BizCounsel Promises Affordable Access to Legal Services for Business

“I just read your article, ‘Golden Rules for Going into Business for Yourself.’ You must have been a fly on the wall in our house when I had the identical discussion with my wife that you describe in the article. I was sure there was no need to have a lawyer, because I could form my new company using LegalZoom or Nolo, and that’s what I did,” Cory wrote.

“I should have had an attorney lined up in the event of a problem, which was the point of your article, but the cost to people like us–entrepreneurs on a shoestring–can be prohibitively high.

“Is there a way to have access to a lawyer now without spending a fortune? I am having trouble getting my bills paid and really need help.”

A Unique Startup–BizCounsel–Might Be the Answer

Cory’s email came in right after I had just gotten off the phone with Los Angeles-based Brian Liu who, in 2001, was one of the founders of LegalZoom along with well-known criminal defense attorney Robert Shapiro.

He recognized that new, small business owners will often need legal assistance. “But as they generally do not have the funds to retain a law firm, the idea for BizCounsel just jumped right out at us,” Liu explained. “We launched in October of 2018, to help these people to reach a lawyer quickly and at a very reasonable cost.”

While it is easy to set up a business without a lawyer, but when things go downhill, as they have for Cory who is being taken to the cleaners by some of his customers, there have historically been three options:

–Use a collection agency and, if they collect, get pennies on the dollar; or

–Go to small claims court, get a judgment and hope to collect; or

–Accept the loss.

“At LegalZoom, we learned that over 80% of people in business from two to five years have never worked with an attorney, and when they are asked why, four reasons are given.”

They include:

(1) The cost of hiring an attorney;

(2) Feeling intimidated by lawyers;

(3) Being reluctant to see a lawyer; and;

(4) The difficulty of finding a lawyer you can trust.

“Hearing these same comments from users for years led to one conclusion: The way law is practiced creates an inability for those who need a lawyer most–the small business owner – to easily get affordable access to legal services.”

In my own law practice, so often a potential client comes into the office who desperately needed to speak with an attorney months earlier, but did not, and now what was a minor, easily remedied problem had become a giant headache. When asked, “Why didn’t you call a lawyer when this mess first developed?” time and time again, the answer is, “I was afraid of a large bill in the next day’s mail, just for talking on the phone.”

“BizCounsel is the solution to that problem, allowing the business owner to make that call and most likely prevent a small problem from becoming a huge legal headache,” Liu points out.

“The little guy in business will need agreements, to have documents reviewed, and someone to call providing ongoing advice. In a very real way, having access to a lawyer–the same lawyer–provides a great sense of security, someone who has your back without their hands in your pocket,” he observes.

How it Works

As he explained, BizCounsel is geared to the business community, aiming to establish a relationship with an attorney who is knowledgeable in small business legal matters.

But, as I learned, this isn’t “Call an 800 number and hope to get the same lawyer you spoke with last time,” as some other pre-paid legal services offer.

“We connect business owners with experienced attorneys who are looking to develop their own law practice. Our subscription includes unlimited on-call attorney advice and counsel, but more importantly, we’re looking to change the way lawyers and small business owners interact.

“At $65.00 a month, small business owners are guaranteed quick access to legal advice. Through our platform, the entrepreneur is able to schedule appointments with their attorney for their continuing legal needs. And because of that on-going relationship, the attorney has the ability to be proactive and anticipate issues before they become bigger problems, instead of just being reactive.

“Use phone, text, or e-mail for any legal assistance needed. We expect a satisfied member to take the relationship to the next level, and to deal exclusively with that lawyer, for additional legal work at a significant discount.”

BizCounsel’s website (www.BizCounsel.com) is well worth the time of any small business owner who does not yet have a company lawyer.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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“I am selling one of my three lube and tire stores to a large national chain that has similar shops all over my part of the country. Their attorney prepared the sales agreement. Our family’s lawyer pointed out two paragraphs he did not like:

“1. Arbitration — instead of going to court — private arbitration is required in the event of a dispute over anything in connection with the sale or activities of the parties afterwards, and;

“2. The loser to pay the other side’s attorney’s fees.

“I thought that having an arbitrator settle a contractual dispute could be much quicker and less expensive than going to court. Also, I have been totally honest in this sale and will honor the terms of the agreement, so if the buyers sue me, I know that I would win and certainly would expect them to reimburse me for my attorney’s fees.

“Why would my lawyer suggest not agreeing to these two clauses in the contract? Thanks for your help, ‘Jeff.’ ”

A second opinion

“Jeff’s family lawyer gave him very good advice,” San Francisco-based business litigation attorney Matt Kenefick says. “There are many good reasons to exclude these clauses from a contract. For a small business owner selling his company to a large corporation, arbitration can have more cons than pros,” he notes, listing common reasons against agreeing to arbitration:

1. Arbitration can increase litigation costs, since, in addition to paying your lawyer, you are paying for the arbitrator’s fees and the costs of the arbitration service provider. Some arbitrators charge over $800 an hour.

