs, additions, improvements and modifications, to restrictions on where you can travel, to licensing restrictions.
I am going to have to take my private pilot check ride, which is a ride with an FAA examiner to make sure I can operate the plane safely and perform certain maneuvers. I’m not too worried about that.
But I also have to read, memorize, and regurgitate on a multiple choice exam a ton of useless factoids about aviation regulations that are irrelevant to safety or to proficient flying.
So much of our life is regulated – from the fishing license, to the boating certificate, to the pilot’s license, to the driver’s license, to the license to start this or that business. It’s a wonder you don’t need a license from the government to launch a new website.
That is so very sad.5 comments
Occupational licensing is a tricky topic for those of us who have “professional” occupations. The notion that any old schmuck can simply hang out a shingle – in the case of a law practice – or open a brokerage with nothing more than a computer, smartphone, and printer – in the case of real estate – strikes fear in the hearts of established practitioners and of busybodies everywhere.
What about the ignorant public? What about the sacred profession (whichever profession) we’re a part of? What about my own livelihood?
If there are oxes to be gored, we’d prefer they be other peoples’ oxes. Not our own.
It didn’t used to be so. Occupational licensing and testing and fee-paying and continuing professional education programs didn’t really get going until the 1920s, a consequence of the progressive movement. In the 1950s, only about 1 in 20 American workers needed the government’s permission before pursuing their chosen occupation. Today, it’s almost one in three. Greg’s called this Rotarian socialism.
Enter the Internal Revenue Service. For nearly 100 years, tax preparers were unlicensed. Consumers – i.e., filers – could make their own decisions about whom they wished to hire in order to prepare their taxes. Civil and criminal statutes can punish preparers who prepare inaccurate or fraudulent returns.
But in 2011, the IRS decided these laws were not enough, and imposed sweeping changes that would require tax preparers to apply for licenses from the IRS in order to prepare federal tax returns on behalf of clients. The new regulations require all paid tax return preparers—except for attorneys and CPAS-to become a “registered tax return preparer” by taking and passing a competency examination, and paying application fees. They would also require preparers to complete 15 hours of continuing education.
The regulations did not spring ex nihilo into existence. They were largely drafted by the former CEO of H&R Block. Most occupational licensing helps big firms or brokerages which can bear the cost of training employees and paying fees, and who benefit disproportionately when small and independent providers are kept out of the business.
My good friend Dan Alban, an attorney for the Institute for Justice, a libertarian non-profit law firm that sues the government on issues relating to licensing, eminent domain, economic freedom, school choice, and the like, won a tremendous victory on January 18 when a federal district court judge struck down the the IRS’ licensing scheme, saying that the Congress had never given the IRS the power to regulate tax preparers and the IRS could not unilaterally grab this power on its own.
The IRS has since appealed the ruling, and asked for the judge to lift the injunction that has put a stop to these regulations.
I would not expect this battle to be over so quickly. The big tax preparers certainly have the ability to lobby Congress to grant the IRS this regulatory authority, even if the IRS loses on this particular issue.
That would be a shame. As I noted on my blog in a different context, there’s no evidence that compulsory educational requirements imposed by certain states on lawyers have any positive benefit for the public.
Whenever I broach the subject of the bar, the bar exam, and licensing regulations, lawyers I talk to acknowledge how ineffective these rules and requirements are. But in the next breath, they worry about the flood of people who would join the profession if we didn’t have such barriers to entry.
The idea that we should be free to pursue a profession or a job used to be a quintessentially American idea. But no longer…19 comments
In 2008 – four years ago! – I penned a doom and gloom email that Greg posted to this here blog (with my permission). Soon thereafter, he invited me to join as a regular writer.
To sum it up, I thought (and still do believe) there is no way the government can automagically print currency in an effort to create real wealth. Paper is not wealth.
I expected inflation to hit much harder and more dramatically than it has. It’s been far more restrained. I suspect this is because that paper has been disproportionately sent to particular areas of the economy – large banks, for instance – that continue to hoard it.
I’m sure you don’t need me to tell you how easy it was to get credit in 2005 (when I bought my first home) compared to 2012 where the bank made me jump through all sorts of hoops to refinance a home I’ve got even though I’m in a much more financially sound position today than I was in 2012.
Still, my prediction that this recession would last years and years has borne out. I believe we are still in the first half of this financial crisis. That it simply feels like a crappy “normal” existence is a consequence of its duration.
