David Bizar, a litigator with Seyfarth Shaw’s Boston office, could command attention at most cocktail parties by mentioning that he served as a member of the U.S. Army’s Judge Advocate General Corps (JAG), and was deployed to Kuwait in 1996 as legal counsel.

But these days, Bizar loves to talk about finance law – it may not be as inherently thrilling at that cocktail party, but it’s extremely action-packed as far as he’s concerned. As a litigator, Bizar mostly serves as a defendants’ counsel to major national financial institutions, which are now often grappling with lawsuits from borrowers whose loans went sour in the bad economy. He’s seen his practice triple in the last three years, and expects it to keep growing.

David Bizar

Title: Partner, Seyfarth Shaw; Boston

Age: 42

Experience: 16 years

Really quickly, I just have to ask: Why do military deployments need lawyers?

[Laughs] Everybody asks me that. What lawyers do in deployments like that, they fill a number of roles. Your primary role is to serve as an advisor to the commander on any legal issues that may arise during the deployment. What the JAGs do, typically, is provide advice in interactions with the host nation… We provide advice on law of war issues and rules of engagement issues.

The soured economy really caused finance lawsuits to spike. What can companies do to protect themselves from this type of litigation?

The No. 1 thing a financial institution can do to protect itself in boom and bust cycles is to have tight lending standards, because most of these claims derive from some type of loose lending practice.… One of the reasons that you’re seeing less of these claims being brought against smaller financial institutions is because they had tighter standards in the boom cycles than some of the larger institutions did.

But today the larger financial institutions have tightened their underwriting standards and they’re being much more careful about who they lend to. Because of that… many of the smaller financial institutions are looking at ways to grow their loan portfolios by trying to… loan to some of the people that are not able to get some of the loans from the larger institutions, and those are more dangerous waters for the smaller institutions. 

If it’s an area that they haven’t tread in before, they’re probably not likely to be as successful with it, maybe because of the profit margin in the short run. And what they don’t always factor into these pricing models is, in my experience, the lower the credit quality of the applicant, the more litigious they tend to be.

Really? I had no idea.

It’s a perfect example with subprime [borrowers], if you look at the lawsuits that have been brought by subprime, there are a large number of them. When you look at the lawsuits that have been bought by prime borrowers in the same predicament as the subprime borrowers, they tend not to bring suits.

Here’s an example: If you’re a highly educated person, let’s say you’re a banker or a lawyer or a doctor, you’re less likely to be deceived at the closing table on the terms of your mortgage. You’re probably going to spend more time trying to understand what it is, and if you end up not getting exactly what you thought you were, you might be embarrassed to make a claim in a lawsuit and say, ‘I was really stupid, I didn’t understand this.’ Whereas someone with less education might be more inclined to say, ‘Good, we’ll sue them.’

How will new financial regulations impact liability for these companies?

They’re very uncertain about the Dodd-Frank bill. The statute has been written and passed… but we won’t know until the regulations are promulgated, what these laws actually will do to everyone who are subject to them.

Don’t new regulations always lead to new legal pitfalls?

With regulations come two pitfalls. One is that even a well-intentioned institution will make mistakes, and not follow the regulations at all, either in some cases because it’s unaware of them, or it makes a mistake in reading them or applying them. Or sometimes it just gets them wrong. A financial institution or any other business may read a regulation, believe that it says one thing, and then have a court someday tell them that it meant something completely different.

Some folks will adopt the interpretation that makes them more money, and other folks will adopt the interpretation that’s safest, and we may not know until a court tells us, what the meaning of it actually was. And by then it’s too late.