2. Arbitration eliminates the right to a jury trial. In certain circumstances, this can be important as juries can be sympathetic in David-and-Goliath situations.

3. Arbitration can make provisional remedies difficult to obtain. For example, when a dispute is subject to arbitration, obtaining a restraining or attachment order to preserve the status quo will require a much higher standard of proof.

4. Arbitration eliminates most appellate rights. Generally speaking, you cannot appeal even if the arbitrator rules contrary to law!

5. Venue: arbitration clauses can specify an inconvenient location for the arbitration proceedings.

“There are, however, times when arbitration makes sense,” Kenefick underscores, adding, “for example, if you want to eliminate the right to a jury trial. Also, if you want an expedited proceeding. Always keep in mind that the devil is in the details — so you need to be very careful to be sure that what is in your arbitration clause matches your needs and expectations.

“It is not necessarily an evil — but it can be an evil.”

Attorneys’ fees clauses

It often comes as a surprise when a small business owner is served with a summons and complaint. Often the first reaction is, “When I win this thing, those guys are going to pay for my lawyer!” Well, not so fast.

In the United States, “The American Rule of Attorney Fees” states that, “Unless provided for by law, without an attorney’s fees clause each party pays its own legal fees and litigation costs regardless of who wins the lawsuit.”

The American Rule contrasts with the English Rule — which almost every other country on the planet follows, and requires the loser to pay for the winner’s lawyers and costs.

He lists two situations where this clause can be dangerous:

1. Parties who are emboldened to file a lawsuit because they believe they will recover their attorneys’ fees.

2. An attorney’s fees clause can significantly raise the stakes in litigation because the amount in controversy will be increased by each parties’ respective claim for their fees.  For a party with deeper pockets, they can use this to leverage a settlement against an adverse party who cannot risk being court-ordered to pay the other side’s attorney’s fees.

So, a party who is more likely to be the defendant in a future dispute will not want to include an attorneys’ fees clause in their agreement; whereas, a party who anticipates that they will more likely be the plaintiff in a future dispute will want to include a fees clause.”

Unfairness in contract disputes

“Prevailing party attorney’s fee clauses can lead to unfairness in contract disputes unless the parties are both strong, financially,” he observes. “They can make it difficult for the financially weak to enforce their claims for fear of losing the case and being hit with the winner’s attorney’s fees and court costs.”

Kenefick concluded our discussion with this warning:

“Both arbitration and attorney’s fees clauses can be volatile and therefore should not be taken lightly.”

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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A common complaint — especially from small-business owners — is the failure or refusal of their customers or clients to pay their bills on time, or pay them at all.

I submit that a certain amount of this, sadly, is encouraged by owners. Here is a recent example:

“Wonderful Tree Trimming and Landscaping” is a mom-and-pop company in my town.

“Marge” runs the show, and she is the nicest, most patient business owner you’ll ever meet. And that’s the problem. She is way too nice, too patient and non-confrontational to a fault.

I got a call from her office manager, asking if I can help them with several past-due accounts.

“Of course,” I reply. “How old are they?”

“Only two years.”

“What? Only two years,” I repeat in a less-than-happy tone of voice. “What were you folks thinking?”

“Well, Marge likes to be patient and nice to people.”

“I am not. Please scan and send me the bills now!”

Not paying for services rendered could be fraud

Without legal justification, an intent not to pay can be inferred — like dine-and-dash restaurant rip-offs — as fraud and theft of services. This can justify an award of punitive damages.

Notes on their accounts revealed textbook examples of fraud and theft of services by people who agreed to pay for the tree trimming but offered one nonsensical excuse after another, made repeated promises to pay but never did or contested their entire credit card charge.

I reached one of them and asked that he bring a check to my office. He replied, “Money doesn’t grow on trees.”

My response in a most unfriendly tone of voice was, “I am going to enjoy suing you for the tree trimming and punitive damages for your obvious lack of intent to pay.”

Soon thereafter, Marge texted: “Whatever you did worked! He called me around 2:30 p.m. and brought us a check by 3 p.m.”

Strong office manager/collections person, good

In my experience representing small-business owners, patience is not a virtue. A strong office manager/collections person who you authorize to immediately jump on past-due accounts is critical.

Often crooked customers say, “I never got your bill, so please mail another.” If possible, fax the bill to them. This gives you proof of receipt. If you are in the same town, go to them and politely hand a copy to the customer or, a receptionist.

Online recommendations suggest being sugary sweet on the phone to past-due customers.

I disagree. The customer who, without justification, doesn’t pay, is a thief, and the sooner you and your people recognize and accept that, the better.

So, the payment is past due, was promised to be received by a certain date, does not arrive, you have one option: Call and say, “No more delays. We will pick up a check at your office today, and if it isn’t there, this goes to our lawyer, whose nickname is Mad Dog.”

