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Debt Relief Attorney Goes Through Arbitration and Must Pay Back Fees to Consumer Over Student Loan Assistance

Attorney Chantel Grant probably feels like she was treated unfairly in a recent Florida Bar arbitration decision. I’m assuming she feels this way because she had to pay back a consumer $4,796 for student loan debt relief assistance.

This assistance is said to have included many popular tactics to attack debt. These included “an aggressive approach to lenders, including informing them to cease and desist contact with her client, requesting and subsequently evaluating loan validation materials, putting lenders/servicers on notice re: the consequences of their deficient loan documentation for pursuing payment, and establishing additional potential leverage to reduce or eliminate debt by testing for violations of the FCRA and/or the TCPA.” A real kitchen sink approach.

Grant has been named in some recent posts. She’s probably not excited about that, either.

The arbitration decision is an example of why step number eight in my guide about how to deal with dealing with a debt relief company you feel has not done a good job, is worth considering.

The arbitration final determination lays out the facts that were considered.

“a. In August, 2016, Zachary Hodges received a flyer concerning debt relief solutions in the mail;

b. At that time, Hodges called the number on the flyer and was transferred to an attorney’s office in Boca Raton (not Ms. Grant’s firm);

c. Hodges e-signed a Limited Scope Legal Services Agreement with the Kevin Mason P.A. firm (“the Mason Legal Services Agreement”) on 8/11/2016;

d. Hodges testified that the Legal Services Agreement was explained to him over the phone by a legal assistant at the Mason Firm;

e. Hodges testified also that he substituted the debt service payments he had been making to his student loan creditors/servicers to pay the flat fee installment plan over 72 months (later amended to 69 months) set up under the Mason Legal Services Agreement;

f. In addition, Hodges testified his understanding was he would never pay more than the flat fee amount of $22,157.00 under the Mason Legal Services Agreement for any services contained in that Agreement;

g. Hodges ultimately paid only for thirty months under the Mason Legal Services Agreement and terminated the relationship in 2019. The total fees paid by Hodges were $9592.95.

h. On termination, the remaining fees under the Mason Legal Services Agreement were waived by Grant.

i. Grant testified that she was not part of the Mason Firm at the time that Hodges signed the Mason Legal Services Agreement and had no knowledge of or involvement in the process resulting in Hodges’ execution of the Mason Legal Services Agreement.

j. Grant testified she took over the Mason firm as GM Law Firm, LLC on January 1, 2017. She did not review or amend the existing Mason Legal Services Agreement that Hodges had signed.

k. Grant further testified she spent approximately three hours per month on Hodges’ matter for each of the thirty months that Hodges was a client of the Kevin Mason Firm and then the GM Law Firm, LLC.

l. Grant has been approved for an hourly rate by one court she was unable to remember at $475.00.

m. Grant testified that multiple paralegals worked on Hodges matter over the course of 30 months, and that other lawyers employed by GM Law Firm as of counsel or as associates were also involved in providing legal services on the Hodges matter. She testified that no time records were kept showing how much time was tracked to his matter.

n. Hodges testified that he spent approximately five minutes every other week by telephone with a variety of legal assistants to discuss the status of his matter and the work being done to assist him.

o. Hodges’ testimony included his belief that the GM Law Firm was not taking any steps to assist him with his student loan debt. Further, he testified he was instructed not to pay his creditors and to leave everything in the hands of his law firm, and that he was not subjected to collection calls until after he started with the law firm debt relief program. He testified that a debt servicer called him and told him there had been no contact from the GM Law Firm for more than a year. At that point, Hodges decided to cancel with the GM Law Firm, as he felt GM Law Firm was lying to him by saying they were waiting for a response from the servicing company while the servicer was telling him there had been no contact in over a year.

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p. Grant testified that her legal services, among other things, involved an aggressive approach to lenders, including informing them to cease and desist contact with her client, requesting and subsequently evaluating loan validation materials, putting lenders/servicers on notice re: the consequences of their deficient loan documentation for pursuing payment, and establishing additional potential leverage to reduce or eliminate debt by testing for violations of the FCRA and/or the TCPA. In addition, she counseled clients on settlement offers and sent letters to credit bureaus on clients’ behalf. She testified further that if her client were sued by a creditor, she would handle the defense at no cost to the debtor-client named in the suit.

q. Grant testified that Hodges left the debt relief program but re-joined it at a later date after GM Law Firm had taken over his file.

r. Exhibits submitted in this proceeding included the Mason Legal Services Agreement; copies of the cease-and-desist letters sent by Grant in Hodges’ matter; correspondence from the servicer on Hodges’ loan; relevant excerpts from the CFR [16 CFR Sections 310.3 and 310.4], and a copy of the First Amended Complaint in Hodges v. GM Law Firm, LLC, Civil Action No. 1:20-cv- 03799-JPB (U.S. Dist. Ct. N.D. Ga) (now dismissed).”

