I received a copy of a client agreement from a debt relief company called Bedrock Legal. You can see previous posts on Bedrock Legal here.
What you are about to read is not a legal opinion but my impressions after looking over a copy of a Bedrock Legal client agreement. All legal questions should be directed to an attorney who is licensed in your state.
The client retainer agreement says the services of Bedrock Legal are provided by A. Florio and Associates at a virtual mailing address in Dallas, Texas.
The agreement is for something called a Debt Resolution Program. The contract says Bedrock Legal will provide:
“1.1. Debt Analysis
Bedrock will review Client’s personal hardship and other debt circumstances and formulate a plan to negotiate improved terms.
1.2. Negotiate and Resolve Client Debt
Bedrock will undertake representation of Client regarding specific, unsecured debts listed in the Creditor List enclosed with this agreement. Representation related to any debt is governed by the promises and limitations discussed throughout this agreement.
1.3. Litigation Defense Services
Bedrock will advise and represent Clients in their defense of litigation initiated by creditors or collectors to recover debts listed in this agreement. Bedrock attorneys are immediately notified of litigation, and may be assigned to address any litigation served on Client after the effective date of this agreement. Litigation services are further conditioned and limited by other terms of this agreement, circumstances of practicality, and jurisdictional rules.”
However, the agreement also says while Bedrock Legal is hired by the consumer “Bedrock Legal Group may contract work relating to this Agreement to third parties for such tasks including, but not limited to customer service and debt negotiations. Bedrock attorneys will supervise all third party entities to ensure contracted services comply with Bedrock’s rules and regulations.”
The agreement does not identify exactly who will be performing the contracted work for the consumer.
The Litigation Defense Services provided under the agreement appear to be qualified and may not include court representation for all lawsuits the consumer may face. The agreement says, “If Bedrock’s assigned attorney determines that Client is likely to gain a favorable result through continued defense of the litigation, he or she will prepare and file responsive pleadings on the Client’s behalf, appear at subsequent court proceedings, and continue defense through various stages of litigation, including trial, if prudent.”
However, there is a long list of items the consumer must to to even potentially be covered by the Litigation Defense Services, including paying an additional retainer fee and additional costs. The agreement goes on to described these costs for litigation services if the attorney feels the case has a shot.
“3.6. Costs of Litigation Services – Court Costs and Trial Preparation Costs
a. Client must pay all costs associated with Litigation Services, including the payment of any court filing fees or any other court-imposed costs associated with the litigation. These costs vary by jurisdiction. Bedrock will NOT advance such costs. Client acknowledges that failing to timely pay necessary costs may have adverse consequences, including but not limited to entry of judgment against Client in the litigation.
b. If a litigated matter proceeds to trial, Client shall also be required to pay the costs associated with Bedrock’s trial preparation, which the parties hereby agree in advance shall be set at three hundred fifty dollars ($350.00) per trial (the “Trial Costs”). Trial Costs commonly include but are not limited to, photocopying and reproduction costs, notary fees, long distance telephone charges, messenger and other delivery fees, postage, travel costs including parking, mileage, transportation, meals, and hotel costs, investigation expenses, and other similar items. The Trial Costs must be paid sixty (60) days before the scheduled trial date unless otherwise agreed upon by Bedrock and the Client. The Client shall not be responsible for, and shall be refunded the Trial Costs if the litigation is settled at least thirty (30) days before the trial date.”
And speaking of fees, the contract appears to include a number of additional fees in the additional fees section.
“3.7. Additional Fees
Client may be responsible for additional processing fees. Such fees may include: Payment Plan Change Fees ($19.95), Adding/Removing Debts ($25.00), Renegotiation Fee ($299.00), Settlement Payment Fees ($10.00), and Banking Changes ($25.00).”
The client is also asked to pay an advance $995 Retainer Fee, legal administration fee, and 16% of the scheduled debt as a settlement fee. Again, these services may be provided by some unidentified third party, “Bedrock has a non-exclusive reciprocal referral agreement with independent contractors to provide these services under Bedrock’s direct supervision. Representatives of such independent contractors cannot and will not provide any legal advice to the Client, and any such advice will only be communicated to Client by Bedrock. Although these services are performed under Bedrock’s supervision, a court or courts might determine that there is no attorney-client relationship between Client and the independent contractor representatives in regard to these services, and communications between Client and the independent contractor representatives might not be protected by attorney-client privilege.”
The agreement also provides for “a target debt reduction of minimally thirty-five percent (35%) of amount owed on the debt at the time the Agreement is executed.”
This can get tricky. For example, a debt is enrolled and not settled right away, the balance on the debt will continue to grow. For example if a $10,000 debt is enrolled, using simple math, the interest rate is 20% and not settled for a year, the balance would grow to approximately $12,000. The target settlement would be for a 35% reduction of the original balance of $3,500. So the total balance at the time of a settlement agreement would be around $8,500, plus additional interest may continue to be charged till the debt is fully settled.
When you factor in service fees alone, it appears the total fees add up to about 32 percent of the debt and the minimal savings is 35 percent of the debt.
So it is not entirely clear what the benefit is to the consumer when the fees allegedly charged on this $24,079 worth of debt is going to be about $7,600 and take about four years when for about $1,500 the consumer may be totally out of debt in about 90 days with bankruptcy.
This particular client agreement also contains a debt to a credit union which may not settle at all or settle for more.
The agreement goes on to list a number of other areas the consumer may wish to investigate and/or review with an attorney who is licensed in their state before signing. These include if the supervising attorney is actually licensed in the state the consumer lives in, why fees are charged in advance regardless of settlements actually taking place, additional fees that may be charged, what happens if the consumer does not agree to the negotiated settlement, and the holding of fees if the client cancels the agreement.
The agreement also includes a service agreement for Reliant Account Management (RAM) that contains additional fees.
I did find the client budget to be very odd and certainly lacking enough detail for anyone to make an informed decision.
And it appears the agreement is geared towards getting around the prohibition on advance fees being charged by asking the client to sign an Affidavit of Compliance they had a face-to-face meeting with someone.
You can read the full client agreement here.
As with any contract, make sure you read, understand, and have all of your questions asked and answered prior to signing. It is in the best interest of the company and the consumer to not be rushed or have any misperceptions of the services and fees which may result in conflict later.