Recent court documents present an argument by Howard Law that the CFPB action and closure of Morgan Drexen should not involve them or their clients.
“When the CFPB initiated the underlying action (the “Action”) against Morgan Drexen, Inc. (“Morgan Drexen”) and Walter Ledda (“Ledda”), it was fully aware of the Law Firms’ contractual relationship with the Morgan Drexen, it was fully aware of the debt and insolvency-related legal services that the Law Firms were providing to their clients, and it was fully aware of the fee structure that the Law Firm’s employed in these client relationships.
Notwithstanding its comprehensive understanding of the facts, the CFPB knowingly and intentionally decided not to name the Law Firms in the Action. Under established American jurisprudence, this decision had a consequence: It deprived the CFPB of the right to seek any relief against the Law Firms in the Action.”
“Four months after the Action was initiated, Kimberly Pisinski, an attorney in the exact same position as the Law Firms, attempted to intervene in the Action in order to “vindicate her right to be free from interference given the exclusion for the practice of law in the Dodd-Frank Act and that the Tenth Amendment reserves certain rights (including regulating the practice of law), to the States.” (RJN, Ex. “2”). The CFPB vigorously and successful resisted this intervention effort, by, in part, affirmatively representing to this Court that the relief sought in the Action would not “affect” Ms. Pisinski’s law practice. (RJN, Ex. “3”). The Law Firms were not only fully cognizant of Ms. Pisinski’s failed intervention effort, the denial of this effort reaffirmed their understanding of what was plainly stated in the Complaint: No relief was being sought against them in the Action.”
“Notwithstanding the foregoing course of conduct, the CFPB now contends in the Application that the injunction entered against Morgan Drexen—an injunction obtained via a default—enjoins the Law Firms to same extent as Morgan Drexen. According to the CFPB, the “in concert” language in Federal Rule of Civil Procedure 65(d)(2) justifies this nunc pro tunc imposition of relief against these non-parties.” – Source
“I am the president of Howard Law, P.C. (“Howard Law”), a California professional corporation, and I own all of the shares therein.
Howard Law is a law firm that is in the business of providing legal services to its clients.
I hold fifty percent of the Class A partnership interests in Williamson & Howard, LLP, a California limited liability partnership (“W & H”).
Lawrence Williamson owns the balance of the Class A partnership interests in W & H.
Lawrence Williamson is licensed to practice law in the State of Kansas.
W & H is a law firm that is in the business of providing legal services to its clients.
I am authorized and empowered to speak for both Howard Law and W & H (together the “Howard Firms”).
In my capacity as the President of Howard Law I am responsible for overseeing the maintenance, organization and preservation of Howard Law’s books and records. Such books and records are maintained in the ordinary course of business in an organized and business-like manner.
In my capacity as the holder of a partnership interest in W & H, I am responsible for overseeing the maintenance, organization and preservation of W & H’s books and records. Such books and records are maintained in the ordinary course of business in an organized and business-like manner.
The range of legal services that Howard Law provides to its clients includes, but is not limited to legal representation in business litigation matters, personal injury matters, consumer protection and class action legal matters, social security disability matters, labor and employment matters, and insolvency and bankruptcy matters.
The range of legal services that W & H provides to its clients includes, but is not limited to legal representation in business litigation matters, tax, TCPA and FDCPA matters, estate and insolvency and bankruptcy law matters.
Within the context of their insolvency and bankruptcy law practices, the Howard Firms provide debt workout or “debt settlement” services for both business and consumer clients.
In a typical consumer debt settlement case, an insolvent consumer laboring under the burden of debt obligations that the consumer can no longer pay will approach the Howard Firms seeking partial or complete relief from this debt burden, through a consensual workout or “debt settlement,” or failing such a settlement, through a bankruptcy filing under Chapter 7 or Chapter 13 of the Bankruptcy Code.
Since most of the consumers seeking the foregoing relief are individuals in financial distress, their ability to pay for legal services is very limited. As a consequence, most law firms will not undertake the representation of such clients.
In order to accommodate the needs of the foregoing constituency of financially challenged consumer clients, while at the same time affording the Howard Firms the means to obtain reasonable remuneration for the legal services being provided, the Howard Firms’ outsourced certain paralegal and administrative services.
The provider that had the most complete suite of paralegal and administrative services was Morgan Drexen, Inc. (“Morgan Drexen”). Accordingly, the Howard Firms entered into a contractual relationship with this provider. The contract reflecting this arrangement is attached hereto as Exhibit “1” (the “MD Administrative Services Contract”).
