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Collection Law Firm playing both sides of the court? (Long)


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I apologize for the length of this post....

Okay, this is driving me nuts… while trying to prepare for dealing with a local collection agency/law firm (we’ll call ‘em Two Faced Law Firm) that is trying to collect an alleged amount from me for a large and often reviled bank. Initially, Two Faced Law Firm sent me a dun notice with the mini-Miranda, and I dv’d and threw down the arb card. They didn’t validate for 8 months, and then only with a “final” billing statement. <deleted>

Anyway, over the next few days I want to put together a list of valid claims against Two Faced Law Firm, and naturally am looking to include FDCPA and TCPA violations for which I have physical evidence. I’ve been looking at whatever cases I can find online where they were accused of violating the FDCPA. I found one where they made “an offer in judgment” and paid the Plaintiff $5K to settle. I also came across a class action suit against Two Faced Law Firm (Debtors vs Two Faced Law Firm), for various violations of state and federal laws, including FDCPA violations.

Let me include here that on April 7, 2009, Arkansas Collection Laws were changed to require certain attorneys and law firms to be licensed to collect debt unless they fall within certain specific exemption qualifications. Here are the laws as they currently read ;

SECTION 2. Arkansas Code § 17-24-101 is amended to read as follows:

17-24-101. Definition.

As used in this chapter, unless the context otherwise requires, “collection agency” means any person, partnership, corporation, or association, limited liability corporation or firm which engages in the collection of delinquent accounts, bills, or other forms of indebtedness owed or due or asserted to be owed or due to another or any person, partnership, corporation, or association, limited liability corporation or firm using a fictitious name or any name other than their own in the collection of their own accounts receivable, or any person, partnership, corporation, association, limited liability corporation or firm which solicits claims for collection or any person, partnership, corporation, association, limited liability corporation or firm that purchases and attempts to collect delinquent accounts or bills.

SECTION 3. Arkansas Code § 17-24-102 is amended to read as follows:

17-24-102. Exemptions.

(a) This chapter does not apply to:

<1-7 are standard exemptions and have been deleted>

(8) Attorneys at law who use their own names or the names of their law firms to collect or attempt to collect claims, accounts, bills or other forms of indebtedness owed to them individually or as a firm;

Now, I have been told and agree that this all means that attorneys and law firms who collect debts for a third party now fall under the definition of “collection agency”. Yes?

Now, back to the class action suit that I found <deleted>. All of the Debtor’s had been successfully sued by various creditors via Two Faced Law Firm prior to the changes of Arkansas Collection Laws. While they did not specifically state it in their complaint, one of the legs of their defense was that the Two Faced Law Firm was required to be licensed to collect debts.

Two Faced Law Firm conceded that it was deemed a debt collector under the FDCPA, but countered that they were “immune from suit under Arkansas Code Annotated section 16-22-310, which provides that attorneys “shall not be liable to persons not in privity of contract, for civil damages resulting from acts, omissions, decisions, or other conduct in connection with professional services performed by the person, partnership, or corporation.” According to Two Faced Law Firm, all claims other than actual fraud or intentional torts, which are expressly exempted from section 16-22-310, and claims under the FDCPA were barred by the attorney-immunity statute.” (I tend to agree due to the fact that all of the Plaintiff’s were successfully sued prior to the collection laws changing.) Two Faced Law Firm also cited RCP 12(B)(8) which bars claims that should have been raised in the underlying complaints.

The Debtors argued that Two Faced Law Firm were not entitled to immunity because they were not acting as an attorney or rendering a professional service, but were acting as a collection agency.

The circuit judge held a hearing on Two Faced Law Firm’s motion [to dismiss]. After hearing arguments from the attorneys, he announced that he was granting the motion to dismiss based on Rule 12(B)(6). The judge further stated that while the facts in the pleadings, if true, may be grounds for sanctions under Arkansas Rule of Civil Procedure 11, attorneys' fees, and ethics complaints, he concluded that no cause of action against Two Faced Law Firm existed for actions taken as the professional representative. The judge acknowledged the Debtors' allegation that Two Faced Law Firm acted not as an attorney but also as a debt collector, but he determined that the actions alleged in the complaint were all done in Two Faced Law Firm’s capacity as a law firm.

This is the crux of my angst. How can they wear the hat of a collection agency on one day, and then wear the hat of an attorney when the need arises?

I’ve been able to locate 2 websites for Two Faced Law Firm so far. Their home pages state right off the bat that they do debt collections and solicit businesses to use them to collect on consumer debts. One of the home pages even has a bold slogan line that says “You concentrate on your business. We make sure you get paid.”

