I don’t go out hunting for these things. They just arrive in my inbox. Today comes this interesting suit involving attorney Evan Kagan in Florida. You can see past articles involving Evan Kagan here.
This case is Automated Financial Transaction v. Evan Kagan, individually, and Law Offices of Evan S. Kagan, Consumer Legal Group. The case was filed on October 18, 2011.
The case is a bit of a brain twister to read but the bottom line appears to be a dispute by an affiliate marketer that money paid for legal services was not paid out or split as agreed.
This case not only contains allegations of fee splitting with non-lawyers but also lead theft, law enforcement raids, massive fees charged to consumers for work never delivered, and access into escrow accounts by multiple parties.
I’ll let the suit do the talking and I welcome your comments about the fee splitting issues it raises in the comments section. And also, what lessons can be learned from this situation that can be avoided in the future to keep everyone out of trouble?
Defendant, KAGAN is a professional service corporation organized and existing under the laws of the State of Florida with its principal place of business in Broward County, Florida.
Venue is proper in Broward County, Florida because Defendants are residents or do business in Broward County, Florida as well as the cause of action referred to herein accrued in Broward County, Florida.
By information and belief on or about 2010, EK and KAGAN in conjunction with American Legal Attorney Services, LLC (“ALAS”) formed a working relationship or joint alliance in the same office regarding working together in the legal business as well as consumer debt elimination business and splitting legal fees therein.
EK and KAGAN relinquished management responsibilities of his law firm to ALAS and in turn, ALAS controlled all of the KAGAN clients, accounts, finances and work flow therein even though EK and KAGAN tried to conceal same.
ALAS held itself out to be a private lawyer referral service but appeared to only represent EK and KAGAN and ALAS never introduced any other attorney or law firm to AFT besides EK and KAGAN.
On or about August, 2010, ALAS in association and on behalf of EK and KAGAN orally contracted with AFT to directly market the legal services of EK and KAGAN, a copy of the ALAS unexecuted agreement reflecting the payment terms of said agreement is attached hereto and incorporated herein as Exhibit “A”.
Additionally as part of those marketing services on or about September, 2010, EK, KAGAN and ALAS requested that AFT prepare retainer agreements and perform compliance calls to the clients that AFT had referred to EK and KAGAN.
On or about September, 2010, EK, KAGAN and ALAS began receiving client referrals from AFT and AFT began receiving monies by wire transfer in September, 2010.
AFT was issued a weekly commission schedule reflecting the monies KAGAN had received for legal services kfrom referred clients and all monies due and owing AFT for said referrals which were based entirely on the amount of legal fees that KAGAN received that week, commonly known as the Vanco account of which ALAS, EK and KAGAN had access.
On or about October, 2010 and through some sort of law enforcement action against the Defendants as well as the transmission to AFT, by information and belief, of illegally obtained client leads from Shane Santa Croce, Senior Paralegal for KAGAN and ALAS principle, EK, KAGAN and ALAS split apart with EK and KAGAN moving forward with all clients and files, but not phone nor office operating systems, as EK and KAGAN together became the sole operating entity at a new office site of the legal and consumer debt elimination business, operating under its new fictitious name as well, Consumer Debt Legal Group.
On or about late October, 2010, EVAN KAGAN, individually and on behalf of KAGAN reassured and re-confirmed the marketing relationship between KAGAN & AFT wherein the contract and payments with AFT would continue, would not be modified and he acknowledged EK and KAGANS’ obligations to AFT.
On or about November, 2010, EVAN KAGAN, individually sent correspondence to Tina Piazza, a KAGAN employee, instructing her to check the Vanco account and determine the amount of legal fees received on files referred to EK and KAGAN by AFT so that EK and KAGAN could pay AFT its percentage due and owing.
EK, KAGAN and AFT continued to work together through the original oral agreement and by the parties prior conduct, the payment terms of which are set forth on the unexecuted agreement sent by KAGAN to AFT on or about November, 2010 attached hereto and incorporated herein as Exhibit “B”.
Pursuant to the aforesaid oral agreement, KAGAN wired AFT or its directives in the months of November, 2010, December, 2010, January, 2011 and February, 2011 a total sum of $51,237.68 and KAGAN always continued to send the weekly accounting reports, since November, 2010 reflecting legal fees received by KAGAN and due AFT for said client referrals, said reports were continuous and the same as the accounting reports received by AFT in September, 2010 and October, 2010.
On or about February, 2011, EK and KAGAN being happy with the marketing relationship with AFT solicited AFT for foreclosure defense work that EK and KAGAN had added to its debt elimination business.
On or about March, 2011, KAGAN sent AFT an account of all marketing referrals received, pursuant to agreement, reflecting a total sum due and owing AFT of $95,884.02 a copy of the spreadsheet received from KAGAN is attached hereto and incorporated herein as Exhibit “C”. The aforesaid amount does not reflect the $10,218.38 that had been delayed and never paid in February, 2011 nor the future income lost to AFT due to lost clients that was caused by EK and KAGANS’ neglect, mismanagement and conduct during the term of the Agreement.
On or about late October, 2010 the aforesaid marketing agreement with AFT was re-affirmed and re-acknowledged by EK and KAGAN when they split apart from ALAS and started operating under the fictitious name Consumer Debt Legal Group.
Thereafter and pursuant to an ongoing law enforcement investigation of EK, KAGAN and ALAS, monthly payments to AFT were delayed. Wherein, AFT was advised that all future payments to AFT had to be approved by EK and KAGANS’ criminal defense team.
On or about November, 2010, EK and KAGAN advised AFT that all legal problems had been resolved, settlement effected, and all future payments would be timely made based on legal fees he had collected from the legal clients referred by AFT.
EK and KAGAN breached the oral agreement by delaying, failing and refusing to pay the monthly percentage installments due thereon in March, 2011 and each and every month due thereafter.
KAGAN, through new associate Andrew Barnett, stated that KAGAN was having cash flow issues and demanded that as a condition for KAGAN to continue paying fees to AFT that were already earned, AFT would be required to refer KAGAN new clients of which AFT had already limited pursuant to the large debt already owed AFT and KAGAN’S continued failure to perform the representation requirements under the client retainer agreement as well as lack of communication with clients.
AFT has performed all of its obligations under the marketing agreement, and all conditions precedent to bringing this action have occurred or been waived.
EK and KAGAN have been unjustly enriched at AFT’S expense and to their detriment by virtue of the fact that EK and KAGAN have received marketing referrals/clients from AFT without full payment therefore.
EK and KAGAN owe Plaintiff in excess of $95,884.02 that is due with interest since March, 2011, according to the attached account spreadsheets as provided to AFT by KAGAN, attached hereto and incorporated herein as Exhibit “C”. – Source
I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.