But why even put yourself at risk of being jerked around by an unknown customer?

Check your court’s plaintiff/defendant index to see if a potential customer has been sued and for what. Require a signed credit application that will allow you to check their credit and find out if they’ve gotten in trouble before for not paying.

Convince customers you aren’t serious

Want to be stiffed? Convince your customer that you aren’t serious, and I hear this all the time: “We’ve been sending them past-due notices every month for a year, and we thought that would scare them into doing something.”

They did something all right: They ignored you.

If the first letter or phone call gets no response, consider having your lawyer place a call and send a demand letter. That should be very inexpensive. Still no response? If you are within or close to your small claims court’s monetary jurisdiction, file suit.

Action earns the respect of employees, customers

“When business owners give collections the attention needed, this earns respect from employees. And, no matter how well you pay someone, respect and loyalty have no price,” observes David Schein, Cameron Endowed Chair of Marketing & Management at the University of St. Thomas in Houston.

“I tell businesses to have a one-two-three approach to collections,” he says. “Send invoice within 30 days. If not paid in 60 days, send letter with overdue invoice indicating that it will be turned over to your attorney if not paid promptly. At 90 days, turn it over to your attorney. Many of my businesses get paid with that 60-day letter.”

In case you wonder, “Dennis, how do you personally feel about these situations?” I’ll tell you. Angry, and I share the feelings of my clients who have done the work, performed the service and been ripped off. To treat people that way, in addition to a breach of contract, is simply immoral.

Collecting those debts gives me a great deal of moral satisfaction.”

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In 1998 Grandma Susie and her husband hired a paralegal to file a bankruptcy. Hospital bills which insurance did not cover left them no choice. When informed that the necessary papers had been filed with the Bankruptcy Court, the couple finally realized that their marriage was over and divorced. Only the paralegal never did file the bankruptcy. Instead, using their money for drugs and a Greyhound ticket, she left town.

“I paid those bills that I could, some he agreed to pay even though the purchases were put on my credit card – including a big screen TV and stereo. He took those items when he moved away from Hanford, after meeting some floozy on the Internet, and I am sure they spent many cozy evenings watching the TV and listening to Country Western music on our stereo! Honestly, how anyone could do this – walk away from your wife and children – I will never understand. He has been gone eight years and we haven’t heard a word,” Grandma Susie told me.

Hell Hath No Fury Like a Woman Scorned

You might have heard the saying, “Hell hath no fury like a woman scorned.” Often credited to William Shakespeare, the line comes from The Mourning Bride by William Congreve, written in 1697, and stands as a warning for what might happen when a woman is rejected in love – or ripped off by a druggie paralegal. 300 years have done little to change human nature, and Grandma Susie was indeed a woman scorned – twice. Susie was also someone to be reckoned with.

“When I learned what the paralegal had done – and the problems it created – I took her to court, obtained a judgment, but by the time they located her, it was too late; she died of a drug overdose, we believe,” Susie told me.

And that is where it all would have remained had not Citibank sold this 9-year-old account to Capital Management Services in New York. That’s right, the account had been idle – no collection activity of any kind – for nine years.

Hi There, Gimme $5,000 Or I will Sue You!

In late April, 2006, a collection agency wrote Grandma Susie, threatening suit unless she responded to their demand for payment of this old account. “After all these years, I had no idea what was actually owed, or if my ex-husband had paid on it, and then in came this demand letter. Could they sue me? Would they win?” she asked. “They gave me 30 days to respond to their demand, and after all this time, I have no records and honestly thought that it was written off. They were very nasty on the phone,” she wrote, asking for my advice.

This was going to be fun, I could tell.

Hi, There, Let’s Talk Statute of Limitations

“If they sue you, which these types of companies could very well do, you have a defense,” I told Grandma Susie. “In fact, we are going to have some fun with these guys right now, but first let me explain why they called. These guys purchase old debt from companies all over America, most of written off as uncollectible – for one reason or another – by the company selling this debt. For some odd reason, your credit card company did not elect to go after you for what was owed years ago, if it was truly owed.”

I explained to my Hanford reader that what these collection agencies want you to do is to re-affirm the debt. “At most, in California, they have four years in which to file suit from the last payment. If they do sue you, the correct response is to plead the Statute of Limitations, which means that they are too late. But if you agree to start making payments, or actually do make a few, this eliminates that Statute of Limitations defense – and boy do they love that!” I said.

So, calling their toll free number (I love to make them pay for the privilege of hearing me tell them to drop dead!) I set up a conference call with my Hanford reader and Miss Whatever Her Real Name Was, and after the introductions, the conversation went like this:

Beaver: Ma’am, do you know how old this alleged credit card bill is?

Collector: Hmm, I see l998.

Beaver: Bingo, you can read! That cool, now, you know I am a lawyer, so let’s see if you can read my mind. What am I about to say?

