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The dramatic decline in home sales and mortgage refinancings have hit the real estate law sector hard across Massachusetts, particularly closing attorneys at small and solo firms. 

Closing attorneys stress that today’s conditions don’t compare to the industry carnage of 2008, when the subprime mortgage meltdown led to widespread cutbacks on real estate legal billing and jobs. 

But today’s stresses – including the plunge in the number of homes for sale, the major drop-off in mortgage refinance deals and higher regulatory-related expenses facing firms – have nevertheless forced layoffs, consolidations and even some closures of smaller real estate firms, according to industry figures.  

The pressures have also forced some firms to expand into other real estate legal fields, such as evictions, condo conversions, developments and even commercial real estate. Some are also starting, or expanding, their own estate planning practices. 

“There’s no question people have seen a significant decline in [closing] business,” said Michael Lombard, a partner at Touchstone Closing & Escrow, which has six offices across eastern Massachusetts. “They’re struggling.” 

Lombard said his firm has seen a 40 percent decrease in business since the pandemic-era peak in local purchase and refi loans. As a result, the firm reduced its staff by about 15 percent, while initially jettisoning an attorney who has since been replaced.  

Today, Touchstone Closing & Escrow is doing better.  

“We’ve been very busy. Not crazy busy like before the pandemic, but still very busy,” said Lombard. 

Sales, Loans Tell the Story 

Sales and refinance stats tell part of the cutback story that’s unfolding across the state. 

Statewide single-family home sales declined by 14 percent from 2017 to 2022, according to annual data from The Warren Group, publisher of Banker & Tradesman. But single-family sales were down by 16 percent last year from their pandemic-era peak in 2021. 

And the downward spiral in sales appears to be intensifying in 2023. Year-to-date through August, single-family home sales were off a whopping 24.4 percent, compared to the tally at the same time last year, according to data. 

Statewide condominium sales decreased by 5 percent from 2017 to 2022. But condo sales were down 17.2 percent from the pandemic-era high in 2021, compared to 2022, data shows. 

The second pillar of closing attorneys’ business, handling mortgage refinance deals, has been a roller coaster ride over the past five years and eight months. 

For single-family homes, refinancings were actually up 9 percent from 2017 through 2022, according to The Warren Group. But refi loans were down last year by nearly 60 percent from their pandemic-era high of 220,299 deals in 2021. 

Condo refinance deals show similar trends since 2017. 

Michael Maloney, managing partner at SKM Title & Closing Services PC, said his firm has seen a decline in business since the pandemic-era peak of 2021, though “it’s not equal” to the overall market plunge in purchase and re-fi loans. He didn’t provide specific numbers. 

Besides the huge fall-off in purchase loans and refis, Maloney and others say real estate firms are under pressure from escalating expenses, such as increased cybersecurity measures mandated by federal regulators, at a time when closing fees are stagnant.  

“Costs are up, but closing fees aren’t keeping pace,” he said.  

With significant contraction in the residential real estate sales and refinance markets, some solo practitioner closing attorneys have had to join larger firms to survive. iStock illustration

Consolidation Among Firms 

The net result: anecdotal reports of small and solo real estate firms consolidating with larger firms, Maloney and others said. 

“Some people have left the business,” he said, adding solo firms have been the hardest hit by today’s various sector woes. 

Larger firms are also pushing, or expanding, into new areas, such as commercial real estate law, Maloney said. The commercial real estate deals are usually somewhat small, “south of $5 million,” said Maloney. 

In an email exchange, Peter Wittenborg, executive director of the state Real Estate Bar Association, said his organization’s membership has been “steady” and “pretty stable in the last five or six years,” despite recent sector hardships. 

“Keep in mind that the residential real estate market is highly volatile and cyclical,” said Wittenborg, adding that REBA has diversified since the 2008 subprime meltdown, from a focus largely on title practices to a more multi-faceted approach to real estate law. 

“Now, we have sections for every practice area of real estate law, residential conveyancing being one of more than 20 sections,” he said. 

Noel Di Carlo, a partner at Warshaw Di Carlo & Assoc. and co-chair of REBA’s residential conveyancing section, said her firm is doing well because it has a number of real estate practices beside conveyances, such as real estate litigation, condo conversions and real-estate development. 

“If you don’t have a lot of tools in your toolbox, you’re going to have a hard time,” she said. 

Solo Practitioners Challenged 

For solo firms, it’s sometimes hard to diversify into other practices and keep pace with changes.  

“For a solo firm, I can see people saying, ‘This is not economically worth it for me anymore,” Di Carlo said. 

Most attorneys contacted by Banker & Tradesman declined to identify solo attorneys who have thrown in the towel – or simply joined another firm. 

Jordana Roubicek Greenman, a solo real estate attorney in Boston, said she’s definitely not giving up. Survival is about having multiple numbers of real estate focuses. 

“I exist by doing more,” she said.  

Another key to success for solo firms during difficult times is providing clients with personal, hands-on help, rather than dishing off real estate legal work to paralegals, she said. 

Of those solo real estate attorneys who are leaving the business, Greenman said: “I think a lot of it has to do with the feeling of being overwhelmed – and overwhelmed by all the liabilities involved.”