[What follows is a comment I recently posted on a general listserve used by a wide variety of attorneys, including both “creditor’s rights” attorneys and attorneys that, like me, represent debtors and victims of debt collection abuse. My contribution was prompted by several posts by others that cast lawyers that bring claims under the Fair Debt Collection Practices Act (FDCPA) as unethical or otherwise taking advantage of “hypertechnical” rules on behalf of “deadbeat” clients. – Daniel A. Schlanger, Esq., Schlanger & Schlanger, LLP]
Here goes to stepping into the lion’s den. . . .
There have been some extremely negative comments about consumer lawyers on this listserve recently. My practice focuses on FDCPA litigation, as well as auto fraud cases and collection defense, and I wanted to take a few moments and share my perspective:
- Although the FDCPA is, for the most part, a strict liability statute, and although I think this is completely appropriate, the cases my firm files, and that most of the consumer lawyers I know file, are not about “hypertechnical” violations. We file cases in which either the person is being pursued for money they do not owe (in whole or in part), or in which there is some real sense in which they have been treated unfairly, lied to, or the law hasn’t been followed. An example of the latter might be cases in which the collection action against the consumer was initiated after the statute of limitations had expired combined with bad service, such that the person learns of the lawsuit that never should have been brought for the first time when his or her bank account is restrained.
- Any good lawyer leverages his or her client’s legitimate counterclaims in settlement. This is a basic part of advocacy and it would be malpractice not to do so. Sometimes this will lead to the other side paying your client. Sometimes to a walk away. Sometimes to a reduction in what your client pays the creditor. How it plays out depends on the facts of the case, the value of the claim and counterclaim, etc.
- Both in terms of FDCPA work and in terms of state court collection defense, the vast majority of cases in which the debt buyer/debt collector runs into trouble stem from systemic problems in the debt collection industry. Specifically, Debt collection has become a sloppy, automated, robo-filing, greedy mess of an industry. There are roughly 300,000 collection cases brought in NYC civil courts alone each year. The majority are brought by a handful of debt buyers and debt collection law firms. This sort of volume on debts for small amounts has led to a variety of problems. For example, I did discovery with one firm in which we learned that a firm with 12-14 attorneys had filed 80,000 lawsuits (eighty thousand lawsuits, this wasn’t a typo) in a single year. The system may not be designed to treat consumers unfairly, but it is certain to do so.
- To put it differently, if debt buyers and debt collection law firms (and increasingly, there is shared ownership of the two amongst the big players), took the time and money to have a human being meaningfully review the accounts upon which they collected and sued, including reviewing the payment history, the affidavits of merit, the attorney affirmations, any disputes by the consumer, making an effort to get a consumer’s current address, etc. the vast majority of violations would be avoided. The industry’s refusal to do so is an economic decision based on its calculation that the collateral damage caused by the current system, and the FDCPA lawsuits generated by same, is preferable to changing how it does business. I think this reality is a particularly troubling with regard to the high volume collection attorneys who are, after all, attorneys, and have an independent obligation to review pleadings prior to signing, etc.
- The same issues are in play with regard to the systemic sewer service that generates so many personal jurisdiction defenses in collection actions (as well as some FDCPA litigation). The decision to pay a process server $5-10 per summons,– regardless of the number of attempts, and only if service is “effectuated” – has predictable consequences. One process server after another realized that, at a minimum, they would fudge information about “prior attempts”, speaking with a neighbor, etc and would never come back without having “served” the papers (even if it meant serving them on a vacant lot or post boxes, etc. store, both of which I’ve encountered recently). There have, as some of you know, been changes in the NYC process service requirements designed to fix some of this, but my point here is that the problems (and the FDCPA lawsuits, motions to dismiss collection actions, etc. generated by the problems) are a result of the industry’s cost benefit analysis.
- Even when the NY collection firms are notified of problems regarding sewer service, lack of indebtedness, etc. by the consumer, they very often press ahead, knowing that it is difficult for pro se litigants to navigate the system. These are my favorite cases as an FDCPA attorney. If the industry took meaningful steps when a consumer said “I have never had a _____ card in my life, and haven’t lived at that address since I was 12”, a lot of litigation would be avoided. Again, I assume that the typical collection firm’s refusal to back down under almost any fact pattern so long as the defendant is pro se, is a measured business decision. If my efforts change that calculus even a little bit, I have done a good thing.
- Finally, there are of course a few bad apples in every barrel. There are debtors who simply wish to find any means to shirk an obligation. I try not to represent them (not least because they tend not to appreciate their obligations to me, either!). There are also a small number of lawyers filing FDCPA litigation that do a lousy job, file boilerplate pleadings, make absurd “hypertechnical” arguments, and create bad case law that I then have to deal with. I am not a fan of them either, and wish they would improve or go away, as they make my job much more difficult.
