Iowa Judiciary Branch debt collection lawsuit sparks new charges
A law firm sued for alleged illegal acts while working for the Iowa judiciary says opposing attorneys in the case ‘paid up’ their legal bills and may have hired the business for their own financial gain.
A federal lawsuit filed in the fall of 2020 alleges that the law firm Linebarger, Googan, Blair & Sampson, which is one of the nation’s largest collectors of money owed to government agencies, used deceptive tactics and high pressure to force the Iowans to pay their court-ordered fines and penalties.
The Linebarger firm countered that it was not a debt collection company but a “law firm that represented the Iowa judiciary under a contract for services.” He says the terms “debt”, “debt collection” and “collector” do not apply to his work “because government fines and legally imposed fees” are not legally considered debt.
The lawsuit was filed on behalf of two Iowans by a California public interest group called Public Justice; the Terrell Marshall Law Group of Seattle; and attorneys working for Iowa Legal Aid. It seeks to hold the Linebarger company accountable for the provisions of the federal Fair Debt Collection Practices Act and the Iowa Debt Collection Practices Act.
Court records indicate that the two Iowans on whose behalf the case was filed settled their claims with Linebarger last September for an undisclosed amount. Their attorneys, including those for Iowa Legal Aid, are now battling Linebarger over an apparent agreement by Linebarger to pay “reasonable” attorney fees.
In recent court papers, Linebarger argues that it’s “obvious that plaintiffs’ attorneys were running the clock” in terms of legal fees, and says it “is fair for the court to consider” whether the lawsuit was filed for the benefit of the two Iowa Plaintiffs or for “the financial benefit of Plaintiffs’ attorney”.
Plaintiffs’ attorneys are seeking payment of more than $232,000 in fees, but Linebarger says records show those attorneys spent more than a year building a case and “targeting” Linebarger before they even got a client to represent.
“The four attorneys in this case spent a lot of time trying to create a claim before they got a real client,” Linebarger says. “The lawyers were looking for a client to ultimately justify their misuse of fee transfer statutes to learn about the law – or, in other words, as a full employment or continuing education program for lawyers and paralegals.”
Linebarger says plaintiffs’ attorneys would never be allowed to charge clients for work done 18 months before they were hired by those same clients, so their opponent in the courtroom shouldn’t be required to pay either. these fees. Some of the time that’s billed, Linebarger says, represents the time lawyers spent trying to “market themselves to potential clients for the purpose of generating business.”
Excluding expenses incurred before plaintiffs’ attorneys engaged clients would reduce the claim for legal fees by $127,331, Linebarger claims.
Alexander Vincent Kornya, director of litigation and general counsel for Iowa Legal Aid, told the court that the fee request reflects work on initial disclosures and discovery requests; investigations and elaboration of the factual context; and time spent participating in mediation and settlement conferences.
“We eliminated time that was arguably administrative in nature and reduced time that arguably could have been spent more efficiently,” Kornya told the court. “The remaining time has been reasonably and necessarily expended to secure the plaintiffs’ rights.”
The court has yet to rule on the reasonableness of the attorneys’ fees.
The Iowa Judiciary hired Linebarger in 2010 to collect money owed to the state. Under this contract, the state was to pay Linebarger 25% of all debts collected. However, when Linebarger sent collection notices to Iowans, the company allegedly added 25% to the amount owed and called the total a court-ordered liability. He would have ordered the recipients to pay that amount to the state or face contempt of court action and possible revocation of their driver’s license.
Between 2012 and 2018, Linebarger reportedly collected more than $58.6 million from Iowans in accordance with the company’s contract with the judiciary. During the same period, Linebarger — which employs only two licensed attorneys in Iowa — received nearly $12 million in collection costs, according to the lawsuit.
With at least 2,300 government customers nationwide, Linebarger collects more than $1 billion in government debt each year, but has be subject to scrutiny for his debt collection tactics and was accused of threatening debtors with arrest and jail.