But you aren’t getting the worst of it, unless you’re a recent graduate from a college or, wait for it, law school and now finding yourself saddled with six-figure debt earning a low five-figure salary.
Educational debt – non-dischargeable in bankruptcy – is like mortgage debt which is not cram-downable. That effectively keeps a whole class of citizens in debt-poverty. You can say, as you can say about indebted homeowners, that they made that choice of their own free will (I don’t agree with this view…), but the fact remains that hundreds of thousands of people in their mid-twenties and thirties are saddled with enormous debts punishing them for choices they made when they were 18 and 19.
This is not good for the economy, or society.
The consequence is an economy that limps along until this debt is cleared out, which means for the next 10 to 15 years.10 comments
When, after deciding that think tank and political advocacy were a lost cause (as is true of many things, I should’ve consulted Greg Swann earlier about this), I went back to law school, I decided to go to law school, I had only the vaguest notions of what being a lawyer actually meant.
I knew I wanted to earn a good living. I knew I was pretty smart. I also “knew” that my years in managing non-profits had left me with precious few skills that might be attractive in the for-profit world.
Three years and more than $300,000 in direct and opportunity costs, I emerged from UNC-Chapel Hill (having completed my first year at Arizona State) with a law degree, the privilege (I mean that in the technical sense) to practice law upon passing the bar, and not much more. The economy had collapsed, and in the interim we had sold two homes in Phoenix, one for about what I bought it (thanks to Greg) and the other at a vastly lower price (through a broker my wife selected).
There were no BigLaw jobs for me to take, coming from a good, but not great law school, with good, but not great grades.
Fortunately, I had spent a year and a half getting my hands dirty as a glorified intern at a local Public Defender’s office, where I worked on some very serious cases, and helped win a trial for someone accused of a robbery, the evidence I located would show, he could not have committed.
More importantly, it turned out that I had skills that were much more important than lawyering. Technical and technological skills. And I discovered that I am, while introverted and contemplative, pretty good at interacting people through the crucial hiring (sales?) process.
If I had it all to do again, I don’t know that I would go to law school exactly. Don’t get me wrong: I am probably one of the few lawyers who loves practicing the law.
But I’ve found that I also like building things. I have tons of ideas on how to make things, and provide more efficient services to people. Unfortunately, the law and all the players in this system are extremely conservative, in the sense that they hew to established rules, practices, and technologies. The databases and computer systems, to take one small example, are archaic. Everything and most everyone is resistant to change.
So here I get to my point: If you are young (by which I mean, under 40) and at all entrepreneurial, or have what you think is a good idea, do not go to law school. First, Inside the Law School Scam has the goods on what an incredible waste of money law school is for the vast majority of people who go.
If you do want to go to law school, be very, very sure you want to actually practice the law. And that you know what the “practice of law” means beyond receiving a better-than-average paycheck. The days when a law degree was a ticket to a six-figure income are over.
Mostly, the American system of education has been a scam, that has only become increasingly apparent in the past 5 years as the average debt of recent grads has soared, nearing the six figures. Law Schools are at the center of that scam.6 comments
Three years into my private law practice, the web continues to be the primary way I market my law firm. Having represented more than 500 people over the past three years, I’m starting to see both repeat business and referrals. But not everyone needs a criminal lawyer, the way they’ll eventually need a realtor, so it takes time to build out a referral base.
In order to not put all my eggs in one basket, I’ve launched a bankruptcy practice as well with separate websites and separate identities to help channel potential clients to the right information, and so that if my web presence suffers on one dimension, it won’t suffer on all dimensions.
We’ve also tried other marketing efforts, including direct mail, radio advertising, and networking. The networking can be effective, but that’s really not my strength, so I’ve not invested the kind of time and effort that I should on reaching out to other lawyers in order to develop referral channels.
All of this is to say: I spend an inordinate amount of time focused on Google (and to a lesser extent Bing and Yahoo) in watching updates.
For the past nearly 30 months, my website has been number 1 in my city for my primary keywords. But the ride has been bumpy, especially in the last year and a half. Google has made more than a half dozen important changes to its algorithms and search behavior since January, including one that is rolling out as we speak. This after a number of years in which Google implemented fewer updates than that for entire 12 month periods.
Some of the updates have been improvements. For instance, in April, Google released a penalty for over-optimization – basically spammy and keyword laden websites. Fortunately, I had moved away from keywords about a year prior, so I was not penalized, but I did see some competitors take a huge hit.
