It’s a world that the public rarely catches a glimpse of, but the competition for clients can lead to nasty disputes among plaintiffs attorneys and lawyer referral services who question whether the rules are being followed by everyone.
For plaintiffs lawyers, referrals can be the difference between boom or bust – especially for firms that prefer a business model that includes a high volume of cases that they can settle quickly rather than finance all the way through trial.
Legal Newsline previously reported that a Florida man ended up the plaintiff in a class action that he didn’t care about as a result of an app on his phone referring him to a lawyer. More digging through court records showed that attorneys and companies in the lawyer referral game keep an eye on competitors in case they need to accuse them of ethical breaches.
“It’s a dog-eat-dog world out there, and this sort of turf warfare is common,” says Eric Troutman, a class action defense lawyer at Squire Patton Boggs.
“(M)ost often, the drama unfolds behind the scenes.”
But some drama plays out in public records, like a lawsuit filed last year by Connecticut lawyer Sergei Lemberg, who does not appear to be suffering a shortage of clients. A search of the federal court database shows him as the lawyer in more than 3,000 lawsuits filed since 2007.
"Trolling for clients"
Lemberg feels a company called Egeneration is operating a lawyer referral service while not adequately disclosing that it is not an actual law firm, so he sued it a year ago in Connecticut federal court.
Lemberg’s stopcollector.com advertises his Fair Debt Collections Practices Act practice, while Egeneration maintains stopcollections.org. Egeneration’s site has “disseminated false advertising in Connecticut,” Lemberg wrote in his lawsuit.
“While Defendants disclaim being an attorney referral service, their website hides such disclaimer in small print at the very bottom of the site,” Lemberg wrote.
“In reality, the website was designed with the intent of deceiving consumers into believing they are dealing with a law firm who can help them with their FDCPA claims, when in reality the defendants are really trolling for clients for unidentified lawyers.”
Egeneration has asked that Lemberg be disqualified from representing his own firm in court and that the lawsuit be dismissed. The company says it discloses that it is a referral service and not a law firm, while Lemberg’s claim that the site does not comply with attorney advertising rules is not recognized as a private cause of action in Connecticut.
“The truthful disclaimers and explanations on the website cannot be disregarded because of their placement or font size,” the company said.
Troutman isn’t surprised these disputes arise, wondering whether Lemberg is motivated by a desire to protect his website from one with such a similar name.
Referrals, Troutman says, are the lifeblood for firms like Lemberg’s, who is also active in filing suits under the Telephone Consumer Protection Act.
“In the TCPA space, in particular, a solid referral can net hundreds of thousands or even millions in attorneys fees in a settled class action,” said Troutman, whose main focus is the TCPA.
“But relatively few people actually want to sue callers over the nuisance of, say, one wrong-number phone call. So consumer firms have to get creative to net referrals so they sometimes partner with call-blocking apps to generate leads and, ultimately, revenue.”
‘This disgusting mess’
Use of one of those call-blocking apps was at the center of another of Lemberg’s legal battles when a former business partner accused him of unethical behavior with referrals obtained from PrivacyStar, a wing of First Orion.
After Lemberg sued fellow TCPA lawyer Tammy Hussin for a business arrangement that ended, Hussin mounted a counterclaim that alleged Lemberg was taking a $595 “PrivacyStar cost” out of each referral’s settlement and forced her to pursue lawsuits on behalf of people who didn’t know they were filed.
Troutman says many users of call-blocking apps don’t realize they are agreeing to be contacted by lawyers. Hussin’s claims back that assertion.
Just doing business with Lemberg while he obtained referrals from the app harmed her reputation, she claimed. She claims she was “bombarded” with clients Lemberg contacted through the call-blocker when they reported unwanted calls.
He sent her “clients” that weren’t informed why Lemberg’s staff contacted them and were unaware they were caught up in a mechanism intended to produce lawsuits, she said. Lemberg insisted Hussin file the cases before speaking to the new “clients” who were referred to her, Hussin claimed.
“Hussin unknowingly filed complaints on behalf of Californians who were unaware of legal representation, causing embarrassment to Hussin and causing Hussin to expend wasteful hours to correct such deficiencies,” she wrote.
Unaware that the app was sold to MetroPCS customers, Hussin says she was amazed at how many of her clients sent by Lemberg were using MetroPCS.
She even bought stock in the company, believing it to be “the telecommunications carrier of the future,” she said.
Her counterclaim details her experience with the PrivacyStar clients who she says did not know they had hired a lawyer for a TCPA lawsuit and were “suspect of Hussin’s true intentions.” Their claims were worth a substantial amount, she said, but many were unresponsive.
In 2014, Hussin told Lemberg that using PrivacyStar was unethical and must be stopped, the counterclaim says. Ultimately, their business relationship fractured, and Hussin claims Lemberg stole her clients and forged her signature on settlements.
Lemberg says Hussin’s claims and an ethics complaint she filed with the Connecticut Bar were attempts at extortion.
He said she failed to discuss the administrative fees with clients while denying most other allegations.
“(Hussin’s) ethics complaint included allegations that were patently false and baseless,” Lemberg wrote. “Defendants did not have and still do not have a reasonable basis for bringing the ethics complaint or making the confidential ethics allegations public.”
Eventually the two reached a settlement, but the fight shows why lawyers prefer to keep these disagreements out of a courtroom. Hussin lamented in an affidavit that she “would like to see every pleading in this disgusting mess sealed forever.”
What’s at stake? “Faith in the legal profession”
Of course, not every dispute involves Lemberg. For instance, a company called LegalForce, a law firm that offers law firm automation and free trademark search services on its website Trademarkia, has filed several lawsuits since 2017, with at least one of its targets being a lawyer referral service.
LegalForce says it is abiding by the rules prohibiting attorneys sharing fees with non-attorneys but feels competitor UpCounsel is not. It cites laws in California, Pennsylvania, South Carolina, New York and Ohio.
“This rule was adopted to prevent non-lawyers from aggressively reselling hourly and fixed-fee attorney services at a mark-up, causing the public to lose faith in the legal profession,” the complaint says.
“These rules have not been revised in the age of the Internet… In contrast, despite Plaintiffs’ belief that fee-sharing rules are out of date, in the absence of formal legislative change, Plaintiffs have chosen to lawfully abide by the regulations.
“As a result, Plaintiffs have been unable to fairly compete…”
LegalForce creator Raj Abhyanker, who files the cases himself, says his original concept has been copied by companies willing to skirt ethics rules.
The UpCounsel lawsuit settled in March, months after a California judge allowed parts of it to proceed.
In its defense, UpCounsel said LegalForce was attempting to bully it, much like it had when it filed similar lawsuits against companies like it and individual attorneys.
“LegalForce and… Abhyanker have made a habit of abusing the courts in this district to compensate for their professional shortcomings,” a motion to dismiss said.
“Rather than compete in affair and open market, they attempt to use litigation to squeeze and bully companies that have succeeded where LegalForce failed.”
From Legal Newsline: Reach editor John O’Brien at john.obrien@therecordinc.com