On Pareto Efficiency and Business Deals

 When I did my undergraduate degree at Purdue University, my major was in Management, and we didn't have minors as such, we had "concentrations". One of my "concentrations" was economics, and one of the courses that I took was Public Policy Economics. It was the most surprisingly useful course I took as an undergraduate. 

In addition to game theory (which I was familiar with as a poker player), there were three topics that I remember specifically: 1. he difference agenda setting can make in the outcome of a transaction; 2. the "prisoner's dilemma" scenario - (which I may cover in another post); and (3) the doctrine of Pareto Efficiency.  I want to talk about Pareto Efficiency because I use this every day.  

Pareto Efficiency is an economic theory that in its simplest terms says that there is room to make a deal if one party can be made better without any other party being made worse.  The corollary to that is that if a party can't be made better without another party being made worse, there is no room to make a deal. At the outset of every case I try to eyeball whether there is room to make a deal by determining whether we are already at a pareto-efficient state.  

Determining that there is room to make a deal is the first step, The first step is generally explaining to the client the dynamics of trade possibilities, and the second step is making sure the opposing party understands that their is an opportunity to making a deal rather than taking on litigation until the end.  

As a matter of policy we rarely take cases where I don't think there is room for a pareto gain. If I don't see room to make a deal, I explain to the client that I don't see a probable settlement, and we talk about the pros and cons of litigating the case in court.  In business cases and consumer cases, it rarely makes sense to take a case that you can see at the beginning is going to have to be fought to the bitter end.  This approach is why we can often take business cases where the amounts are around $250,000 and keep our attorney fees at $5,000 or less.  

https://en.wikipedia.org/wiki/Pareto_efficiency

A Marked Uptick in Collection Efforts by Nextgear Capital after Judgments

 Though Nextgear Capital hasn't been filing quite as many lawsuits since Covid hit, it looks like they have stepped up their efforts at collecting after judgment.  Many people have called us and told us they have received numerous telephone calls from Nextgear's in-house debt collectors.  Because these are business collection accounts, and not consumer collection accounts, the Fair Debt Collection Practices Act does not apply to these calls.  Nextgear has also been filing their Indiana judgments in the states where the debtor lives to take advantage of wage garnishments and other allowed collection actions in the debtor's state.  Don't panic if you get these calls. We have found Nextgear open to dealing on judgment debts. I urge you to call us to talk to us about how we can help you negotiate a reduced debt with Nextgear.  

After 8 Years A New Identity - The Beginning of Hofer Hagan LLP, the end of Consumer Law Office of Steve Hofer

 As of today, I am ending my practice under the name Consumer Law Office of Steve Hofer, BUT I have joined up with attorney Keith Hagan, and we have formed a new firm, Hofer Hagan LLP.  Other than the new name, not much is changing. Keith and I have been doing most of our cases together for a few years now. We are going to be trying out a few different website looks, but the practice will stay mostly the same.  Right now, we don't even have new phone numbers.  

BATNA - "Best Alternative to Negotiated Agreement"

 I was just introduced to the term BATNA - or "best alternative to negotiated agreement".  In short, as a prelude to negotiating a deal, you evaluate what your best alternative is if you can make no deal at all. This helps you determine the lowest possible offer that you will accept.  Now, as you dig into commentary on BATNA, you will see a lot more detailed analysis, but I think you get the idea. 

Even though the term BATNA is new to me, when we have engaged in negotiations, we have always told our clients to consider the alternatives to doing a deal at all. Also, keep in mind, the other side will be trying to guess your BATNA when determining what kind of proposal to make to you.  One of the things that we look out for is to look for situations when the other side is making incorrect assumptions that underestimate our clients' alternatives to making a deal.  

https://www.investopedia.com/terms/b/best-alternative-to-a-negotiated-agreement-batna.asp#:~:text=The%20best%20alternative%20to%20a%20negotiated%20agreement%20(BATNA)%20is%20the,no%20agreement%20can%20be%20reached.

Have you been scammed on a "Turnkey" Rental Property Investment Scam? Here are some thoughts

 I have been handling consumer law cases for over 30 years, and just recently I received my FIRST complaint about a "turnkey" rental property Investment.  I did some initial checking and my first impression is there maybe avenues where an attorney can help you get your money back.  

The first thing you have to understand is that whenever somebody is selling a security, and for our purposes think of "security" as a passive investment, both the person selling you the investment and the investment itself must either be registered or covered by an exception.  Now there are some very broad exceptions.  The smaller the investment and the lower the number of people to whom it is offered, the more likely that it is covered by an exception. Because both federal and state law apply to securities offerings, the offering must comply with both state and federal law to be fully exempt.  

In general a sale of a fee interest (traditional property ownership) in real estate is not a security, but when that property is sold as an income-producing asset along with services in managing the property, that property might be a security.  

The current crop of "turn-key" property "scams" look more like a security than traditional real property sales, because the whole spin is to combine the purchase of the property with management services that make renting the property practical. Promoters advise that putting a rental property into your IRA is a great investment. The thing is, rental property that is actively improved or managed by the investor is not allowed to be in an IRA. That's what makes these operations look more like securities investments than a pure purchase of investment real estate.  

"Turn-key" property sellers and managers are not necessarily scams, but keep in mind, a lot of these companies own portfolios of properties that they also manage to make money. Are they more likely to sell you the turkey that is a money-loser, or the prime property that is a cash cow?  

If you find yourself victimized by a Turnkey property operation, and either you, the property, or one or more of the promoters is located in Indiana, we would love to hear from you.  If the transaction has nothing to do with Indiana, You can find an attorney in your state at the National Association of Consumer Advocates website www.consumeradvocates.org.  

Have You been sued in Indiana by National Collegiate Student Loan Trust?

 After a hiatus during covid, it looks like National Collegiate Student Loan Trusts have begun to file lawsuits again all over Indiana.  If you get sued, please call us. These cases are not hopeless.  

Have you had a problem with The IRA Club or Alpine Capital Solutions, LLC? We would like to hear from you.

 We are investigating a complaint relating to real estate investments sold through The IRA Club in Chicago and Alpine Capital Solutions, LLC out of Indianapolis.  If you have or have had any issues with either of these firms, please contact us.