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Case Number: 15-61088-7
Judge: Benjamin P. Hursh
Court: United States District Court for the District of Montana (Lewis & Clark County)
Plaintiff's Attorney: United States District Attorney’s Office
Description: Helena, Montana - Deighan Law, LLC, p/k/a Law Solutions Chicago and doing business as UpRight Law (UpRight) was accused of misconduct relating to UpRight’s representation of Montana consumers as debtors or prospective debtors in bankruptcy cases.
“Lawyers who misrepresent their services to vulnerable clients and fail to perform as promised harm debtors, creditors, and the integrity of the bankruptcy system,” said USTP Director Cliff White.
In the current matter, the USTP alleged that UpRight engaged in misconduct and misrepresentations impacting hundreds of Montana consumers, which came to light due to investigations by the USTP in two bankruptcy cases. In one case, UpRight substantially delayed filing its client’s bankruptcy case for almost a year after it misrepresented that it had a local attorney who was licensed in Montana available to file the case. UpRight’s delay resulted in a creditor garnishing more than $6,000 of the debtor’s wages. In the other case, UpRight obtained payment of its attorney’s fees by advising the debtors to participate in an improper scheme whereby they surrendered their vehicle to an out-of-state towing company. Another bankruptcy court previously sanctioned UpRight for implementing the towing program—which it used in more than 200 cases across the country—describing it as a “scam from the start,” and the towing company’s owners were indicted for their role in the scheme. UpRight’s advice resulted in the debtors being sued by their automobile lender for conversion of its collateral.
In the settlement, UpRight does not contest the USTP’s allegations that it engaged in misconduct in the course of its dealings with Montana consumers, including misrepresenting that it had a sufficient number of local Montana-licensed attorneys available to provide adequate bankruptcy representation, misrepresenting to clients the scope of legal services to be provided and the cost of those services, failing to timely provide its clients with written retainer agreements that clearly and conspicuously explained the legal services to be provided and the cost of those services, failing to discuss non-bankruptcy alternatives, failing to adequately supervise the firm’s non-attorney staff (some of whom engaged in the unauthorized practice of law), providing erroneous legal advice, and failing to adequately supervise its Montana “partner” attorneys. This misconduct contributed to UpRight’s substantial delay in filing bankruptcy cases for Montana consumers. In addition, UpRight filed bankruptcy cases for only 109 of the 473 Montana clients from whom the firm collected at least a partial fee.
To resolve the USTP’s allegations of misconduct, UpRight has refunded or will refund more than $300,000 in fees paid by Montana consumers for whom UpRight never filed a bankruptcy case. UpRight also agreed to pay a civil penalty of $10,309 and to return all fees, totaling $3,770, to the debtors in the two cases in which the USTP brought its enforcement actions. Additionally, UpRight will be barred from accepting bankruptcy clients or providing bankruptcy services to consumers in Montana, effective July 2, 2018, through July 2, 2024.
While the agreement resolves disputes with the USTP in the two underlying bankruptcy cases, it does not impact the rights of the debtors in those cases or any other parties or government agencies not participating in the settlement, including other Montana consumers, nor does it impact the USTP’s rights to litigate enforcement actions against UpRight in other jurisdictions or to seek redress in other Montana cases.
Outcome: The settlement is set forth in a consent order entered by the Bankruptcy Court for the District of Montana on March 9 and resolves enforcement actions filed by the USTP over allegations of misconduct relating to UpRight’s representation of Montana consumers as debtors or prospective debtors in bankruptcy cases. As stipulated in the settlement, UpRight has paid or will pay more than $300,000 in monetary relief and will be barred from representing bankruptcy clients in Montana for six years.
As a result of dozens of USTP actions filed since 2016, UpRight has paid or been ordered to pay almost $900,000 in monetary relief, including returning fees to over 500 impacted consumers and paying court-ordered sanctions, attorney’s fees, and costs. Additionally, bankruptcy courts have imposed practice bans against UpRight in at least four jurisdictions.
“This settlement shows that the USTP will continue to hold accountable attorneys who fail to adequately and honestly represent their clients.”