Your Defense Lawyer May Go Too Far – Watch Out!
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But is it possible for a debtor-friendly lawyer to go too far, when representing a debtor?
The answer is yes, according to U.S. District Judge Cathy Bissoon of the Western District of Pennsylvania. In fact, in Sofaly v. Portfolio Recoveries, Civil Action #24-53 (Western District of PA), Judge Bisson sanctioned the debtor’s lawyer and issued a warning to all debtors: be careful when hiring a lawyer! Some will waste your time, money, and put your credit rating in jeopardy, unnecessarily, for their own gain!
So what really happened in Sofaly?
Sofaly v. Porfolio Recoveries, Civil Action #24-53 (Western District of PA)
In this case, a lawyer claimed that his client, Sofaly, had drafted a handwritten letter (Dispute Letter) to a debt collector, Portfolio Recoveries, which ignored the Dispute Letter allegedly, thus violating the Fair Debt Collection Practices Act. See Sofaly v. Portfolio Recoveries, Civil Action #24-53 (Western District of PA). See the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692.
The lawyer and Sofaly then brought suit in federal court for unfair debt collection practices.
Only, Portfolio Recoveries alleged it was the debtor’s lawyer — not Sofaly — who had written the Dispute Letter. The attorney was pretending to be the debtor, and actually hoping Portfolio Recoveries would never see or act upon the Dispute Letter, allegedly.
But why?
It’s simple. The lawyer was trying to build a contrived case for unfair debt collection practices, allegedly.
Importance of the Matter
First, if true, these facts demonstrate a false and deceptive “set up” for the creditor/debt collector — involving a lawyer posing as a client — when all lawyers are busy fighting the false stereotype that “all lawyers are liars.”
Secondly, the Dispute Letter had been hand-written to evade the debt collector’s scanning software that reads letters, allegedly. So by design, this scheme would also make it appear — and falsely so — that the debtor offered no challenge to his debts. Again, the Dispute Letter was intended to be disregarded. This made the debtor look that much more careless and delinquent, potentially causing further damage to his credit rating and reputation.
Not surprisingly, Judge Bissoon gave the matter her full attention, as we shall see.
Rule to Show Cause
First, Judge Bissoon issued a rule to show cause why Sofaly’s attorneys should not be sanctioned for the Dispute Letter. Then, Judge Bissoon conducted a hearing and heard testimony on the issue of whether the debtors’ lawyers should be sanctioned.
Findings Of Face Made by Judge Bissoon
Judge Bissoon found that the “Dispute Letter” had, in fact, been a “script” prepared by Sofaly’s counsel, not Sofaly. Judge Bissoon wrote:
Important also was counsel’s decision for firm staff to handwrite the [Dispute] letters. As they admitted in Court, and revealed in the client contracts, counsel’s efforts were specifically designed to evade common tools used by debt collection companies to detect debt disputes. Their hope was to generate lawsuits based on the unlikelihood of the debt collection companies discerning that the debt was “disputed,” given the manipulative camouflaging in the letters.
But the Debtor’s Lawyers Had Their Client’s Permission, So. . . ?
The lawyers for Sofaly defended the Rule to Show Cause on several grounds. First, even if the lawyer had written Dispute Letters here, and in other cases, they did so with the client’s permission. The client had in fact agreed to the content of the letter. In fact, the client also authorized the lawyer to sign his name to the letter.
This is 100% acceptable according to agency law.
But Judge Bissoon wasn’t buying it:
The fig leaf behind which [the debtor’s lawyers] hide: their clients gave them permission to hand write their letters, sign them and send them off into the world. According to counsel, that is agency law, plain and simple. And agency law apparently trumps all. If it is not obvious, here is the problem: Principles of agency may defeat the suggestion that the firm’s clients were deceived. They may establish the clients’ knowledge and understanding of counsel’s specific intentions. But they say nothing at all – to the Court’s satisfaction, at least – regarding the likelihood, indeed the intention, to deceive Defendant, the Court and those similarly interested.
Content and Form of the Dispute Letter
Secondly, shouldn’t the letter have been hand-written to sound like the way a debtor might dispute a debt? Judge Bissoon wasn’t buying this, either. She found that the Dispute Letter contained rambling nonsense, and falsehoods, specifically designed to throw off software that reads letters. The court found:
Counsel have insisted that the scripts were intended to be similar to what a “real debtor”
might write, accounting for their lack of sophistication. The Court questions whether Plaintiffs’
counsel are giving their [clients] enough credit. In any event, they have failed to
introduce supportive evidence, aside from their self-serving and conclusory testimony.
The Court’s Heavy Sanction
Ultimately, Judge Bissoon ordered:
Plaintiffs’ counsel shall pay Defendant’s reasonable attorney’s fees, expenses and costs in
the above-captioned cases, up through the date of this Memorandum and Order. . . The monetary sanctions are entered against [the debtor’s attorneys] jointly and severally. Opposing counsel shall file Defendant’s petition for fees and costs with the Court no later than August 23, 2024.
But that was not all.
Judge Bissoon further ordered that the debtor’s lawyers pay all of the defendant’s fees, expenses and costs in the case, up through her opinion. Moreover, she ordered the attorneys to write more letters, but this time, letters of apology to all those on whose behalf the lawyers had written Dispute Letters. And lastly, she ordered that the debtor’s attorneys at issue attach a copy of her opinion — delineating the attorneys’ questionable conduct — to every debt defense related matter in Western Pennsylvania.
At least Two Sides to Every Story
It remains to be seen whether the above findings of fact and/or sanctions were appropriate. In fact, the case can be appealed, for example.
This Author’s Take
We see both sides. And, we’re not sure the Court’s well-written opinion fully resolves the issue, unfortunately.
For example, regardless of who had written the Dispute Letter, aren’t debt collectors supposed to actually read letters disputing debt? Why should the debt collector “get a pass” for cutting costs by having computers –not hiring humans — read mail addressed from debtors?
And seriously, why can’t a lawyer assist a client with a debt dispute letter? For one thing, a debtor — who hand-writes his own dispute letter — may be naive enough to think the creditor will actually read and acknowledge the debt dispute. And, the debtor may fail to make a copy of his dispute letter. With that, and since debt collectors apparently throw such hand-written Dispute Letters in the trash, isn’t it therefore a good idea for lawyers to be involved to dispute a debt to help create a record?
How Things Really Work
In truth, attorneys write “ghost-write” letters for their clients all the time. We do it (1) so the client can try to get a matter resolved, short of escalating the matter where all parties lawyer up, and (2) to avoid the client saying something stupid ill-advised in the letter.
But it’s not “deceit” or “fraud” for a lawyer to prepare letters going out under the client’s signature.
In the end, the client must fully understand and consent to her attorney’s conduct and all the ramifications of it. Here, Judge Bissoon believed the client at issue had never truly consented to or understood the attorney’s actions. Ultimately, every law firm — and its staff — should stop short of conduct that’s deceptive in any measurable way both for ethical reasons, and to avoid being sanctioned.
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