Collector: You are going to say that it is too late because of the Statute of Limitations and you want us to leave her alone. Right?

Beaver: Right. And I want you to mail her a letter to that effect and take her out of your data base NOW. Deal?

Collector: OK.

Beaver: Now, you can have desert.

Grandma Susie heard it all and was silent. I could sense that she was crying. “I’ve read you for years, and guess that it pays to subscribe to the Sentinel!” she said.

Yup, it sure does!

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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I’m often asked, “How do you get your story ideas?” Sometimes, as with 80-year-old “Mr. Albert,” they literally walk in the front door. Anyone who has an alarm system for their home or office will find his story valuable.

Mr. Albert is no more than five feet tall, hunched over, walks with a cane and has a support dog whose vest reads, “My name is Spot.” Mr. Albert is terribly hard of hearing and nearly every time he’s spoken to says, “What? Say that louder!” If he had not stepped into my office, he could have become a victim of an alarm company’s illegal use of an automatically renewing contract provision, as I am certain many of its customers have been.

‘The bill collector won’t leave us alone’

“A bill collector for a security system is constantly phoning,” Mr. Albert told me, “and insists that we pay on a contract that we canceled months ago because they failed to make repairs. She also claims their contract automatically renewed for a five-year term!”

Examining his paperwork, I could see that this out-of-town alarm firm had purchased the local security system provider that the couple signed up with years ago. That local company “gave us excellent service if anything needed their attention,” Mr. Albert said.

I immediately phoned the out-of-town outfit’s customer service and spoke to “Jo-Jo,” who had all the charm of a Mafia goon. She stated, “Our contracts automatically renew for 60 months unless the customer notifies us in writing via certified mail not less than 90 days prior to expiration of the then existing term of their intention to not renew, and he didn’t do that. He owes the money.”

“Mr. Albert canceled months ago,” I replied, “because of your non-performance and told you to pick up the equipment, which you failed to do. Also, that 90-day intent to not renew is total unenforceable nonsense. You obviously are ignoring California’s July 2022, Automatic Renewal Law that requires you to provide him a simple way to cancel and send a reminder notice between 15 and 45 days before the date of renewal. And, by the way, most states — and the Federal Trade Commission — have similar regulations.”

She replied, “There is no such law!”

As it was clear Jo-Jo had attended the Al Capone Collections School, I said, “I have a great idea. Have your boss give me a call. I want him to explain his reasoning for your attempted elder financial abuse.”

I am still waiting for his call. Mr. Albert hasn’t heard from Jo-Jo again.

The many online reviews for the firm that bought the local business all say the same thing, something along the lines of: Our former, locally owned company was wonderful, but these people are rude. All they care about is money. Horrible service. We wanted out, but they just renewed us for five more years.

Advice from a security company’s CEO

I discussed the Mr. Albert situation with Marvin Fuller, CEO of M&S Security Services, based in Bakersfield, Calif. He was a source for my article Is Your Neighbor’s Security Camera Pointed at Your Window?

His father, Marvin Fuller Sr., began the company after retiring from law enforcement. When I was a deputy DA, we worked on cases together, and I was impressed by his ethics and sense of fairness. Those qualities live on in his son.

For anyone wanting to obtain an alarm system, Fuller has these recommendations:

1. Stay local.

You will have better service and will be less likely to have a contract dispute. You can call the owner and say, “I just lost my job and am having a tough time. Can we do something with this contract to help me out?” Fuller says he’s received these calls himself. Or, someone might call and say, “My building just burned down!” Fuller says, “We have always helped our customers. But out-of-town providers are like cellphone companies — it’s only about the money.”

2. Watch out for the hard sell.

This includes salespeople who do not want to let you read the contract or think about the offer. “Read the contract to be sure you are getting everything that has been promised,” Fuller says. “There is nothing wrong with saying, ‘No!’ Yet many people feel guilty. I always say, ‘This is what I do for a living, and I never get upset if I can’t close a deal.’”

Fuller adds that you should never allow yourself to be pressured: “That is what happens with a lot of older people.”

Also, be careful if you’re pushed to sign something. When you are told, “I need you to sign this right now,” don’t. If you do sign something, look first for the three-day right to cancel, and be sure the dates are correctly listed.

Fear is a great motivator. Do not be intimidated by stories of break-ins all over your neighborhood.

3. Consider all the options.

You should be given options instead of being told, “You’ve got to have this.”

Always ask to be shown the minimum amount of equipment needed separately from the bells and whistles, which are often things you do not need.

4. Ask your neighbors for recommendations.

Fuller suggests checking in with neighbors who have alarm systems to see if they’re happy with theirs and whether they would recommend that business.

5. Don’t settle for one estimate.

Always get more than one estimate and be sure to go online to research the elements in the type of security system appropriate for your home or business. Take your time!