In a typical case involving a financially distressed client seeking debt relief, one of the Howard Firms would enter into an attorney-client relationship with the client. This relationship would be documented in a standard written retainer agreement. A true and correct copy of this standard form of retainer agreement is attached hereto as Exhibit “2.”
Once the foregoing attorney client relationship was entered into, Morgan Drexen would then provide the designated clients of the Howard Firms the suite of outsourced clerical, paralegal and accounting services described in the MD Administrative Services Contract.
Pursuant to the MD Administrative Services Contract, Morgan Drexen’s paralegal personnel were tasked with contacting the creditors holding debt related claims against the consumer client, and attempting to solicit a debt settlement plan wherein the creditor would consent to reduce its debt to an agreed upon level, and the client-debtor would then agree to pay this reduced sum over time.
The attorneys at the Howard Firms would review and approve the proposed debt settlement plan if it was in the best interest of the client, and they would also intervene in the negotiation process, when necessary, to try to facilitate an agreement with an intransigent creditor. Many times, the attorneys themselves will personally initiate negotiations.
Once such a debt settlement plan was agreed upon and documented, the consumer was then required to maintain the funds necessary to pay the negotiated settlement (as approved by the client) in the trust account maintained by either Howard Law or W & H, as the case may be (depending upon which firm had the client relationship). The applicable firm would then periodically draw from this fund the sum needed to make the payment owed to the creditor under the agreed upon debt settlement plan and to pay the firm its legal fee for rendering this service.
In many instances, consumer clients employ one of the Howard Firms to prepare a bankruptcy petition concurrently with the rendering of debt settlement services. This agreed upon course of action is implemented for a number of sound reasons including the following: In many instances a creditor will refuse to discount its debt, or the consumer’s financial hardship will become so acute during the negotiation process that the filing of a petition under Chapter 7 of the Bankruptcy Code is necessary in order to discharge the debt that is burdening the consumer.
When the Howard Firms entered into the MD Administrative Services Contract with Morgan Drexen, they fully expected the Morgan Drexen’s paralegals to prepare the bankruptcy petitions as agreed, and they believed that this work was being done or had been done. When this Court ruled that Morgan Drexen had not prepared the petitions as contractually agreed—the petitions that their clients paid for—they were shocked, and took steps to address these failures.
The Howard Firms never “shared” fees with Morgan Drexen. They were invoiced monthly for services that Morgan Drexen represented were in fact rendered.
The Howard Firms are still in the process of determining whether or not Morgan Drexen charged other fees for work that was not completed. This review process has been delayed and materially impaired by the Howard Firms’ inability, until of late, to obtain copies of their client files from the bankruptcy estate.
In addition to the foregoing services, under the terms of the MD Administrative Services Contract, Morgan Drexen agreed to maintain the Howard Firms’ client files. Such files contain a range of information about the clients’ financial and legal circumstances, and some instances they include communications, directions and notes that are subject to the attorney-client and/or work product privileges. Due to these circumstances, Morgan Drexen was required to maintain these client files in the strictest confidence and to promptly return the same to the Howard Firms if the relationship with Morgan Drexen was terminated, as it now has been.
In sum, the relationship between the Howard Firms and Morgan Drexen was purely contractual. Morgan Drexen agreed to provide the services detailed in the MD Administrative Services Contract and the Howard Firms agreed to pay for these services. – Source
“In the Application, the CFPB contends that the legal advice that the Howard Firms provided to their clients either through a website or through written communications was somehow in violation of the Injunction. There is nothing in the Injunction that barred either myself or the Howard Firms from continuing to provide legal advice to our clients. Moreover, the commentary on the record at the hearing on June 18, 2015 indicates that it was not the intent of the Court to interfere with the ability of the law firms to counsel their clients.
As the Court will recall, the letter sent out by the Trustee and the CFPB directed the Howard Firms’ clients to call Morgan Drexen with any questions, questions that would have been answered in large measure by non-attorneys. In order to prevent the Howard Firms’ clients from acting on advice that was given by individuals who had no understanding of their legal or factual position, the Howard Firms’ transmitted their own clarifying communications to clients. Without these clarifying communications, the clients of the Howard Law would have directly contacted their creditors, at the urging of the Trustee, when many of these same clients were in the midst of litigation with these same creditors, and where these clients were, in many instances represented by counsel.”
“I have not spoken to Walter Ledda, the Chief Executive Officer and owner of Morgan Drexen, since the prior to the date on which he resigned from Morgan Drexen, which was in May of 2015.” – Source
“In July 2014, I saw an advertisement for the legal services of Vincent Howard. I recall that the commercial offered options to handle credit card debt. I telephoned Mr. Howard’s law firm and to learn about my option. I opted to retain Howard Law for both debt settlement and bankruptcy services. Mr. Howard’s services were offered to me subject to his final review.
