April 3, 2009
Down economy brings uptick in business: Bankruptcy lawyers, pawn shops thrive
Los Angeles Daily News
LOS ANGELES — A year ago, Lauren Ross had just four or five clients a month. Now she has that many every week.
Her prosperity didn't come to an end with the recession. It took off.
And considering her profession, it's no coincidence: She's a bankruptcy attorney.
"I'm trying to single-handedly make this economic recession end by spending my way out of it," she joked at her Burbank office. "My husband isn't too happy about it, but I think it's my moral obligation to buy shoes."
While the recession has cost millions of Americans their jobs and homes, some businesses have handily weathered the economic turmoil. Others, like retail liquidators and bankruptcy attorneys, have even profited from it.
The movie theater, for example, has proved to be a haven for escapists even in tough times.
Theater owners in 2007 brought in $9.6 billion, said Peter Corcoran, North Hollywood-based spokesman for the National Theater Owners Association. In 2008, they brought in nearly $9.8 billion, even though admissions are estimated to have dropped off slightly.
"People, when they start watching their money, they still want to go out," Corcoran said. "Historically and still, movie theaters are the least-expensive type of out-of-home entertainment."
Retail stores, reeling from a dismal holiday season, saw a slight bump in January that held up in February. But many chains are closing stores or, like Mervyn's, simply going out of business.
But what happens to all of those unsold items that shops can't move off their shelves?
That's where liquidators come in. Chicago-based Enable Holdings has seen perhaps its best year ever, and is looking forward to even better times this year as the recession continues.
"We've actually been doing very well lately," said Ryan Calverley, spokesman for Enable Holdings. "With all the retailers going under, it has to go somewhere."
The liquidator, which represents several major retailers that prefer to remain anonymous, increased its sales 100 percent in December compared with the previous month, said CEO Jeff Hoffman.
"We think this (2009) will be a fantastic year for us for the obvious reason that retail is struggling," he said.
The recession creates a comfortable environment for liquidators: On one end, manufacturers and retailers have trouble selling more of their merchandise. On the other, consumers don't want to pay full price.
"Both ends of our funnel work in our favor during a down economy," Hoffman said.
With credit lenders scared to finance business deals, high-end pawn shops such as Beverly Hills of Bond Street Collateral Lenders have been making a killing.
"People aren't often earning the money they used to," said Marc Sonnenthal, president of the company.
Clients come in with valuable art or jewelry and the company gives them a loan. Sonnenthal said he's seen a 35 percent increase in clients over last year.
Generally, entrepreneurs, real-estate developers or the rich and famous patronize this appointment-only business in a Beverly Hills penthouse.
"High-end film stars come in, too. They overspend," he said. "We're discreet. We never mention any names or anything of that nature."
Although the rough economic times have actually helped Ross, the bankruptcy attorney said her work has begun to weigh on her.
She recounted stories of clients such as an elderly woman who had refinanced her home before the market imploded to pay for her daughter's cancer treatment. Others, she said, she expects to end up homeless.
"I feel a little guilty, although I've paid my dues — I've been doing this over 25 years," Ross said. "For the first time in bankruptcy law, I get a little depressed at the end of the day."
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