The arbitration document states:

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“B. The basis for Grant’s claims is that the money paid by Hodges for services were flat fee retainer payments, earned on receipt or were reasonable fees under the Rules Regulating The Florida Bar 4-1.5. She asserts she performed sufficient legal services to justify the fees paid ($9592.95) and that as Hodges left the debt relief program before its conclusion, there is no way to know whether her efforts would have ultimately been successful on his behalf.

C. Hodges’ defense to Grant’s claims for retaining the monies paid is that the Mason Legal Services Agreement was illegal and thus, void, such that any monies he paid to Grant’s firm or the predecessor firm Kevin Mason, P.A. should be refunded. Hodges points out that the GM Law Firm is the successor in interest to Kevin Mason, P.A. and that the use of the phone to enroll a client in a debt relief program violates 16 CFR 310.3 and 16 CFR 310.4 [addressing deceptive and abusive telemarketing practices]. Additionally, the Arbitrator considered case precedent including Florida Patients’ Compensation Fund v. Rowe, 472 So.2d 1145 (Fla 1985), Standard Guaranty Ins. Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990), and Rule 4-1.5 of the Rules Regulating the Florida Bar, including, without limitation, the time and labor required, the novelty and difficulty of the questions involved, the skill requisite to perform the legal services, the amount in controversy for this action and the results obtained, and the fees customarily charged in the geographical area of Florida for similar legal services.

B. The Arbitrator finds that Grant failed to meet her burden of proof for an entitlement to attorney’s fees under Florida Patients’ Compensation Fund v. Rowe, 472 So.2d 1145 (Fla 1985), Standard Guaranty Ins. Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990) and Rule 4.1-5, Rules Regulating the Florida Bar, and is, therefore, denied retention of the full amount claimed. There are no paralegal fees identified by Grant in her exhibits, and she testified that no time charges were captured for any of that time or the time of any associate or of counsel lawyers who worked on Hodges’ file. The letters submitted by Grant that were sent to Hodges’ creditor and servicers by the GM Law Firm or the predecessor Kevin Mason Firm, are identical in form and content. The issues involved in the debt relief actions taken by Grant are standard practice for attacking creditors’ claims and do not present any novel or complex issues. Grant did testify about the choice of law complexities she encountered in assessing the strengths of a settlement offer for Hodges. Further, there was testimony from Hodges that he spoke with Grant only twice over the course of the client relationship, both times when he made clear he was planning to cancel and terminate the relationship. The Arbitrator finds that the claims of illegality regarding Hodges’ entry into the relationship with the Kevin Mason Firm cannot be sustained in view of Grant’s testimony of no involvement in that process and the lack of any adduced evidence of that process. Further, the Arbitrator finds Hodges’ return to the relationship with the GM Law Firm undermines any implicit evidence of coercion by the GM Law Firm regarding their relationship.

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The amount of attorney’s fees and costs awarded to Hodges is 50% of the $9592.25 total he paid or $4796.13.”

Thoughts

Several points in this arbitration should concern attorneys if complaints, at least in Florida, rise to Florida Bar arbitration.

  1. The Florida Bar didn’t seem to put much weight on Grant’s flat fee retainer position. Instead, they instead looked at “the time and labor required, the novelty and difficulty of the questions involved, the skill requisite to perform the legal services, the amount in controversy for this action and the results obtained, and the fees customarily charged in the geographical area of Florida for similar legal services.” As they say in the UK, this was a “value for money” examination.
  2. The use of standard form letters wasn’t a winning position either. “The letters submitted by Grant that were sent to Hodges’ creditor and servicers by the GM Law Firm or the predecessor Kevin Mason Firm, are identical in form and content. The issues involved in the debt relief actions taken by Grant are standard practice for attacking creditors’ claims and do not present any novel or complex issues.”

The way I read the final arbitration ruling seems to put attorney fees at risk unless unique legal work can be performed and documented. The same old cookie cutter approach using an underling administrative company appears to have a losing hand in this case. This might give other attorneys some pause, especially if they practice law in Florida.

You can read the final ruling here.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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