What does this mean? It means that, first of all, there is never one SEO strategy. Building a quality website takes time, and Google is trying to reward quality over quantity. And it’s trying to penalize people who take quick – and often spammy – routes to success.
If you were building a website in 2009 (as I was), then the road to the top could be swift. But if you’re building a website in 2012, it’s a much harder slog, not just because of the increased competition, but because Google is increasingly on the watch for cheap techniques.6 comments
John Battelle has some interesting thoughts on search. Google’s 2004 message to investors was:
Our search results are the best we know how to produce. They are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating.
Google has abandoned that commitment. Just look at the screen real estate on Google that now is committed to paid content – AdWords now accounts for one-third of the space on your screen.
And now Google is including social results with the putatively objective results it used to provide. So if your potential clients are searching the web while logged into a Google account, their first-page results will include items endorsed by people in their Google circles.
And whether you get it or don’t, or like it or don’t, a lot of content is being created on Twitter and Facebook that isn’t systematically reflected in Google Search results, either because Google doesn’t prioritize it or because Google doesn’t have the rights to crawl it.
For me, as a Raleigh criminal lawyer, figuring out how to make my presence more social is difficult. Even if people get good results with me, they tend not to want to praise me, unless pseudo-anonymously. They may quietly confide in friends who ask that I’m a good lawyer.
But they’re unlikely to announce on Facebook or on their Google Plus pages that I got them a “not guilty” on their DWI.
I haven’t figured out how to solve that problem.
But as realtors (and mortgage brokers, etc.) you ignore the social aspect of search at your peril. If you’re banging away trying to raise your Google PageRank, then welcome to 2005. And you’re working your way to dominate your search results for your locality, then welcome to 2007.
You may be missing what your competitors have realized: being endorsed by past clients, friends, etc. can push your placement above competitors, and those endorsements may in fact be the added juice that gets someone to choose one service over another.
Does this mean search is dead? Not by a long shot.
Many people have joined Google Plus, but Google’s latest investor phone call reveals that fewer people are engaged in building out their Google Plus pages.
That also means that the true impact of Google Plus has yet to be felt.5 comments
If MySpace (current valuation, $30 million) is the Facebook of the past, then what does that make Google Plus?
I’m not sure. But, as an inveterate fan of all things Google, I hold some hope that Google will succeed where other platforms have failed, or are failing.
I share Greg’s skeptical view of Facebook, which has struck me from day one as a kludgy mess. I find it virtually useless for business. It strikes me as AOL-like in its attempt to separate itself from the Internet.
Facebook wants all things to be Facebook. The Internet wants to be free. Google wants to help us more effectively find things on the Internet. Those are radically different visions of what it means to organize information and minds.
Google does all this at great risk, since making things more accessible, more open, and more transparent also lowers barriers to entry for competitors.
Google Plus seemingly moves in a different direction, by providing the tools by which can interact in a “social framework”. The trick will be to keep it all more free-wheeling than is possible on Facebook, give users more control over how information about them is shared, make it easy and intuitive to use, and make money at it.
Here’s where Google has an advantage: because it is the means by which people already search and organization information, that means that social networks can be brought to bear on that information, such that search results, for instance, can be influenced by your network.
For businesses, that means figuring out to make their business a part of various social networks can really give them a leg up if, and when, Google Plus takes off. And, unlike the pointless Google Wave and dreadful Google Buzz, I think it just might.4 comments
One of the sad things about the modern welfare state – which I’d date to about World War I and really got underway with the New Deal – is that it’s caused a poverty of imagination. People can’t imagine what the world would be like without this or that government regulation or this or that government program.
For instance, I gently suggested below that three years of law school is a waste of time – and, in fact, most other common law countries don’t require it, and don’t seem to be imploding. I also suggested that maybe some rules should be loosened.
You merely need to look at the comments section of that post to see the handwringing about what would befall our great civilization if there were under-educated or incompetent lawyers!
This is what I meant when I said that people prefer security over freedom. You’d think, by suggesting that three year law schools (which have only been in existence since the 1930s or so) should be done away with, I was suggesting a return to the dark ages,
“I’m all for free markets,” people say. “I just think a free market depends on [insert this or that government program] to ensure [this or that value].” As if, granting the premise that a free market depends on those things [it plainly does not, because a free market depends on nothing but the free, unfettered interplay of billions of human beings], government has any reasonably good track record of providing any effective program that produces a desired value.
