Attorney has his finger on area’s financial pulse
By Debra Talcott
Clients reap the benefits of his advice in the Bingham Farms offices of Thav, Gross, Steinway & Bennett. WDFN listeners tune in to his Saturday morning radio program, “The Financial Talk Center.” Workout buddies look for him at the Sports Club of West Bloomfield. Wherever he goes, attorney Ken Gross is happy to share his views on the current economic crisis and recession.
“Part of my practice as a business lawyer has been to address problems individuals and businesses face from a financial perspective,” says Gross. “Today’s problems are different from those of the past because people and businesses have lost the equity cushion in all real estate holdings. To add insult to injury, banks refuse to lend money, and credit card companies have slashed credit lines.”
Gross, who was born in Detroit and raised in Oak Park, took a rather circuitous route to becoming an attorney, but his divergent path was beneficial to his practice of business law and commercial litigation. After completing his freshman year at Michigan State University, he moved to Minnesota and worked as a teaching tennis professional and manager of an indoor tennis facility while attending college part time.
“The time spent working allowed me to adopt a business approach to school when I returned to Michigan,” explains Gross.
After earning his bachelor’s in business administration at Wayne State University, Gross attended Wayne’s law school.
“I look back at school with fond memories of accomplishment,” says Gross. “But I realize now that, at the time, I was too young and hungry to enjoy the flexibility and wide range of freedom that is afforded a student. Instead, I was in too big a hurry to complete school and begin a career,” he admits.
From early school years, the young Gross was the student others viewed as the future lawyer. Active in Student Council and never one to shy away from a debate, Gross gravitated to the profession, always intending to practice business law, which has been the focus of his practice for 27 years. Now, however, his practice emphasizes financial crisis management.
“The landscape for legal work in our community has changed dramatically. Real estate as a business no longer exists. Virtually every developer has been either put out of business or is forced to sit on the sideline and wait until a turnaround occurs,” says Gross. “The automotive industry, inclusive of the tier one, two, and three suppliers, is in a state of shock with the fallout from the GM and Chrysler bankruptcies,” he adds, explaining that legal work today is all about assisting business clients to stay in business.
The legal work of overseeing mergers, acquisitions, and real estate development–all part of a thriving economy–is currently nonexistent in Michigan.
Not one to mince words when it comes to talking about the credit card companies, Gross admits he “gets a kick” out of pushing the credit card companies as far as he can to negotiate debt resolution for a client.
“Just yesterday I was able to negotiate a $16,500 American Express balance down to $3,500 payable over three months,” says Gross. “In two calls, [the representative] went from $16,500 to $9,000 to $5,000 to $3,500. The wide range of abuse credit card companies were able to put over on the American public for so long is a classic example of what is wrong with our lobby-based system of government.”
Admitting that the credit card legislation slated to take effect in February 2010 is a positive step, Gross says he is, however, concerned about the actions the companies are likely to take in the ensuing nine months.
“Increased fees, reduced lines of credit, and increased interest rates are coming in the next few months,” Gross predicts.
Once this legislation becomes law, credit card companies will not be allowed to increase rates unless a cardholder is 60 days behind in payments. However, this protection applies only to consumers, making Gross suspicious that the industry will find ways to make money from business owners.
“I’m fearful the industry will walk around it by issuing a card to a business with a personal guaranty from its owner–and in that setting, the new law will not apply,” explains Gross.
Another area Gross’s firm excels in is assisting clients with delinquent tax problems. He explains that tax problems typically reside in two arenas: individuals who owe outstanding income taxes and business
owners who are delinquent in payroll taxes and are facing assessment for federal and state taxes and penalties for the unpaid portion of withholding taxes that are deducted from their employees’ paychecks.
“Under federal law there is an opportunity to compromise unpaid tax liabilities through an Offer In Compromise which allows a taxpayer to pay a small portion of the tax liability in full satisfaction of the debt,” explains Gross.
In such cases, Thav, Gross, Steinway & Bennett will arrange payment agreements for their clients to pay taxes over extended payment terms to avoid seizure of assets, closure of a business, or levies against wages.
When a client is in collection at the federal level, the process of negotiating payment terms requires the firm to contact the IRS. Gross credits partner Charles Thav, who has been handling such issues for 40 years, with a strategy that has worked time and again.
“I was sitting in his office one day, and he was beginning a telephone conversation with a collection officer. Suddenly, in mid-sentence, he hung up. When I asked why he’d done that, Thav replied, ‘I could tell he was going to be unreasonable, so when that happens, I hang up and call the 800 number back and keep calling until I speak with someone who sounds reasonable before I tell the agent the name of the client I am representing.’”
Gross laughed, but when he watched his senior partner call again and negotiate a successful payment arrangement with another agent, he became a believer.
“These are the type of strategies you don’t learn in a textbook or seminar,” he chuckles.
In a recent airing of his radio program, Gross spoke with guest Congressman Thaddeus McCotter, who represents Michigan’s 11th District. In their discussion of the “automotive apocalypse” that has radically changed U.S. manufacturing, Gross explained to the Congressman that the effects of automotive bankruptcies pose difficulties for citizens beyond those who directly work for an auto company or a supplier.
“The U.S. Treasury is calling the shots, and the outcome is difficult for dealers who are losing their livelihoods and for personal injury plaintiffs whose cases are being dismissed,” observed Gross.
Gross’s partner and co-host on the show, David Einstandig, explained that in representing a local dealership he sat at the Chrysler bankruptcy hearings for four days and learned that the Treasury was not the entity that required closure of dealerships. While the press has reported that “underperforming” dealerships were those that did not have their contracts renewed, Gross and Einstandig maintain that is not necessarily the case.
“Dealers had been strong-armed into taking more inventory to help the company, with a promise that the company would stand by them. The next thing you know, Chrysler files its Chapter 11, and 14 days later they send letters to 789 dealers, many of whom were long standing and profitable, notifying them that their dealership is terminated. To add ‘injury to insult,’ neither Chrysler nor the government offered to buy back the vehicle inventory.”
When Ken Gross is not helping business clients and consumers tackle their financial problems, he enjoys his life with wife Bonnie in the Farmington Hills neighborhood where they have lived for the past 20 years. The couple is proud of their two daughters, both of whom followed their father’s freshman year green-and-white footsteps by attending Michigan State University.
“Amy, who is 26, graduated from MSU as an English major and resides in Tel Aviv, where she works as a recruiter for a program that provides internships in Israel for college graduates. Jennifer, 21, is a senior at MSU and plans to become an elementary school teacher,” Gross explains.
With their daughters pursuing their own goals, the Grosses have been known to enjoy cruising the Eastern Caribbean. They also have another female family member on whom to dote–their Cairn Terrier MacyMoo.
“She watches television with us, and any time she sees another animal, she goes crazy, barking and crashing the television screen then scurrying around the house looking for her newfound friend,” Gross quips.
While Gross devotes time to family, friends, and his own fitness routine, a major part of his life is focused on helping people realize that their current financial troubles are not their fault and that they are not alone.
“I tell people to look to the left and look to the right. Two of the three of them are in financial distress,” says Gross. “It’s unfair, and I’m angry this has happened to us. Nobody had any way of predicting the real estate market would melt down and that the value of our homes would be 60 percent of what it was two years ago.”
Encouraging his radio audience to be proactive rather than embarrassed by their financial struggles, Gross advised listeners that have lost the equity in their homes to shed as much debt as they possibly can.
“Your responsibility to yourself and your family is to go forward,” he says. “You should not leverage your future to pay for your past.”