The law firm of Weltman, Weinberg & Reis Co., L.P.A. (WWR), following its success after a long court battle with the Bureau of Consumer Financial Protection (Bureau or BCFP), filed a request with the court last Friday asking for $1.2M in attorney fees from the Bureau.

The BCFP initially filed suit against WWR in April of 2017, alleging that the firm falsely represented in its letters to consumers the level of attorney involvement in collecting debts. However, according to the request, WWR began to incur attorney fees when the Bureau commenced its investigation of the firm two years prior to the filing of the suit.

According to the filing, WWR cooperated with the Bureau during their investigation, yet the Bureau was unable to find "any instance in which any consumer was harmed, any consumer was misled, or any consumer was confused by any of Weltman's collection practices." Despite this, the Bureau proceeded to file the complaint when WWR refused to enter into a consent decree.

A portion of the filing discusses a two-sided stance from Richard Cordray, the Bureau's former director. According to the filing, Cordray authorized the filing of the complaint, yet he previously approved the substance of the allegedly violating letters back when he served as Ohio's Attorney General. Following the filing of the complaint, the Bureau issued a press release that caused WWR to lose several large clients.

In arguing for attorneys' fees, WWR states that the Bureau pursued these claims in bad faith because it knew or should have known that the claims were meritless. WWR pointed to the plethora of evidence presented both in the investigation prior to both the court proceeding and the discovery obtained during litigation, stating that nothing in this evidence pointed to wrongdoing by WWR. To support its claim, WWR brings attention to the fact that the Bureau dismissed half of its case on the first day of trial.

Weltman began and ended its request with reference to Acting BCFP Director Mick Mulvaney's statement that the Bureau has long "pushed too hard" with rulemaking by enforcement, asking "where do those we charged go to get their time, their money and their good names back?" The request for attorneys' fees is one avenue.

insideARM Perspective

As discussed in one of insideARM's previous articles, the Bureau focused on collection law firms around the time it began its investigation of WWR. The Bureau filed an action againts the law firm of Frederick J. Hanna & Associates (Hanna) in June 2014, entering into a consent order around December 2015. The Bureau filed another consent order with the law firm Pressler & Pressler, LLP (Pressler) around April 2016. Excluding the costs to represent themselves in their dealings with the BCFP, the consent orders for Hanna and Pressler were $3.1M and $1M respectively. Instead of entering into a consent order, WWR chose to fight the claims, which cost them $1.2M in legal fees alone. This excludes lost revenue from the reputational impact of the suit and the hours spent by WWR employees to cooperate with the investigation and prepare for the lawsuit's defense.

Keeping in mind that the consent decrees are specific to the allegations in each action and are not indicative of what every consent order will demand, comparing these numbers shows that it is at least a $1M ordeal for debt collectors if the BCFP comes knocking. As the request for fees states, the Interim Director's question was likely rhetorical when he asked where targeted companies can go to make themselves whole again. Whether the court will make the Bureau stand by these words and cover WWR's attorneys' fees remains to be seen.

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