Legal Fraud the Size of Texas
Most of us still remember the BP Deepwater Horizon Spill. Between April 20 and September 19, 2010, a deep water drilling platform off the coast of Louisiana is estimated to have leaked about 210,000,000 gallons of oil into the Gulf of Mexico. It is considered the largest marine oil spill in history.
The spill decimated the tourism and fishing industry from Texas to Florida. To assist the many people and businesses hurt by the spill, BP created the Gulf Coast Claims Facility, a $20 billion fund earmarked for both clean up and provide compensation to those whose businesses or income were hurt. Hundreds of thousands of claims were filed.
Lawyer Rules on Solicitation of Clients (Ambulance Chasing Is Illegal!)
Lawyers were an essential part of the effort to ensure those hurt by the spill received compensation. Unfortunately, several lawyers may have been too zealous in their efforts to recruit clients.
Unlike most professions, lawyers are severely restricted in their ability to solicit clients. Lawyers can advertise but, in most states, they can’t directly solicit clients. The except is direct mail but even mail solicitations are restricted in many states.
What isn’t allowed is barratry. The term barratry is a legal one and one not in common use by non-lawyers. To the public, barratry is known as ambulance chasing and it is illegal.
We will discuss Texas law because the case discussed below originated in Texas but know that the concepts are applicable to most states.
Barratry or ambulance chasing is the practice of illegally soliciting clients who are in need of legal services. In Texas that means lawyers are prohibited from initiating personal contact with potential clients who have not invited such contact. Personal contact means using runners, knocking on doors, email or phone solicitation. Texas lawyers can advertise and with some restrictions send a letter but can’t do one-on-one solicitation. And what the lawyer can’t do directly, he or she can’t do indirectly which is why there is a prohibition on using “runners”.
Barratry also includes a lawyer encouraging clients to file frivolous lawsuits. After a major disaster, some unscrupulous lawyers will encourage clients to file claims even though they know there is no basis for the claim.
In Texas barratry can be both a criminal offense and a civil offense. Lawyers can also lose their rights to practice law. We have reprinted the formal definitions but remember they will vary a bit from state to state.
Texas Penal Code § 38.12
A person commits an offense under Section 38.12 if, with “intent to obtain economic benefit,” the person:
- Knowingly institutes a suit or claim that the person has not been authorized to pursue;
- Solicits employment, either in person or by telephone, for himself or for another;
- Pays, gives, or advances or offers to pay, give, or advance to a prospective client money or anything of value to obtain employment as a professional from the prospective client;
- Pays or gives or offers to pay or give a person money or anything of value to solicit employment;
- Pays or gives or offers to pay or give a family member of a prospective client money or anything of value to solicit employment; or
- Accepts or agrees to accept money or anything of value to solicit employment.
There are additional provisions of Texas law that prohibit or regulate
- Soliciting someone who indicated a desire not to be solicited
- Soliciting by coercion, fraud, or false, misleading, or deceptive statements (no false advertisements)
- Waiting periods before making mail solicitations (no one wants to be bombarded by letter solicitations the day after a loved one dies in a tragic accident)
If you have been improperly solicited by a lawyer, the lawyer can be sanctioned or punished by the courts and you may be entitled to damages. That may mean getting out of your attorney relationship or getting back some or all of the fees paid to the lawyer. Once again, this is a general statement. The law varies state by state and depends heavily on the facts of each case.
Hundreds of Clients Accuse Texas Lawyers of Barratry
Let’s go back to our story. It is a fraud that suggests that there is truth to the statement that everything really is bigger in Texas.
Almost 300 people accused Texas lawyer Jimmy Glenn Williamson (“Jimmy”) of an illicit barratry scheme by unlawfully soliciting thousands of potential clients to bring claims against BP related to the Deepwater Horizon oil spill. Jimmy engaged another lawyer who we will call Cyndi and her law firm.
Cyndi then engaged a third Texas lawyer, Michael, and his law firm to aid in their alleged barratry scheme*.
