On April 23, 2012 Legal Helpers Debt Resolution filed suit against Global Client Solutions and CDS Client Services. in Illinois.
It’s just so amazing how far the once loving relationship between Legal Helpers and Global Client Solutions has changed. At one point people were concerned Global Client Solutions may have been bending over backwards to assist Legal Helpers Debt Resolution and now apparently they are bending over the other way.
The suit filed by Legal Helpers Debt Resolution alleges CDS has 4,000 consumer accounts they were setup incorrectly and failed to designate Legal Helpers’ as having control over the Global account.
The lawsuit is brought in an attempt to “correct the set-up of the Clients’ accounts with Global.”
It’s interesting to now see Legal Helpers so insistent that the consumer relationship is with them and not the affiliate or backend service company. In the suit LHDR even cites, “According to the Illinois Rules of Professional Conduct, “with respect to a non lawyer employed by or associated with a lawyer…a lawyer having direct supervisory authority over the non lawyer shall make reasonable efforts to ensure that the person’s conduct is compatible with the professional obligations of the lawyer.” See Illinois Rules of Professional Conduct, Rule 5.3.”
On April 16, 2012 LHDR sent Global instructions that (1) CDS was no longer authorized to act on behalf of the Clients; (2) CDS was not authorized to maintain possession and control of Client Accounts; (3) CDS was not authorized to receive funds from the Client Accounts; (4) Global was to transfer all Client accounts to the control of Legal Helpers.
Well the whole effort went sideways when Global Client Solutions “refused to acknowledge Legal Helpers’ Amendment to Instructions citing that CDS maintains that the latter should remain in control of the Client Accounts since CDS was originally named as a “Sponsor” for the Clients in several of that DSA Agreements.”
LHDR says that upon the termination of CDS, LHDR had to be named as in control of the client accounts since CDS is not a law firm and cannot act as a lawyer for the client.
Legal Helpers Debt Resolution asked the court for a Temporary Restraining Order so they could get the client accounts back.
LHDR even claims, “Legal Helpers has a duty to protect, manage, and oversee the interests of its clients.”
On April 27, 2012 CDS responded to the Legal Helpers action with a basically, “cool your britches” approach. They said, “ CDS Client Services, Inc. (“CDS”) has never stopped servicing — and continues to service — the very accounts that Legal Helpers professes to have been abandoned by CDS. The accounts about which Legal Helpers recently got client complaints are not accounts over which CDS has control; they are accounts over which Legal Helpers seized control a month ago. Legal Helpers is either confused or being disingenuous, but either way, there is no emergency; each account that CDS “controls” is being serviced by CDS and is not among the accounts that are the subject of the complaints to which Legal Helpers has cited.”
CDS goes on to say that GCS has no role in this other than as a spectator and that it “intends to remain neutral and leave this matter to the companies and/or courts for the ultimate determination as to the dispute.” – Source
You can read the full complaint, here.
David Henson, President of CDS Client Solutions sees the situation differently in his declaration. In fact he takes exception with Ryan Sasson of Legal Helpers who “asserts that [Legal Helpers Debt Resolution] requires “emergency” relief because “CDS has stopped providing services to Legal Helpers’ clients.” Henson says the assertion is incorrect.
Apparently the 4,000 CDS-LHDR clients are broken up into two groups. (1) 3,200 clients CDS is listed as the sponsor of with GCS and (2) 800 clients that had LHDR as the sponsor and they LHDR took control over. The dispute appears to be over the 3,200 clients CDS still controls.
Henson goes on to say that they were wrongfully terminated by LHDR over a demand by LHDR for “two large “contribution deposits” to fund potential settlements of the Illinois AG Action and Washington Class Action.”
“CDS and the other [backend companies] balked, because, among other things, there was no basis for the amounts sought by Legal Helpers from CDS (and the other administrators). No settlements had been reached. Legal Helpers would provide no information or accounting as to how it determined the amounts of the purported “contribution deposits.” The amounts demanded were completely arbitrary. Because of this, CDS, along with every other administrator, could not agree to accede to this completely unreasonable and unsupported demand.”
“Legal Helpers thereafter apparently concocted a new plan to seize the fees that CDS and others were earning as a way to fund Legal Helpers’ liabilities. On March 30, 2012, Legal Helpers summarily terminated all of its service providers’ (including CDS) allegedly “for cause” on the pretext that each administrator had breached its contract with Legal Helpers in the exact same way.”
“Specifically Legal Helpers claimed that each administrator had failed to fund Legal Helpers’ liabilities (even though the service providers were not responsible for such liabilities under their contracts with Legal Helpers), failed to maintain the finances necessary to fund those liabilities (which, again, the service providers were not responsible for paying), failed to provide certain client information to Legal Helpers (which CDS had in fact provided), failed to settle client debts in a timely manner (which is false), and misdirected client funds (also false).”
Following the Termination of CDS, Legal Helpers Runs Into Difficulties
“After Legal Helpers assumed complete control over the [800] clients, Legal Helpers apparently ran into operational difficulties. Client monies in those accounts apparently were not being sent to the clients’ creditors.”
Alleged email LHDR sent to clients of CDS saying LHDR was now in control of the client account.
You can read the full declaration of David Henson, here.
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I sure hope all states that have people scammed by Legal Helpers sue LHDR because its business practice is nothing but pure scam — taking all money up front and then claim their clients don’t have enough money to settle their debts. Left clients in even worse situations.