In the text of that same home page, it states;

“The firm puts its consumer collection experience and vast resources to work for commercial collection clients by offering:

*Complete claims handling, from initial demand letter to litigation and judgment collection

*Seasoned collection lawyers—not just collection agents—who can pursue your claims in court when necessary

*Cutting-edge technology

*Maximum-volume collections, with capabilities to handle anywhere from a few paper claims to thousands of electronic claims

*Flexible payment arrangements, including hourly fees and contingency fees

Because the firm has developed long-standing relationships with clients through commercial collections, companies also depend on Two Faced Law Firm for extensive traditional business legal services: [which include, Distressed debt/asset liquidation, Banking collections, Business law, Real estate law, Bankruptcy law (creditors), FDCPA defense, Wills and probate.]”

__________________________

Doesn’t all of this clearly indicate that Two Faced Law Firm are primarily soliciting businesses (third parties) to use them as a collection agency?

Would these webpage’s be allowed as evidence, and would they be sufficient evidence to block them from claiming that the actions they took to pursue an alleged debt against me were taken in their capacity as an attorney for their client?

Even if they can successfully use 16-22-310 in my case, wouldn’t the fact that they filed a complaint against me after I invoked the arbitration clause be considered “(1) Acts, omissions, decisions, or conduct that constitutes fraud or intentional misrepresentations” given that the arb clause bars all parties from litigating after it’s been invoked by either party?

are primarily soliciting businesses to use them as a collection agency?

Would this evidence be sufficient to block them from claiming that the actions they took to pursue an alleged debt against me were taken in their capacity as an attorney for their client?

Even if they can successfully use 16-22-310 in my case, wouldn’t the fact that they filed a complaint against me after I invoked the arbitration clause be considered “(1) Acts, omissions, decisions, or conduct that constitutes fraud or intentional misrepresentations” given that the arb clause bars all parties from litigating after it’s been invoked by either party?

Edited by tropicaljo
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Now, I have been told and agree that this all means that attorneys and law firms who collect debts for a third party now fall under the definition of “collection agency”. Yes?

Yes.

This is the crux of my angst. How can they wear the hat of a collection agency on one day, and then wear the hat of an attorney when the need arises?

It might depend upon the situation. If an OC hires the law firm to collect, they should be considered debt collectors. If an OC hires them to strictly to sue, they might not be considered DCs. Even if they offer a settlement before filing suit, they might not be considered DCs, because most attorneys attempt to settle before suing.

This is just my opinion. If it were me, I'd contact a consumer attorney to find out answers to my questions. In my state, if I contact the SC Bar Association and request the name of a consumer attorney in my area, they'll provide a name. As a result, that attorney will give me a free consultation. Some attorneys will give the consultation over the phone.

Other states provide this service, but the attorney might charge a very small fee. It could be worth it to get some answers.

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It is a fuzzy situation, and it's something that I am currently dealing with. However, in my case, the definition of "debt collector" or "collection agency" in the state law that I am going to be using is very similar to the pre-1986 FDCPA definition.

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I found a pre-1986 FDCPA case that discusses the then exception to "an attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client" being held liable under the FDCPA in a light that is favorable to consumers:

Appellee contends all three of the exceptions are present here. First, he argues that the FTC is clearly violating his right to be free from investigation secured by the Fair Debt Collection Practices Act. While the statute clearly excludes "any attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client" from the definition of a "debt collector," it does not state that an attorney, by reason of mere possession of a license to practice law, is not subject to the compulsory process of the FTC. The statutory exclusion does not merely say "any attorney-at-law," it says "any attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client." While the exclusion is not a narrow one, it is readily apparent that Congress did not intend to vest in every attorney a right to be free from investigation. Needless to say, many who hold licenses to practice law, do not practice law, but engage in other businesses. We do not believe Congress intended to shield one debt collection business from investigation simply because it is owned by an attorney, while subjecting other debt collectors to scrutiny by the FTC. The compulsory process of the FTC may be used to determine whether an attorney is in fact acting as an attorney practicing law, or in some other capacity.

fdcpa attorney-at-law collecting a debt as an attorney - Google Scholar

I don't know if that will help you, but you might be able to work something out with it. It will help me out enormously.

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BV80, I appreciate your thoughts on this.

It might depend upon the situation. If an OC hires the law firm to collect, they should be considered debt collectors. If an OC hires them to strictly to sue, they might not be considered DCs. Even if they offer a settlement before filing suit, they might not be considered DCs, because most attorneys attempt to settle before suing.

