Debt Relief Industry Sued or Sanctioned

Florida Lawyer Suspended for Debt Negotiation Assistance and Fee-Sharing

A tipster (send in your tips here) forwarded me a copy of the latest disciplinary actions out of Florida that show an interesting situation which may have a far reaching impact on attorney-back office relationships with debt settlement companies.

Douglas David Stratton, Miami Beach, Suspended for 30 days, effective 15 days from a January 4 court order. Stratton’s practice expanded into the area of debt negotiation assistance. The firm contracted with non-legal back office service provider to handle the administrative functions of the debt negotiation practice. That employee improperly engaged in the direct solicitation of clients. An audit further revealed that the firm engaged in improper fee sharing with the back office provider. Case No. SC10-2373 – Source


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READ  Second Attorney, Partner, Has Law License Suspended for 6 Months for Debt Settlement Activity



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Steve Rhode

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.

20 Comments

  • Sounds like the bar might have been gunning for him then.

    Is the bar aware that attorney model fee splitting is rampant? Were these guys just bad at how they set it up and others are more adept at setting up the structure with which they split fees with non attorneys?

    How creative does one have to be with fee sharing to fly under the radar?

    These are real questions I am asking that I do not know the answers to and would like to.

    So many attorneys are involved with the debt relief stuff. You have established firms representing and defending actions against industry. These guys get paid well for their legal expertise. How do they come about signing off on permissible fee sharing between attorney fronted, but back end provided services? Especially in the TSR regime?

  • Florida Attorneys are exempt from the current debt settlement statute.

    See Statute 817.803 Exceptions.—Nothing in this part applies to:

    (1) Any debt management or credit counseling services provided in the practice of law in this state;

    That is why the Florida Bar went after him for fee splitting instead.

  • Are you suggesting that LHDR took over client servicing for Stratton & Feinstein?

    Isn’t that place set up to do business the same way?

    Aye-ca-rumba!

    • Are you suggesting that LHDR took over client servicing for Stratton & Feinstein?

      Isn’t that place set up to do business the same way?

      Aye-ca-rumba!

  • Hahaha- Yep I wonder ALL the same things! A lot-
    Im certain they took their operation & were selling in other states too. These guys are nuts.

    I wonder what will happen to their clients?……….. Probably SOL

  • Plug holes comment was more from an awareness perspective than from a draft of bill content reference.

    If these 2 attorneys cannot practice while suspended, I wonder who their settlement book went to?

    I wonder how large a book they had?

    I wonder how their settlement clients feel bout that?

    I wonder if they care?

    I wonder who their back end service provider was?

    I wonder what the lower court documents contained prior to the SC ruling?

    I wonder alot huh?

  • Looks like the other half of the Stratton & Feinstein duo was suspended too, for 6 months. From the same source linked above:

    “Brett Feinstein, 407 Lincoln Road, Suite 2A, Miami Beach, suspended for six months, effective 40 days from a January 4 court order. (Admitted to practice: 1992) Feinstein, in a management role, expanded the law firm practice into the area of debt negotiation assistance. The firm contracted with a non-legal back office service provider to handle the administrative functions of the debt negation practice. That entity improperly engaged in the direct solicitation of clients. An audit further revealed that the firm engaged in improper fee sharing with the back office provider. (Case No. SC10-2374)”

    Fee sharing in the attorney model debt settlement is how business is predominantly done. This is gonna leave a mark.

    FL could likely stay busy for the rest of the year on this type of debt settlement enforcement alone.

    FL is considering legislation that will restrict debt settlement operators. Me thinks they are aware of the loopholes that have/can be exploited. Maybe they will plug the holes….

  • Looks like the other half of the Stratton & Feinstein duo was suspended too, for 6 months. From the same source linked above:

    “Brett Feinstein, 407 Lincoln Road, Suite 2A, Miami Beach, suspended for six months, effective 40 days from a January 4 court order. (Admitted to practice: 1992) Feinstein, in a management role, expanded the law firm practice into the area of debt negotiation assistance. The firm contracted with a non-legal back office service provider to handle the administrative functions of the debt negation practice. That entity improperly engaged in the direct solicitation of clients. An audit further revealed that the firm engaged in improper fee sharing with the back office provider. (Case No. SC10-2374)”

    Fee sharing in the attorney model debt settlement is how business is predominantly done. This is gonna leave a mark.

    FL could likely stay busy for the rest of the year on this type of debt settlement enforcement alone.

    FL is considering legislation that will restrict debt settlement operators. Me thinks they are aware of the loopholes that have/can be exploited. Maybe they will plug the holes….

          • Plug holes comment was more from an awareness perspective than from a draft of bill content reference.

            If these 2 attorneys cannot practice while suspended, I wonder who their settlement book went to?

            I wonder how large a book they had?

            I wonder how their settlement clients feel bout that?

            I wonder if they care?

            I wonder who their back end service provider was?

            I wonder what the lower court documents contained prior to the SC ruling?

            I wonder alot huh?

          • Hahaha- Yep I wonder ALL the same things! A lot-
            Im certain they took their operation & were selling in other states too. These guys are nuts.

            I wonder what will happen to their clients?……….. Probably SOL

        • Florida Attorneys are exempt from the current debt settlement statute.

          See Statute 817.803 Exceptions.—Nothing in this part applies to:

          (1) Any debt management or credit counseling services provided in the practice of law in this state;

          That is why the Florida Bar went after him for fee splitting instead.

          • Sounds like the bar might have been gunning for him then.

            Is the bar aware that attorney model fee splitting is rampant? Were these guys just bad at how they set it up and others are more adept at setting up the structure with which they split fees with non attorneys?

            How creative does one have to be with fee sharing to fly under the radar?

            These are real questions I am asking that I do not know the answers to and would like to.

            So many attorneys are involved with the debt relief stuff. You have established firms representing and defending actions against industry. These guys get paid well for their legal expertise. How do they come about signing off on permissible fee sharing between attorney fronted, but back end provided services? Especially in the TSR regime?

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