At a time when having groceries delivered to your front door is as easy as a couple of taps and swipes on your phone, it is tempting to rely exclusively on the Internet for solutions to all of our problems. However, convenience and adequacy do not always go hand-in-hand, especially when it comes to legal representation. Such is the case with UpRight Law, LLC, a “national consumer bankruptcy law firm.” UpRight relies heavily on non-lawyer “client consultants” who dispense legal advice to clients and help to farm out the cases to local attorneys. Using a “Playbook,” these consultants employ high-pressure methods to “close” the sale of bankruptcy services to distressed consumers, such as discouraging prospective clients from consulting with a spouse about whether to sign up with lines like “better ask for forgiveness than permission” and “if your spouse is like mine, he/she never tells me no if I really love something.” UpRight would then contract with local attorneys to handle the cases. Although these attorneys had their own independent practices, they became limited partners of UpRight and were held out to the public as partners.
In a surprise to no one, this model is not without its issues, and bankruptcy courts across the country are starting to crack down on UpRight’s alternative approach to legal representation. Most recently, the U.S. District Court for the Western District of Louisiana affirmed the bankruptcy court’s imposition of sanctions against both UpRight and its local counsel. In Law Solutions Chicago LLC d/b/a/ UpRight Law LLC v. U.S. Trustee, 2018 WL 4658687 (W.D. La. Sept. 24, 2018), the District Court noted quite an array of issues with the case, including (but, unfortunately, not limited to) initially assigning local counsel who was not licensed to practice law in Louisiana; later assigning a local attorney located 350 miles away from the debtor; using a retainer agreement that violated the Louisiana Rules of Professional Conduct; consistently neglecting to contact the debtor; and making multiple misrepresentations, just to name a few.
Sanctions levied against UpRight included disgorgement of fees, suspension from practice in the district for 90 days, precluding the firm from accepting a retainer until the client had consulted with a lawyer in the district, and requiring local counsel to obtain a separate PACER login for cases in which the attorney is representing a client on behalf of UpRight.
During the appeal, UpRight took issue with its characterization as a “referral service” and a “marketer of legal services.” In a subtle yet pointed jab, the District Court noted that the statements were not intended as findings of fact, but if they were, they wouldn’t be wrong.
This was not UpRight’s first benchslap, however. Earlier this year, the Bankruptcy Court for the Western District of Virginia not only disgorged UpRight’s fees, it also sanctioned UpRight $250,000.00, as well as $50,000.00 against UpRight’s managing partner and $5,000.00 against local counsel, and revoked its filing privileges in the Western District of Virginia for not less than 5 years. See In re Williams, 2018 WL 832894 (Bankr. W.D. Va. Feb. 12, 2018).
Perhaps the most egregious part of that case was UpRight’s take on an alternative payment system, titled “New Car Custody Program,” in which clients could turn over their fully encumbered cars to a towing company without the lienholder’s consent in exchange for payment of their bankruptcy fees. This practice harmed not only the distressed consumers but also the auto lenders by converting collateral in which they had valid security interests.
UpRight’s punishment is a lesson to both law firms and distressed consumers: do your due diligence when presented with “alternative” opportunities that attempt to recharacterize the traditional attorney-client relationship. Remember – just because you saw it on the Internet doesn’t mean it’s true.