However... their website advertises them as a company that collects consumer and commercial debts that also happens to handle other areas of business law. The name some pretty big name banks and creditor corporations that they do collections for, like BoA, CitiBank, Chase, and Ford Motor Company to name a few. I've had dealings with this "Two Faced Law Firm" before and they NEVER offer to settle. Their objective is to make as much money as possible and they do a HUGE amount of collection litigation. I don't know how to find out what the stats are on collection lit. v any other kind of litigation, but I bet that the majority of their business is collections.

I have a dun letter from another case that is from a different attorney's office, and he clearly stated on his office letterhead that he had been "retained by" to sue me if I didn't make arrangements to pay his client. Two Faced Lawyer Firm sent a form dun letter with a payment slip at the top, in the middle they simply said "Our client has turned the above referenced account over to us for collection." And as I said before, it also contained the mini-Miranda at the bottom.

I do have an appointment to talk to an attorney this week, I just wanted to try to know the answers to my questions prior to that app't. I just like looking like I know what I'm talking about. :D

@ usagi555, GOOD FIND! Even tho that is a pre-1986 discussion you quoted, it certainly brings out the point I am trying to make so I'm saving that link for future reference!

Needless to say, many who hold licenses to practice law, do not practice law, but engage in other businesses. We do not believe Congress intended to shield one debt collection business from investigation simply because it is owned by an attorney, while subjecting other debt collectors to scrutiny by the FTC. The compulsory process of the FTC may be used to determine whether an attorney is in fact acting as an attorney practicing law, or in some other capacity.
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@ usagi555, GOOD FIND! Even tho that is a pre-1986 discussion you quoted, it certainly brings out the point I am trying to make so I'm saving that link for future reference!

I am ecstatic about this find. As I stated in another thread, my state law has the exact same wording as the pre 1986 FDCPA's attorney-at-law exception. That may make it it a bit more relevant to me than it is to you. This means that if any of the letters from the firm that is representing the OC against me do not count an attorney-at-law acting as an attorney, I can start making truthful accusations of felony violations of the law. The only way they could get around that is if they showed that the state's licensing and regulation division didn't properly enter their name into the database. I've searched the database 6 ways from Sunday and even called and had it confirmed that they are not licensed as a collection agency.

Edited by usagi555
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I don't know if the was the case you may have been referencing, on a quick search I found this case.

Seems in Arkansas attornies have some pretty heavy armour with that immunity clause. I would think to overcome the "we are representing" client XYZ you would need to show your account was purchased via bill of sale or the like in a larger group. Once you can prove it is the LLC's paper they are collecting, they are debt collectors.

In the appellette case I read, referenced above the Plaintiff's, might have prevailed on the FDCPA had they written a stronger complaint. Near the end of the decision the appellette court comments on how there are no citations of law and that the pleading didn't connect to a particular portion of the FDCPA.

Finally, at least you know going in what the defense will be, use this 2 your advantage and I do believe filing suit after the arb election should be a problem.

May want to file complaint with the Bar or others in your state that handle attorney misconduct, since you know there defense if you sue will be immunity clause.

Edited by skippy1960
per OP's Request
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:roll: I think my first hurdle will be to establish that they were hired and acting as a collection agency and not attorneys. I'm pretty sure they didn't purchase the alleged debt cause that's not what they are known to for. Look up their websites and you'll see that they loudly advertise that they collect debts (none to small, none to large), and solicit businesses to use their debt collection services.

I looked up that immunity clause, and there are exceptions... “(1) Acts, omissions, decisions, or conduct that constitutes fraud or intentional misrepresentations”. Personally, I feel that their decision and subsequent act of filing the complaint 10 months after I invoked the arb clause the first time and over a month after I had to reiterate my wish to arbitrate was pretty much an intentional misrepresentation (to the court). They knew full well that there was an arb clause (and admitted it), therefore they HAD to know they were barred from filing a complaint by the clause itself. To go ahead and file was representing to the courts that they had the right to file.

I don't know... I could be misunderstanding the intent of this exception to the rule. :? I'm too tired at the moment after spending most of the last 2 days trying to come up with ammo to use to my best advantage. Someone chime in if I am wrong, please.

Edited by tropicaljo
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Guest usctrojanalum

“The firm puts its consumer collection experience and vast resources to work for commercial collection clients by offering:

*Complete claims handling, from initial demand letter to litigation and judgment collection

*Seasoned collection lawyers—not just collection agents—who can pursue your claims in court when necessary

*Cutting-edge technology

*Maximum-volume collections, with capabilities to handle anywhere from a few paper claims to thousands of electronic claims

*Flexible payment arrangements, including hourly fees and contingency fees

Doesn’t all of this clearly indicate that Two Faced Law Firm are primarily soliciting businesses (third parties) to use them as a collection agency?

This section right here actually clearly indicates that Two Face Law Firm is soliciting businesses to use them as a Law Firm.

