The Scammers Are Coming
Unfortunately, the sociopaths and criminals who ran the last bunch of grifts are probably all now out of prison and ready to fleece a new generation of credulous debtors and mortgagors. Young and naïve law grads must beware.
May 28, 2020 at 04:12 PM
5 minute read
As we move into the next phase of the Covid 19 saga, we're going to see a reprise of some of the worst of the 2008 crisis, including an uptick in unemployment, evictions and foreclosures. Following shortly thereafter will be a bunch of grifters offering credit repair, debt consolidation, and collection and foreclosure defense.
When I had the honor of being chief disciplinary counsel, one of my jobs was enforcing the unauthorized practice of law rules. It's a tricky enterprise, as the unauthorized practice of law (UPL) regime is, in many ways, a vestige of a simpler time, when lawyers rarely practiced across county lines, instead of across state lines and nationally. Many UPL complaints are simply turf-protection by local lawyers trying to keep their competitors from neighboring states at bay. As the Ninth Circuit—where I was involved in a knotty UPL case a few years ago—noted, in a different case, courts cannot be "judicial luddites" and ignore the fact that law follows business, and business respects few geographic boundaries. These cases were far from my first priority.
Rather, I focused on consumer protection. Unauthorized practice of law rules are grounded in the idea that licensing lawyers is, in the first instance, consumer protection, guaranteeing a minimum level of competence (the bar exam), character and fitness (bar examining committees) and a ready remedy for misconduct (the grievance process). Who owns the pond and who is fishing in another's is certainly a concern, especially when the pie is shrinking and the commoditization of legal services and the internet have made it very easy to get basic legal advice and services online for very little money, but my concern was, and remains, protecting the public from those who would rip them off with spurious schemes, and exploit their fear and panic with illusions of legal relief.
Because UPL is both a civil and criminal wrong, we developed a partnership with the chief state's attorney and the attorney general focused on consumer protection in the UPL arena. The Connecticut Bar Association, after over 10 years of trying, got the criminal penalty for UPL raised to a felony. Though our Supreme Court dialed back the state's authority a bit, holding in the Persels case that only the courts could regulate the practice of law, the commissioner of consumer protection retained jurisdiction under Heslin v. Trantolo over the "entrepreneurial" aspects of the practice of law. Though it was a bit like shoveling sand against the tide, we got some consent orders and injunctions, and returned hundreds of thousands of dollars of fees to Connecticut consumers.
Some of the worst players partnered up with bad lawyers to offer legal defense schemes, such as truth-in-lending class actions which never went anywhere and "title protection" which turned out to be nothing more than equity stripping. A study by the New York City Bar Association found that the percentage of consumers who successfully completed debt consolidation was vanishingly small.
The enterprise had its moments, though. One California lawyer I was pursuing for offering bogus foreclosure defense kept sending me letters calling me "Mary" and telling me that I wasn't a "real" law professor because I was only an adjunct. He ultimately went to jail when the California authorities shut his mill down. And one of the "sovereign citizens" who was claiming that there was no such thing as money or credit sent me a bill for $2 million for sending him a letter, as he had copyrighted his name and claimed a copyright violation. (He was arrested too.) I told him that, as there was no such thing as money, I didn't owe him anything.
In the end, we did over 450 UPL cases. By the time I left the office in 2011, the worst of the scams seemed to have run their course. Many who couldn't pay their bills realized that sending money to a debt consolidator wasn't going to work any better than sending it to their creditors, especially when they didn't have enough to go around. Those who hired out-of-state lawyers to ghostwrite pleadings and forestall the inevitable eventually realized they needed real live lawyers, admitted to practice here, when their cases finally reached the docket. Many homeowners learned that the Judicial Branch's foreclosure mediation program was both free and efficacious, and they didn't need class action lawsuits to negotiate with their lenders.
Unfortunately, the sociopaths and criminals who ran the last bunch of grifts are probably all now out of prison and ready to fleece a new generation of credulous debtors and mortgagors. Some of them will undoubtedly enlist young and naïve law grads who cannot find jobs as unwitting accomplices in their schemes, just as they did a decade ago. And the whole cycle will play itself out again.
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