The Washington Post splashes an investigative story about the tax lien business, in which outsiders buy up delinquent municipal property tax liens sometimes amounting to mere hundreds of dollars, then roll in lawyers’ fees and costs that can push up the bill into many thousands, eventuating in the foreclosure of family homes. The narrative is less than clear about exactly how the process works, and even leaves the impression that a tax lien purchaser owed, say, $6,000 can walk away with all the proceeds from the foreclosure of a $197,000 house without having to hand any of it over to mortgage holders, let alone the original owner. And some of the solutions offered (let’s not allow lien foreclosures on elderly people!) would have unintended consequences that are also, to be polite, underexplained. Still, enough of the story is there that an important general principle comes through: it’s dangerous for the law to put opportunistic actors in a position to run up $450/hour legal fees pursuing adversarial process that might not actually have been needed to vindicate their interests.
- “Is the main effect of the minimum wage on job growth?” [Tyler Cowen] Minimum wage is transitional wage; most workers who receive it will earn higher rate in the next year if they stay employed [same] “Obama’s Bogus Case for a ‘Decent Wage'”[Ira Stoll]
- “Equipment manufacturer sues EEOC over email survey trolling for potential class members” [Jessica Karmasek, LNL]
- Don’t mess with SEIU? “Service Employees Suit Assesses Harsh Penalties against Breakaway Reformers” [Steve Early, Labor Notes]
- NLRB is fully staffed now, so watch out employers [Rod Kackley, Crain’s Detroit Business]
- Major League Baseball latest to face suit over unpaid volunteer workers [ABA Journal]
- Dent in lawyers’ business plan? Judge doesn’t think Michigan meatpacking workers’ $1,000 don/doff claim is adequate basis for $140,000 legal fee award [Free Press]
- Workplace vagrants: many employees quit jobs regularly as garnishment catches up to them [Coyote]
“At the risk of losing their homes if they didn’t, scores of Colorado homeowners struggling to avoid foreclosure in the past year were each forced to pay hundreds of dollars in lawyer charges for phantom court cases against them, a Denver Post investigation has found.” In 126 of the episodes, the paper reports, no foreclosure lawsuit was actually filed. Related reporting on allegations against Colorado foreclosure law firms here, here, etc.
Along with the Colorado attorney general, various other law enforcers both state and federal are scrutinizing the billing practices of creditors’ law firms looking for evidence that they’ve been evading the fee and cost reimbursement limits for foreclosures that Fannie Mae, Freddie Mac and FHA prescribe on loans they own, guarantee or insure. [Paul Jackson, Housing Wire via Funnell]
Here’s why: it turns out that many of the major law firms responsible for managing foreclosures for the GSEs also have a controlling interest in the ancillary service firms that generate the variable fees that appear as “costs” on the lawyer’s bill. Many law firms either outright own, or their partners have a significant interest in, the company that is posting and publishing notices; or they may own or have an interest in the company that manages process of service, as well.
Such arrangements are not illegal, but could land the firms and mortgage servicers in hot water if it develops that they have connived at fee padding by the ancillary firms. (& welcome Above the Law readers). More: Heather Draper, Denver Business Journal (and thanks for quote).
In April, an extensive New York Times investigation by Sharon Lafreniere confirmed and extended what writers associated with the late Andrew Breitbart had been charging for more than two years: the so-called Pigford settlement, in which the U.S. Department of Agriculture agreed to make payments to persons charging racial bias in agriculture programs, is riddled with fraud. If you thought this might stand in the way of a payday for plaintiff’s lawyers in the case, you’re wrong: U.S. District Judge Paul Friedman has just approved a payout of $90.8 million to the lawyers, over objections. That represents the maximum (7.4 percent) of what was being asked for: “The deal set out a fee range between 4.1 percent and 7.4 percent.” [BLT]
- We’re worth it: lawyers in credit card case want judge to award them $720 million [Alison Frankel, Reuters] Johnson & Johnson will fight $181 million payday for private lawyers in Arkansas Risperdal case [Legal NewsLine]
- British Columbia, Canada: “Lawyer Ordered To Pay Costs Personally For ‘Shoddy Piece Of Counsel Work’” [Erik Magraken] Ontario client questions lawyer’s fee [Law Times]
- Sixth Circuit: attorneys fees statute not intended to cover dry cleaning and mini-blinds [Legal Ethics Forum]
- Indiana lawmaker goes back to drawing board on loser-pays bill [Indiana Law Blog]
- ‘Shocked’ by $3M legal fee in fatal car-crash case, judge tells lawyers to pay plaintiff lawyer $50K [ABA Journal]
- Seth Katsuya Endo, “Should Evidence of Settlement Negotiations Affect Attorneys’ Fees Awards?” [SSRN via Legal Ethics Forum] /li>
- In Israel, more of a discretionary loser-pays arrangement [Eisenberg et al, SSRN via @tedfrank]
- British cabbie beats ticket, recovers only some of his legal costs. Still better than he’d do here, right? [Daily Mail]
- Turnaround guru Wilbur Ross: current structure of bankruptcy fees encourages lawyer “hyperactivity” [Reuters]
Although our system is (alas) set up to make it very difficult for defendants to recover legal fees from losing plaintiffs, it is not too surprising that this case would be an exception given a judge’s scathing findings against the plaintiffs’ conduct — not to mention the recent agreement by the ASPCA, one of the animal rights groups, to pay the Ringling owner $9.3 million. [ABA Journal]
Extraordinary emails bolster a client’s case that mega-law firm DLA Piper wasn’t holding its legal billings to a needed minimum. [New York Times “DealBook”]
We told you the Kentucky fen-phen scandal — which we’ve been covering since 2005 — was serious. Now it’s resulted in the permanent revocation of the Kentucky license to practice of famed “Master of Disaster” tort specialist Stanley Chesley, whose office is across the river in Cincinnati, Ohio. Two lawyers who directly represented fen-phen clients in Kentucky, “Shirley Cunningham Jr. and William Gallion, are serving prison sentences for bilking clients out of $94 million in settlement money.” While Chesley did not represent Cunningham’s or Gallion’s clients, and denied holding any legal responsibility toward them, he accepted a $20 million fee, far in excess of negotiated sums, for representing the lawyers themselves in the settlement that brought in the cash, a sum that “was unreasonable, especially in light of his professed ignorance and lack of responsibility for any aspect of the litigation except showing up at the mediation and going through the motions of announcing the agreement,” the Kentucky Supreme Court concluded. Chesley participated in the diversion of the pilfered funds into a trust (pleasantly named “Kentucky Fund for Healthy Living“) intended to conceal the skimming, and helped orchestrate the lawyers’ cover-up. Wrote the court: “The vast amount of evidence compiled and presented in this matter demonstrates convincingly that respondent knowingly participated in a scheme to skim millions of dollars in excess attorney’s fees from unknowing clients.” [ABA Journal; court order, PDF; Louisville Courier-Journal; Daniel Fisher, Forbes; David Lat, Above the Law]
“Four law firms that submitted a “grossly inflated” $2.7 million fee request after winning $12,500 for their client should go away empty-handed, a federal judge has ruled. Eastern District Judge Joanna Seybert, sitting in Central Islip, condemned the fee application submitted by real estate investor Robert Toussie’s attorneys, including $2.65 million for Chadbourne & Parke, as ‘outrageously excessive’ and done in ‘bad faith.'” [NYLJ]