Friday, December 19, 2014

Binder & Binder Goes Bankrupt

The Wall Street Journal (“WSJ”) and Reuters reported that Binder & Binder filed for bankruptcy late yesterday. Those filings indicate that Binder plans to close offices and reduce its staff from about 1,000 to about 350. It remains to be seen how that reduced staff can handle Binder’s nearly 58,000 clients. 

The WSJ has been critical of Binder & Binder for many years. While I was wary about the WSJ’s contention that Binder & Binder engaged in fraudulent conduct, I did suggest that when selecting a Social Security law firm, to make sure that an attorney would be the person representing you. Most of Binder & Binder’s employees are not attorneys, which, among other things, means your conversations may not be privileged.

The WSJ cited tougher scrutiny of disability claims, by Administrative Law Judges who are approving significantly fewer cases, as one of the main reasons for Binder’s problems. Tougher scrutiny created greater problems for Binder & Binder because the majority of its work is performed by non-attorney advocates. I agree with Troy Rosasco, another Social Security Disability attorney, who blogged: 

In my opinion, this is a good example why Social Security disability representation should be left to smaller local law firms rather than mega-national corporations with non-attorney advocates. The Social Security Administration should rescind fee withholding for non-attorney advocates which are the steroids allowing Binder & Binder and similar corporations to grow exponentially. 

It is clear that the Binder & Binder non-attorney advocate business model may now be imploding on a massive scale, and its reported 57,000 clients are possibly at risk. massive scale, and its reported 57,000 clients are possibly at risk.

A large portion of Binder & Binder’s debt comes from their ubiquitous television advertisements. Binder might stop taking new cases and just work on the cases they already have, which would take two or three years for the majority of claims. Without the cost of advertising, Binder’s expenses would decrease significantly, and they would gradually lay off employees as the numbers of files decrease, while their income would probably stay about the same the same during the same time period. 

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