Dennis Beaver Practices law in Bakersfield and welcomes comments and questions from readers,
which may be faxed to (661) 323-7993,
or e-mailed to Lagombeaver1 – at – Gmail.com.

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If you are a lawyer who handles real estate transactions, collection matters, contractual disputes, or divorce cases, today’s story could save you a huge amount of money, and an enormous amount of grief.

Recently a very interesting cashier’s check was delivered to my office via FedEx International Air Waybill.

It is payable to my law office in the amount of $382,261.76 and drawn on the Lindsay, Ontario, Canada, branch of Scotiabank, from “Battery Backup Power, Inc. Of Costa Mesa, California”

Odd. A California company using a Canadian bank? Hang on, as it gets even more interesting.

A memo is attached to the check, stating, “Reference your client Shun Hing Electronic Trading Co. Ltd. We have sent this payment owed to avoid litigation brought against us.”

Instructions accompanying the check state, “Please deposit into your trust account, deduct your customary collection fee, and immediately remit the balance to us.”

But there are two problems: First, none of the named companies have ever been my clients and, second, the cashier’s check is counterfeit.

So, why have I been sent this cashier’s check and how do I know that it is a fake? 

Had lawyers across in the United States and Canada asked these very same questions, they would have saved themselves millions, that’s right, millions of dollars over the past several years.

The Anatomy of Debt Collection Fraud

Overseas scammers follow a sophisticated script, outlined by Lawyers’ Professional Indemnity Company of Toronto, Canada. They catalog frauds against lawyers, and their website is well worth any lawyer’s time. https://avoidaclaim.com/

“A lawyer is contacted [via email] to help an overseas business collect a commercial debt from a purported borrower in the lawyer’s jurisdiction, or facilitate the purchase of a large piece of commercial equipment or some other financial transaction. The fraudster provides documentation about the loan, sale of equipment, or whatever else is involved in the transaction. A retainer agreement may be signed, but instead of paying the retainer fee. the lawyer is sent a fake cashier’s check and told:

(1) To deposit it into their trust account and, after attorney fees are deducted, to wire the balance to an overseas account. The lawyer promptly complies with the request, and sends the money.

(2) But as the check is counterfeit, the lawyer’s trust account is left with a shortfall. His/her bank, when discovering that the check bounced, insists on being repaid, which they have the right to do.  (And then, the lawyer normally freaks out!)

“In this type of scam, “Lawyer’s Professional Indemnity points out, “the fraudster will often use the details of a real company, including web address, names of real employees and the mailing address. However, the contact phone number and email, will be fake.”

How Banking Law Makes It Easy to Scam The Attorney

You have probably noticed a small sign posted near your bank’s teller windows that states, “Funds will be available the next banking day in most instances.”  This is a key element that enables the scammer to successfully pull off the fraud, as there is a difference between funds from a check being “available” and the check having “cleared.”

When a bank confirms that funds are available, it means that the bank is providing provisional credit so that the funds may be withdrawn.  However, if the issuing bank does not honor the check–or if it is counterfeit–your bank can still reverse the transaction. 

Therefore, do not disburse funds until the money has been irrevocably deposited into your trust account, regardless of the apparent validity of the check or the bank showing the funds as available.  Advise clients at the start of the representation that they will not receive any payment until the check has cleared and that this will take time. 

With overseas checks, it can take months before notice of a rejection is forwarded.

Red Flags

So, what are the signs that you have been targeted?

(1) Receipt of an unsolicited email from an overseas company you know nothing about;

(2) Fees offered are disproportionate to the work being performed;

(3) The matter involves a hassle-free collection job; there seems to be no need for attorney involvement or for funds to be routed through a trust account.

Does My Malpractice or Office Commercial Insurance Policy Protect me?

Lawyers who have been burned in these schemes across North America have made claims under their professional liability and office commercial insurance policies with mixed results. In general, mal-practice carriers will furiously defend against such claims. As limits of coverage are generally low under an office commercial policy, many carriers will pay their maximum.

So, when an out of the country “client” contacts you, prudence should call for great caution.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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Mary Ramirez and her husband Thomas have been receiving phone calls lately from a “very nice sounding young lady with a company called DCM Services, concerned that we do the right thing for the memory of our son, who passed away last year in an auto accident,” she explained in an e-mail.

Friends of the elderly Ventura couple worried they were about to become the victim of a scam, and insisted that Mary contact You and the Law. By asking questions — daring to become involved — these neighbors have saved still grieving parents from losing thousands of dollars in what can easily be described as a scam of enormous proportions.

But thousands of other families across America aren’t so lucky, losing millions of dollars to smooth talking DCM bill collectors, taking money from people who do not owe a cent, victimizing families at a time when they are emotionally defenseless.

“At the time of his death, Roger was 27 and had just moved back in with us. 2008 was a horrible year for him. His girlfriend left him, he lost his job in computer sales, and we learned that for months he was living off of credit cards. He was a good boy, didn’t drink, or smoke, was respectful to everyone, and then, while looking for employment in the Los Angeles area, was in a fatal accident, caused by an uninsured drunk driver. Roger’s auto insurance simply paid for his funeral.