There are awful lawyers today. There are also awful cosmetologists, auto mechanics, plumbers, farmers, shopowners, etc. etc. Let’s have regulations for everything until every sector ends up like the health care industry.
This video is instructive. Watch to the very end. The woman’s rejoinder is a perfect encapsulation of the Poverty of Imagination mindset I describe above.
MSNBC ran a pretty cool article on me (and another lawyer) and about how an increasing number of young lawyers are starting their own practices.
In general, it was a good article. I hope I didn’t come off as too much of a braggart. People – at least anonymous commenters in the Intertubes – focused on my revenue claims, and not on my basic message which is: 1) anyone can do what I did and 2) State Bars should make it easier for people to do what I did by lowering the costs and barriers to entry.
It’s entirely absurd to me that someone should need to study three years in law school before being able to practice law. That’s not how it is in most other countries, including other countries that follow the common law tradition.
Lawyers in America have built up a frightful monopoly. An ABA executive pooh-poohed my suggestion. That’s fine. He’s part of the establishment. What else would he say?
What is sad to me is that so many other run-of-the-mill lawyers believe that these rules help them – the same rules that saddle them with enormous debt, that prevent them from marketing, the same rules that in the name of the Rules of “Ethics” privilege large firms.
I think people prefer to be secure, rather than free, even if that security is an enormous burden that prevents them from being rich, too.
The wonderful thing about the article is that I’ve been contacted by a couple of dozen entrepreneurial types across the country and am planning a free webinar. That’s pretty cool!
Anyway, thanks also for all the feedback on my website! I have randomly selected a winner who will receive a $100 gift certificate from Amazon. Since feedback was anonymous, I can’t disclose who won the certificate. But, trust me, someone received it. I’m a lawyer, after all!!13 comments
MSNBC is planning to run a story next week on me, as part of a story about how lawyers are coping with a bad economy.
And I’ve been able to grow: I added my wife in January, who has been able to expand the firm’s business. We hired a new lawyer, a former prosecutor, who started in early May and is adding to our ability to expand into neighboring counties, as well as traffic law and bankruptcy law.
I’ve also started a redesign of my website. I’d appreciate your feedback. I recognize your time is valuable. In exchange for your feedback, I will randomly select someone to receive a $100 gift certificate to Amazon.com.
It’s entirely anonymous – you’ll have to trust me that someone got the gift certificate – and confidential. No one but me will know you sent me feedback. And no one will know if you win the gift certificate.
My new front page is at www.chetson.com/home. Please only review that page. Don’t worry about clicking through to the rest of the site which has not yet been redesigned.
Because the prettiest designs don’t always work on every browser, or are confusing, I’d like your frank feedback:
- Does the page display properly
- What is your impression based on the page?
- Are you able to see the various slides, functions, etc?
- Do you understand what kind of law we practice and what kind of things we do?
- Would you pick up the phone and call?
Feel free to email me your feedback to email@example.com. Anyone who emails me by Wednesday, June 15, is eligible for the $100 gift certificate.
Thanks for your help!3 comments
I recently upgraded from a iPad 1 to iPad 2. Two reasons: I’ve found the iPad app to be so useful that I wanted my wife/legal assistant/colleague to be able to use one as well. With the iPad’s Daylite Touch, she and I are able to update, add clients and prospects, and manage calendars on our Daylite database.
Second, while Verizon has customer service problems, AT&T’s coverage where I live is really awful. In certain courtrooms, I’d have to turn the iPad just so to get a signal. Verizon’s network is ubiquitous. While AT&T is purportedly faster, I’d prefer ubiquity and decent speed, to spotty coverage and top speeds.
The iPad 2 is noticeably faster than the iPad. It’s lighter, and since I use the iPad as basically a book at night in bed, the weight difference is nice. I thought the new cover would not stay on, especially in my bag. But once it closes, it doesn’t move.
The cameras on the iPad 2 are shockingly lousy. And Face Time is basically useless since no one I know has Face Time.
I posted a 10 App list on my Raleigh criminal blog and thought I’d share it here, taking out one application which is of use only to lawyers. That makes it a 9 app list. I’ve got no financial interest in any of these products. I use them in my daily law practice. All of these apps could be used in any number of professional settings.
