The Court of Appeals came out with a Not For Publication case (meaning it’s a case you’re not supposed to cite as precedential) today with a fact pattern that shows you how not to handle collection cases for a client.
Attorney had represented Finance Company in consumer collection cases for 20 years. A couple of things came to light that caused Finance Company to look more closely at the files Attorney was handling. First, a collections letter was sent to a Finance Company customer who had received a discharge in bankruptcy, triggering a Fair Debt Collections Practices Act suit against Finance Company. Second, a county clerk alerted Finance Company that, pursuant to the direction of the IRS, it was sending garnishment funds in Finance Company cases to the IRS to cover a tax lien held against Attorney.
Unsurprisingly, Finance Company terminated its contract with Attorney, then demanded his files and an accounting. After a replevin order, they finally got their files. (A replevin order is basically the court’s order that someone should turn over property to someone else.) Finance Company never got anything like a proper accounting. Even after Finance Company had sued Attorney, he took in collection money, deposited it the trust account, then spent it himself without accounting for it.
This particular case involved Attorney’s challenge to the trial court’s order appointing a receiver to manage the files and to perform an audit.
The specific legal discussion wasn’t of too much interest, but the fact pattern – particularly the apparently cavalier handling of the client’s money – was a little startling. Nothing sours a professional relationship (or attracts the attention of the disciplinary commission) quite so fast as losing a client’s money.
What happens when you receive a bankruptcy notices but have no idea who the client is?
I’ve had that happen several times, particularly with medical professionals (dentists, chiros, etc.). I get the notice. See no name or address that even remotely matches anyone on my client list.