“Roger owned nothing except a 15-year-old beat up car which was totaled in the accident. He had no life insurance, nothing at all. His credit cards were in his own name. According to the lady calling us, his outstanding credit card bills were about $15,000. Before this bad time, he was always a responsible adult, and I am sure would have paid those charges had he lived,” Mary stressed.

“This couple is the perfect example of what’s going on in the collection industry that is fundamentally, not just crooked, but downright immoral,” Attorney Linda Monje, of Bakersfield exclaimed when I ran these facts by her. She is both a CPA and attorney, specializing in estate planning, trust and probate law.

The Bakersfield attorney was quick to point out that, in recent months, lawyers in her specialty are receiving inquires “almost every day from people in the same situation as this Ventura couple, often too late to help them.”

“Here is the typical fact situation which has given rise to a huge fraud on the public. We will assume that mom has died — with or without a will or trust — leaving various debts, including a mortgage on her house which is much greater than the value of the house itself.

“Now, unless a family member has personally become obligated for these debts before her death, no one has a legal obligation to pay. I want to stress that point. If no family members were, let’s say, a co-signer on a credit card or auto loan, then they do not have to pay those outstanding debts,” she stressed.

“We can say that the debts survive, but family members in that situation are not on the hook. So, when the phone calls come in from those ever so sympathetic bill collectors — appealing to mom’s memory, or any pitch to get you to say yes I’ll pay — don’t agree.

“You simply need to explain that mom didn’t have anything, except the house, which was upside down on the mortgage. Tell the caller not to expect anyone to be responsible for unpaid bills, and politely tell them to stop all phone calls.”

I would add that you should not concern yourself about hurting the bill collector’s feelings. They are masters of deception. They are known to lie, failing to explain that there is no legal duty of paying bills in this type of a situation.

“Attorneys empathize with their clients, and we know that parents want their kids to have a good memory and a positive legacy, but at the end of the day, it has to be a business decision. Particularly if the parents do not have the money to pay those debts. Merely being a parent of an adult child does not mean that you are liable for their debts unless you have obligated yourself as a co-cosigner, or have guaranteed payment prior to the child’s death,” Attorney Monje points out.

“Be careful of what you sign. You could become obligated for a debt which otherwise you are not obligated for. Especially when a family member is going to be hospitalized, look at what you are asked to sign,” she warns.

“It is critical — especially in these difficult economic times — to understand that a parent or other family member has no legal duty to take on an adult child’s bills of any kind. However, chances are good that you might be asked to sign as a co-cosigner. Think this over carefully. Can you afford to pay thousands — or hundreds of thousands — of dollars in hospital bills? This can happen. Do not let your own personal well-being — or that of your own family — become compromised by taking on legal obligations you do not owe,” she concluded.

And, just in the event you wonder what DCM has to say about all of this, well I did, too. They are the nation’s largest collection agency in this narrow field. And yes, they do indeed have a media relations person — Minnesota based Brittany Pawlikowski.

But, despite my repeated requests to discuss her company’s position, I was refused that opportunity.

If you’d like a real laugh, go into their Web site. DCMservices.com and read about their “core values.” However, I must caution that it might just make you ill.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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“The customer generally isn’t the problem. You are the problem. You may be creating a culture where no one really cares about the company being paid as long as employees get their paycheck. So, ask yourself, ‘What messages am I sending to our staff about the importance of being paid?’

“When you do not emphasize just how important collections are, employees are being trained to think that you really don’t care how old an account becomes or if it ever paid. This attitude is then picked up by customers who will think, ‘They may send me a statement, but no one is calling or bothering me, so they are letting it go.’ “

As we learned from Keno, some customers will virtually scream, “You’re going to have trouble getting me to pay,” and if you take them on, good luck!

“There are clues that, if paid attention to, will tell you not to take on this customer, and that’s why your initial interview is so important, why being a good listener is critical,” she observes, citing:

• If they complain about a prior vendor or relationship, you’ve got to find out why.

• Do they still have an outstanding balance?

• Did they have an expectation that was not met? Was it reasonable? This is especially important with lawyers. If you are the third lawyer they want to hire — because the others were incompetent — there will be a fourth.

• What do they expect from you and how did they work with their previous vendor?

We’ve all heard the old saying, “If the milk is free, nobody buys the cow.” In her seminars, Keno reveals what she calls “the big secret.”

“I often hear, ‘They are my biggest customer and they won’t give me anymore work if I ask to be paid.’ You just have to listen to how absurd that sounds because you are doing work for free.

“Many businesses — especially law firms in highly complex, lengthy cases — need to take out loans to cover the costs of working month after month for a client that’s not paying. Lawyers are also held hostage by clients who aren’t paying but promise to give the firm their next matter.