During the intake process, I provided Mr. Howard’s paralegal, John, with confidential information. l also authorized John to secure a copy of my credit report. This was done while I was on the phone with him. He captured my verbal authorization. on a recording. During the call, he downloaded my confidential credit report. I reviewed the entries on the report and provided him with more details.
On or about July 31, 2014, I executed an Attorney-Client Fee Agreement with Howard Law PC.
While engaged with the law firm, I continued to provide the law firm with information I considered to be confidential. I had the expectation that Mr. Howard and the law firm’s other attorneys and staff would maintain my information in confidence.
I have consulted with a couple of attorneys at 1he law firm- Krystal Bradford and Vincent Howard. During these meetings, I sought the attorneys’ legal advice and, during our meeting, they provided me with legal advice.
Unfortunately, I was recently sued by Home Depot on my outstanding credit card debt. The law firm offered me the option of full representation or the less costly limited scope of representation. I was uncomfortable representing myself. Mr. Howard told me that the law firm would step in and fully represent me in the lawsuit. Fortunately, the matter was settled.
I Understood that there was an attorney-client relationship with Howard Law and the other attorneys in Mr. Howard’s law firm. Other than the attorney-client relationship with Mr. Howard, I share no other relationship with him – familial or otherwise.
In July 2015, I received a letter from the Trustee in the Morgan Drexen bankruptcy. I was extremely upset that after of year of representation, I would be without my attorney.
I immediately met with Mr. Howard, personally, at his law office. My concern was that the letter lead me to believe that I was no longer represented by an attorney. Mr. Howard discussed the specifics of the letter with me and assured me that his law firm would not abandon me if it was my decision to continue the engagement.
It was, in fact, my decision to remain represented by the Howard Law Finn.
Although my engagement with Mr. Howard includes bankruptcy services, I have not been charged by Mr. Howard for bankruptcy during the last four months.” – Source
“In January 2015, I saw an advertisement for the legal services of Vincent Howard. I recall that the commercial offered options to handle financial hardship as a result of escalating credit card bills and other unsecured debt. I telephoned Mr. Howard’s law firm and spoke directly with Mr. Howard regarding his services. Mr. Howard’s services were offered to me subject to his final review.
I was interested in pursuing the strategy employed by Mr. Howard’s law firm, Williamson & Howard. Mr. Howard connected me with a Williamson & Howard paralegal named Wyatt. I provided Wyatt with an extensive amount of information which I considered confidential.
I also authorized Wyatt to secure a copy of my credit report. This was done while I was on the phone with him. He captured my verbal authorization on a recording. During the call, he downloaded my confidential credit report. I reviewed the entries on the report and provided him with more details.
On February 20, 2015, I executed an Attorney-Client Fee Agreement with the Williamson & Howard Law Firm.
While engaged with Willimson & Howard, I continued to provide the law firm with information I considered to be confidential. I had the expectation that Mr. Howard and the law firm’s other attorneys and staff would maintain my information in confidence.
I have consulted with attorneys of the law firm. In fact, recently, I spoke with attorney Bob Beckett, a partner in the law firm who is a Nevada-licensed attorney.
During this meeting, I sought Mr. Beckett’s legal advice and, during our meeting, he provided me with legal advice.
I understood that there was an attorney-client relationship with Williamson & Howard and the other attorneys in his law firm.
In July 2015, I received a letter from the Trustee in the Morgan Drexen bankruptcy. I immediately telephoned Mr. Howard regarding the contents of the letter.
My concern was that the letter lead me to believe that I was no longer represented by an attorney.
I spoke with Mr. Howard for nearly 45 minutes. He explained the nature of the lawsuit brought against Morgan Drexen, the finding against Morgan Drexen, its subsequent bankruptcy and that it would not longer be in operation.
It was never my belief that I as a client of Morgan Drexen. I always considered myself to be a client of Vince Howard and his law firm. It was my understanding that Morgan Drexen was an outside company that provided assistance to Mr. Howard.
My only concern was that my representation with the law firm continue.
Mr. Howard assured me that Williamson & Howard would continue to represent me if that was my decision. I was relieved to know that the law firm would continue to represent me and assist me with my outstanding debt.
Although my engagement with Mr. Howard includes bankruptcy services, I have not paid Mr. Howard for bankruptcy during the last two months. – Source
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