In Maryland, and, I suspect, elsewhere, litigation loan companies are coming under increased scrutiny.  Companies such as American Legal Funding, LLC lend money to claimants pursuing civil or worker’s compensation claims, ostensibly to assist in paying medical bills and other expenses while the claim proceeds.  The funding company gets paid at the end of the case from the award, if there is one.  (Like contingent attorney’s fees, the companies don’t get paid if the claimant loses, so they “evaluate” cases much as a bank evaluates you for a mortgage.) 

And American Legal Funding, LLC was recently found to be in violation of the law by the Maryland Department of Financial Regulation.    At least one local firm is hoping to represent the individuals who took out loans with the company.  If there is litigation on this issue going forward, it will raise some interesting legal questions: if the claimants were represented by lawyers when they took out these loans, have those lawyers committed malpractice or will they be subject to discipline?  Also, healthcare providers often treat plaintiffs subject to an “authorization and assignment,” meaning that the plaintiffs assign to them that portion of any recovery which is necessary to satisfy outstanding medical bills.  If these plaintiffs get awards for violation of the Consumer Protection Act (which is what I assume provides the basis for recovery), will their healthcare providers demand their shares? 

Will clever defense attorneys find a way to make use of this during settlement negotiations?  During settlement negotiations the parties frequently discuss the outstanding liens and subrogation interests.  The existence of a possible second source for recovery matters during these discussions. 

And finally, if an attorney advises a client to obtain litigation funding, is that act a “professional service” that will trigger coverage under an errors and omissions policy?  That’s a question that will go unanswered until a big enough claim is filed.  And until it is, claimant’s attorneys should think carefully before recommending litigation loans. 

A gentleman by the name of William E. Brown is the subject of a show cause order in North Carolina because he failed to comply with the terms of what you might call a licensing plea agreement.  (I have no idea whether Mr. Brown has been charged with any crime, and am not suggesting he has been or should be).  Something happened to bring Mr. Brown to the attention of North Carolina disciplinary authority, and it apparently involved women.  As a result, Mr. Brown’s license was suspended for three years, but the suspension was stayed so long as Mr. Brown refrained from representing women (or talking to them, or coming near them, in any professional capacity, which really makes you wonder what went on in the underlying disciplinary matter).

A three-year suspension is essentially career ending.  I don’t know how North Carolina’s process works, but in many jurisdictions a suspended lawyer must petition for reinstatement to the bar and bears the burden of proving his or her fitness to practice.  Clients don’t hang around for three years, and neither do referral sources.  It is a very serious sanction.

So the fact that Mr. Brown was able to negotiate a stay of the suspension was a gift.  He should have recognized it as such and conducted himself accordingly.  Because now he’s looking at suspension again, and the board will not likely be so lenient this time.

Why is the disciplinary board now looking at revoking the stay?  I don’t pretend to know the details of the situation, but if you read the order it’s nothing earth-shattering.  It doesn’t sound like this lawyer deliberately disregarded the spirit of the stay order by going out and soliciting women clients left and right (at the local Sephora perhaps?  I can get away with that because I’m a woman, see?)  Instead it looks like Mr. Brown committed several technical violations of the order, by failing to keep his practice monitor informed and failing to provide information about certain files concerning women. 

My point is, why are lawyers often so stupid about this stuff?  I don’t do any criminal work, but I imagine lawyers who represent defendants instruct their clients to follow the terms of their plea agreements to the letter.  The same goes for other kinds of settlements.  My clients sometimes ask me about how strictly they should follow the terms of confidentiality agreements – can they tell their mothers, their spouses, their next door neighbors, and so on?  I say no.  The likelihood of getting caught is low, but the agreement itself is too important to endanger with something so trivial.  Let your neighbor figure it out on her own. 

Why is it so difficult to take our own advice?  I’m not exempting myself from this inquiry.  I have sometimes allowed myself to become emotional about issues that the lawyer-me would ignore. 

There’s no way of knowing why any given lawyer represents himself or herself.  Sometimes it’s because the lawyer really thinks he can do it better than anybody else and to my point of view he deserves whatever he gets.  Sometimes there’s no available E&O insurance, or the lawyer is too scared to report the proceeding to his carrier (which is also going to lead to trouble eventually).  I know that some lawyers seek refuge in friendships.  Sometimes the friend is a good licensing defense lawyer, sometimes not.  I wonder if some bar associations are able to provide volunteer defense lawyers for members who need them.  Or set aside a fund for defending these lawyers.  I think it’s a good idea, one that I’m prompted to take a closer look at.