“The big secret that I reveal is that customers or clients don’t leave if they are not paying. They have no reason to. Your service is free!”

Keno recognizes that for many people, asking for money creates anxiety, feels embarrassing, and they just won’t. But she has an excellent method which can minimize that reluctance, and it’s by having a Stop Work Policy.

“Regardless of your line of work, you need a Stop Work Policy and everyone in your organization must be aware of it,” she underscores.

“Stated at the time of your initial interview with customer, and then, if you haven’t been paid, these words can work magic: ‘It’s not me, but as you recall, we have a company policy to stop all work when your account balance is past-due.’

“It’s a version of ‘Referring to Higher Authority,’ where the employee diverts any anger from the slow or no pay customer onto your accountants, owners, managers, husband or wife who will not let you continue working until the bill is brought current.”

Keno sees the expression, “When your ox gets gored,” as applying perfectly to being part of the collection process. “If a bonus or raise is conditioned on getting the company paid, self-interest will can work wonders for the bottom line.”

Acknowledging that, especially in smaller offices, most people don’t like doing collections, “So they find everything else to do before they make that call. Hire someone experienced for that role, in a part-time position, who comes in once a week and that’s all they do,” she recommends.

“You should start your collection process right away, so when an invoice hits 30 days, you ‘Dial and Smile.’ Often, you’ll hear, ‘Oh, I never got your bill. Sorry, send me another.’ By calling early, you find out promptly, not at 90 or 120 days, and this affords you the time to stop work, if needed, promptly.

“Your customers, clients and patients have a legal and moral duty to pay for your services. Never forget that,” Beth Keno concludes.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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I am receiving phone calls and collection notices from a New York collection agency on a checking account that I closed years ago. When the account was still open, it had Overdraft Protection. I purchased a monthly subscription for products from a company back East and signed an authorization for direct deductions from the account.

But the products never came. Even though I informed my bank in writing of what clearly appeared to be a scam and told them to reverse those deductions – the company continued to charge the account – and the bank kept on paying under my Overdraft Protection. When I disputed the charges, the bank claimed that as I signed an automatic withdrawal order, they had to honor it. Of course, they insisted that I re-pay them, but I refused. There the matter stood for five years and I thought it had been just dropped by the bank.

Recently this “debt” was reported to a Credit Reporting Agency and this collection agency is bothering me. Isn’t it too late, anyway, because of the Statute of Limitations? What do you suggest? Thanks for any advice you can provide. Steve, from Avenal.

An extremely common problem

If you or anyone you know is in a similar situation – or if you have authorized an automatic deduction on a checking account or credit card – get out your scissors and keep this column as it could save you money and grief.

Automatic deductions – dangerous

Automatic deductions contracts – from a checking, debit or credit card account – are potential nightmares. Many credit counselors and financial advisers strongly suggest avoiding the so-called “ease” these transactions appear to offer. If things go right, everyone is happy. But if they do not?

In the news not long ago were the huge problems America On Line subscribers had in ending their subscriptions, many of which were via the automatic deduction formula. Just getting AOL to stop billing was a real problem for an unknown, but assumed large, number of people worldwide.

So, if you can somehow avoid the temptation to enter into these transactions, you will be far better off.

Critical time limits

First of all, Steve did precisely the right thing in providing written notification to the bank. That’s exactly what the law requires. Do more than just call! Send a letter outlining the problem briefly, telling them to stop further charges and to reverse those to date, if your situation is like Steve’s. Assume written notification to the bank or credit card company is required.

Recall that Steve’s problem with his checking account was many years ago, and yet just recently discovered that his credit report contained the old information, and that Plaza Recovery Associates, a New York based national collection agency, is now after him.

In discussions with Steve, I learned that he had a pretty good grasp of the Statute of Limitations, which is the law that prevents stale claims from being successfully brought to court. “I asked a collector if this six-year-old debt wasn’t beyond California’s four-year statute. He answered, Oh, that starts running when we, the collection agency, get your claim, so it is perfectly valid now.”

In fact, when I called Plaza, some creep there told me the same thing. It is absolute gold plated nonsense. In California, your bank has four years from the date of your last payment on a contract to file a suit, or they are too late, even if you owe the money. But you must raise that defense!

But how about the credit reporting bureau? Why did they suddenly get the account, and how long could it remain on his records?

The answer is that at some point the bank “charged off” the debt, and released the information to credit reporting agencies. They can keep a valid bad debt on there for seven years, but an invalid debt must be removed, and I instructed Steve to contact the agencies and do the following:

(1) Tell them in writing that the debt is not valid and ask that they obtain verification from the bank and collection agency. They have 30 days in which to do so, and if they do not remove it, there are penalties should the debt be found invalid. (2) Advise he wants that entry removed, and he has that right under the Federal Fair Credit Reporting Act. (3) Finally, if, for some reason they object, or if the credit bureau concludes the debt is valid, he needs to submit a 100 word statement to all the credit bureaus explaining the problem and clearly stating that it is barred by the California Statute of Limitations.