- Daylite Touch – This app will only be useful if you use the MacOS Daylite as your database. This is not the place to review Daylite, which is mostly a great product, with a couple of significant flaws. But Daylite is the best solution I’ve found in a Mac environment to manage customer or client relationships. I remote host my Daylite database so that I can reach it anywhere in the world. Daylite Touch is simply awesome. It lets you add new clients (if I get a call when I’m not at the office), update court dates (while sitting in court), add notes, add tasks, and manage an awful lot. It rarely crashes, it seamlessly integrates with the desktop version of Daylite. Truly, Daylite Touch may be the best part of Daylite. There’s a yearly fee of $50 per device, but in my estimation it’s well worth it.
- EverNote – If you need to sync documents between devices and computers, EverNote is a great solution. In North Carolina, we have various sentencing guidelines, or updated court room calendars that show which judges have been assigned to which courtrooms. At the start of each week, I’ll refresh whichever documents I need to refresh from various sources in EverNote. During the week, I merely need to go to one spot on my iPad to find whatever reference document or calendar I need to view. EverNote, in short, allows me to keep all of these documents synced and in one place across multiple computers.
- LogMeIn – LogMeIn provides a secure way to access your desktop when you’re not in your office. This can be incredibly useful. Let’s say you forgot to load a document from your office into Evernote. LogMeIn will let you load it, so that the document will then be synced with your iPad. Of course, it’s always important to keep your password confidential, since if someone has access to your desktop, they can see everthing.
- iAnnotate PDF iPad – I liked iAnnotate last year, and I like it this year. It provides all you really need to view, edit, and share PDFs. There are multiple different PDF viewers, but from my perspective this is the best. Easy to use, not expensive, and very stable.
- WordPress for iPad – One of the things I do is maintain my own website and blog. Doing so can be a chore. But it’s also important to keep people up to date about the latest developments in the news and in the law. WordPress for iPad allows me to do this. Admittedly, writing very long posts on the iPad is not very convenient. But I’ve found that I can make quick posts or updates with ease.
- DocumentsToGo – I’m cheating here because I haven’t used this suite of software. I have used Apple Pages, which I don’t like. I find the formatting gets all messed up. Since I don’t write long documents on my iPad, I prefer a word processor that will not mess up formatting from documents received from a desktop, but will allow me to make small edits. DocumentsToGo syncs with the cloud (which Apple Pages does not).
- Air Sharing HD – There are a number of applications, including DropBox, that allow you to share documents with your iPad. DropBox syncs with the cloud, which then syncs with your iPad or computer (and vice versa). This application allows you to sync directly with your iPad, which means nothing will go to the cloud. In addition, this application will allow you to print directly from your iPad to a networked (Mac) printer. That can be very convenient.
In the future, it would be nice to permit your iPad to print to any printer (if authorized) in any networked situation. But for now, Air Sharing HD will have to do.
- Skype – I put this on the list because I don’t have standard telephones. Instead, I use a combination of Skype and Google Voice and cell phones to direct calls. It works quite well in a small office, allows you the flexibility of appearing to run your office from where ever you may be located, and is very inexpensive. My gripe with Skype is that even after a year, they have not updated their app for the larger iPad screen. Certainly with the new cameras on the new iPad, video conferencing should be integrated into the new Skype iPad app. When it is, this application will be fantastic, much better than Apple’s Face Time which is nearly useless because virtually no one has it.
- 1Password – I’m pretty fanatical about managing passwords to maintain security. When you do this, it’s difficult to remember all the passwords you have for different accounts and so forth. 1Password is a secure way to maintain passwords, while not using duplicate passwords at different sites. 1Password is, as far as I know, only for the Mac. But the iPad version of it nicely integrates with the Mac environment. Highly recommended.
Hopefully these apps will help you use the iPad in your professional practice as more than a toy. I’ve found that these apps really help me deliver high quality criminal law defense to my clients.7 comments
So this is a brilliant point from the comments section. Brian Brady says local lending is a possible solution to our present problems. Greg’s reproduced it.
Now, the problem with secondary mortgage market is that, as currently constituted, it hasn’t been a true market for generations. It’s a political game to the extent that people on Wall Street knew they could socialize the risk, but capture the upside. How else to explain such risky behavior?
Defenders of big banks will point to efficiencies of large scale movements of capital. But certainly those efficiencies are overshadowed by the significant social and economic costs of politicized subsidies.3 comments