New Jersey lawyers, who file lawsuits to collect debts, face significant risk of lawsuits themselves from the very persons they sue on behalf of their clients. A June 30 decision by a New Jersey federal district court found a law firm violated the Fair Debt Collection Practices Act (FDCPA) because its attorneys did not spend sufficient time reviewing its pleadings or examining documents.
Daniel Bock, Jr. allegedly had broken his promise to pay a debt and his creditor hired a New Jersey law firm to obtain payment. The firm sued to recover the debt and Bock soon after settled, paying the creditor $3,000. In a surreal twist, Bock sued the law firm, arguing that the attorneys were simply not providing their client’s case with enough attention. In other words, Bock felt that his rights had been violated because the lawyers should have done a better job representing their client against him.
Failure to “Lawyer” as a Basis for FDCPA Liability
A federal court agreed. Attorneys who file lawsuits collecting debt should spend more time pursuing debtors, not because their clients deserve better service, but because not reviewing underlying documents, drafting or “carefully” reviewing the complaint and conducting a reasonable inquiry into the merits, violates FDCPA section 1692e’s prohibition against “false, deceptive, or misleading representations” as well as section 1692e(3) and (9).
What’s Enough Lawyering?
According to the decision, attorneys will not run afoul of the FDCPA when filing a collection lawsuit if they:
1. Have drafted, or carefully reviewed, the complaint; and
2. Conducted an inquiry, reasonable under the circumstances, sufficient to form a good faith belief that the claims and legal contentions in the complaint are supported by fact and warranted by law.
As the court noted, these are only general principles, “and allow for more detailed case-by-case elaboration.”
Will Your Practice Pass FDCPA Muster?
Whether a lawyer has exercised sufficient attention to a matter is not always easy to assess. Here, the court found that a four second review of a complaint, without examining the underlying terms and conditions of the credit agreement and assignment documents, did not suffice.
Maurice & Needleman regularly advises debt collection law firms on matters of professional responsibility and consumer financial protection law. Our attorneys review collection law firm practices and assist firms in strengthening their practices to promote compliance with consumer financial protection laws and professional ethics requirements. In addition to our trial and appellate work defending claims alleging violation of consumer financial protection laws, the firm defends attorneys against ethics charges and professional malpractice. Contact Don Maurice at (908) 237-4570 or [email protected] for more information.