I told Steve that he needs to also contest this charge with Plaza, asking them to provide proof that it is a valid debt. While it is unclear if they’re working for his bank (Bank of America) or merely purchased an old, stale account, pressure on Plaza Recovery Associates may cause them to lose interest.

I placed two calls to Plaza as well as taking a look at their Web site. It’s worth the time to see how these collection agencies portray themselves. I don’t like people who lie for a living and far too many collectors find absolutely nothing wrong at all in telling the often scared, poorly informed public, anything to extract money that they might not legally owe. As my reader gave me authorization to speak with the collector, I can tell you the conversation was amusing to say the least. Amusing and brief. Their arrogant attitude merited little of my time.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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In some cases, it’ll work out better if you let it go instead of trying to force a deadbeat client, patient or customer to pay your bill.

We’ve all heard the saying “happy wife, happy life.” Of course, today, we might update the saying to “happy spouse, happy house.”

For purposes of today’s article, let’s stick with the “happy wife” version, as it is a partial key to the mess that Atlanta attorney “Josh” has found himself in.

“Dennis, my law school grades weren’t the best. I couldn’t find a decent-paying job, so I opened my own office, discovering the hard way that law school does not prepare graduates to practice law. I’ve accepted cases and clients I should have avoided, taking whatever walked in the door to make the rent payment.”

“One client was a contractor who was sued over alleged poor-quality work for a kitchen remodel. He was likable, persuasive and convinced me that it was an excellent job but the customer stiffed him.

“Relying on that, I filed suit against the homeowner. Had I done an internet search, I would have discovered my client was a crook, had been sued often and lost his contractor’s license. But I needed the money. My bad!”

“We lost the case at trial,” Josh wrote, “and there was a balance owing of about $8,000 in fees which he never paid. I felt it would have been best to forget the whole thing, but my wife insisted that I go after the guy. I didn’t want to, but she implied that if I did not, I would look weak. So, I did.”

A lawyer suing their client for fees can make it more difficult to obtain malpractice insurance. While not required in most states, any lawyer who does not carry malpractice insurance, in my opinion, is someone to be leery of.

‘Have you sued a client for your fees?’

I asked attorney malpractice underwriters, “If a lawyer answers ‘yes’ to the question on your malpractice application/renewal form, ‘Have you sued a client for your fees?’ will this have an impact on that their ability to obtain coverage?”

Every underwriter replied, “Generally, an automatic decline. We might accept the risk of our insured filing suit for fees, but their premium would be greatly increased, or we could add a provision that excludes any malpractice claim that arises out of a suit for unpaid fees.”

Avoiding the slow-pay, no-pay quagmire

Some of the ways that attorneys — and this does not only apply to lawyers —can reduce the risk of clients who fail to pay include:

– Requiring a substantial upfront cash retainer, universally requested in criminal law matters.

– Billing frequently and not hesitating to end the attorney-client relationship when fees and expenses are unpaid after a set amount of time. These conditions must be spelled out in the retainer agreement.

But a law degree and license to practice law (as well as medicine, accounting, architecture — you name it) does not mean that you have business smarts. When it comes to being paid, patience and “empathy” for a client going through tough times are contagious.

“She’s my best (client, customer, etc.). I can’t drop her,” is a frequent response to, “Why isn’t Sally paying our bills?”

Clients are consistent. Deadbeats and con artists will rip off their attorneys the way they rip off everyone. That’s why, before a lawyer agrees to representation, their best friend is Yelp and other online reputational sources. The bad reviews will save your skin!

The get-even suit for malpractice

Nationally, 40% to 60% of malpractice suits against lawyers are a direct result of the attorney suing for past-due fees.

The best way to get a lawyer suing for fees to go away is to allege the case was lost due to their negligence. Even where there is absolutely no evidence of any professional negligence, that’s the position usually taken by the attorneys who represent the insured’s former client.

I was referred to lawyers retained by legal malpractice carriers and received an earful of disturbing comments about the lawyers hired by deadbeat clients to respond to the lawyer suing for unpaid fees.

The saying “no honor among thieves” applies to certain lawyers who seem to relish representing crooked former clients, even though they know there is no legal basis for these suits.

The insurers’ attorneys acknowledged that, on occasion, their insured have committed legal malpractice, which justifies a suit against them. But, they said, when it is a matter of attorney fees alone, this is an area in our legal system where deadbeats often hire like-minded counsel.

And that is what Josh is facing. He admitted, “I should have told my wife, ‘Honey, I respect your sense of fairness, but let’s just chalk this up to a learning experience.’”

Dennis Beaver Practices law in Bakersfield and welcomes comments and questions from readers,
which may be faxed to (661) 323-7993,
or e-mailed to Lagombeaver1 – at – Gmail.com.

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