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I think you already know what you need to do:

I think my first hurdle will be to establish that they were hired and acting as a collection agency and not attorneys

The Arkansas law seems to be dealing with vicarious liability. You would need to do as you have already said, claim that the attorney is now a collector and that the Arkansas law does not apply.

Do some research on your courts online and see what has happened with other debt related cases.

Edited by Downto0
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Guest usctrojanalum
Thank you for your opinion, usc. I don't agree with it, but I appreciate your taking the time to read and post.

Collection agencies do not have the power to bring litigation. Nor do they typically employ lawyers.

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However... their website advertises them as a company that collects consumer and commercial debts that also happens to handle other areas of business law. The name some pretty big name banks and creditor corporations that they do collections for, like BoA, CitiBank, Chase, and Ford Motor Company to name a few. I've had dealings with this "Two Faced Law Firm" before and they NEVER offer to settle. Their objective is to make as much money as possible and they do a HUGE amount of collection litigation. I don't know how to find out what the stats are on collection lit. v any other kind of litigation, but I bet that the majority of their business is collections.

I understand what you're getting at, but their advertisement also states "*Seasoned collection lawyers—not just collection agents—who can pursue your claims in court when necessary". They are also pursuing business as a law firm.

Look at the case you cited in your 1st post. The case against the law firm was dismissed, because the law firm was hired to represent the creditors or collection agencies and file suit against debtors. The law firm was merely representing the Plaintiff's who hired them.

My point is that is how a collection law firm can be a debt collector in one situation and a law firm representing a client in another situation. If they're hired to collect, they're a collection agency. If they're hired to take legal action, they are a law firm representing a client.

Edited by BV80
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Downto0, So far, I haven't been able to gain online access to anything from my local court. Based on my own previous experience with Two Faced Law Firm, as well as several people I know who have been abused by them, and nearly 8 years of prowling here and at other sites like CIC, this company consistantly uses the law to circumvent other laws. <sentence removed>.

BV80, the only way that I can see to find out whether they were hired as a collection agency or as a law firm is to ask the person that hired them, and to do it in such a way that they can't lie. I've read that Two Faced is notable for creating in-house documents to support what they want the court to believe, so asking them is pointless. They're just gonna say that they were hire to sue me, and they'll produce a contract with the Bank to prove it.

Anyone have any suggestions on how I can find out the answer, one way or the other?

Edited by tropicaljo
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I think this is a non issue. If you are doing Discovery you could ask all these questions and request supporting documents. The end game will most likely be that you will be sent the Answers and Documents to support their claim that the attorney was hired to sue you, not to collect the debt.

Since there doesn't seem to be any new cases relating to the new law then yours would have to be the one to set precedent. Not a comfortable place to be.

I think the appropriate thing to do would be to file a separate action against the attorney in Federal court. I don't think the new law would be of any help to the attorney here.

Yea, I know. This would be costly. The attorney knows this as well.

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Okay, so I spoke with my attorney today and she agrees that I would be best served to pursue the arbitration. As for this hearing that Two Faced Law Firm has requested concerning the Court's order to Stay Pending Arb... She said that both the court clerk AND TF Law Firm were supposed to provide me with a filed copy of the order. Especially since the judge hand wrote the stipulation that it the arb be done within 90 days. Since neither of them sent me a filed copy, she said I should quickly write the judge a brief letter stating the above<remainder of sentence deleted>. I'm supposed to cc the letter to TF, and my attorney wants me to write a second letter to just TF and be saccerine sweet and offer to file the arb as well as request that TF inform thier client that I'll be needing them to send me the funds to file.

The thing is, I have no idea how to format the letter to the judge. I mean... do you start out, "Dear Judge," and do I send it directly to the judge or do I send it to the clerk and request she forward it to the judge?

Last but not least, we discussed the "Collection Attorney" issue and my attorney says that this has become a hot issue nation wide. She was telling me that it is a pretty even split amongst the Districts, some saying that trying to play both sides of the fence is a no-no and some saying it's okay. Unfortunately the District I am in has been allowing this, but no one has really pushed the issue to the mat. She said that it isn't going to be long before the Supreme Court will have to make a difinitive decision to settle this discrepency in the laws. She also thinks that I could file for sanctions at the very least (after the arb) against the individual attorney handling this collection for filing a complaint in the face of my invoking the arb clause.

Edited by tropicaljo
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Still need to know how to format my letter to the judge and how to properly get it to the judge ASAP. The letter that TF sent to the judge requesting a hearing date was received by the judge over a week ago, and I'm not sure how busy the courts are right now or how soon the judge will schedule the hearing.

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