Together they allegedly agreed to split the profits from any fruits of the barratry joint venture with 40% of any attorney’s fees derived from the Deepwater Horizon litigation going to Michael and 60% going to Jimmy and Cyndi. Jimmy and Cyndi then agreed to split their 60% of the fees according to the amount of resources each put into the cases after [potential clients had been improperly solicited.
If handled properly and assuming the clients do not object, lawyers can partner together on a project and share fees. So far, no problems. How the trio sought to obtain clients is where things get interesting. If the claims of the former clients are true, their actions were also very illegal
To advance their barratry scheme (and to get more clients), Michael met with Scott Walker in April 2012. Walker ran a marketing business.
Michael told Walker that he and Jimmy sought to obtain potential clients affected by the Deepwater Horizon oil spill, with a goal of representing 100 Mississippi companies in their claims against BP. Michael conveyed to Walker that he and Jimmy wanted to hire Walker to provide services to solicit potential clients with claims against BP related to the Deepwater Horizon oil spill.
If Michael’s plan was to put up billboards or run TV ads, everything would have been okay. The group of lawyers apparently had different plans, however.
Walker introduced Michael and Jimmy to Steve Seymour, who was employed by Diamond Consulting and who was “a public official in Hancock County, Mississippi.” When Michael and Jimmy met with Seymour, they told him that they were trying to get potential clients in Mississippi with claims against BP related to the Deepwater Horizon oil spill and that Jimmy was the “absolute best lawyer in the field in handling Deepwater Horizon oil spill claims.”
Once again, so far so good. It isn’t illegal to hire marketing consultants to help generate business.
In May 2012, Michael and Jimmy met with Walker and Seymour. Jimmy brought a stack of double sided, color flyers promoting the [legal] services of Jimmy and Michael. Jimmy and Michael told Walker and Seymour to use the flyers in their sales pitches to potential clients in an effort to sell [clients] on hiring Jimmy, Michael, and Cyndi for their claims against BP. Jimmy and Michael instructed Walker and Seymour to call their friends and acquaintances to try to get them to hire Jimmy, Michael, and Cyndi for their claims related to the Deepwater Horizon oil spill and also “to make cold calls on people and businesses they didn’t know.”
Jimmy gave Walker and Seymour attorney-client contracts to be used for signing up potential clients. Jimmy instructed Walker and Seymour to have potential clients sign blank attorney-contracts and then email the signed contracts to him.
If true, all of these actions were illegal. Using flyers to pitch potential clients certainly sounds like a direct solicitation. The same with having folks call friends and neighbors. If a lawyer can’t directly solicit someone he certainly can’t indirectly do so, especially by giving runners blank contracts.
Later that month Michael entered into an agreement with Walker and Seymour and a third person in which Michael said he would pay them 30 to 40 percent of the legal fees he anticipated receiving from the clients.
Lawyers can share fees with other lawyers in certain circumstances but not with nonlawyers and never with runners. This is classic ambulance chasing or barratry.
Jimmy then recruited another individual, Kirk Ladner, to join with Walker and Seymour, telling Walker, Seymour, and Ladner that they would become “multi-millionaires.”
To advance their client solicitation scheme, Michael and Jimmy also met Dane Maxwell, whose company, CMV Investigations, provided lawyers with investigation services. Michael and Jimmy recruited Maxwell and CMV Investigations to solicit potential clients with claims against BP related to the Deepwater Horizon oil spill.
Maxwell formed a team of contract workers “to make cold calls on potential clients.” As part of the barratry scheme, Michael and Jimmy agreed to pay Maxwell $1,000 for each potential client that he and his team signed up, plus expenses.
Lawyers can certainly hire private investigators to help prepare cases for trial and to investigate claims but they can’t use an investigator to go door to door or cold call strangers in the hopes of signing up clients.
If it isn’t already obvious, Jimmy, Cyndi and Michael were quite serious about signing up clients. Maybe in the early stages of the scheme the intent was to sign up 100 businesses but the scheme seemed to have no end. According to the former clients, Jimmy, Michael and Cyndi paid over $7 million in illegal “barratry pass through money” to the runners, investigators and consultants to sign up clients.
According to the clients, a “barratry pyramid scheme” was developed, with Michael, Jimmy, and Cyndi at the top directing the solicitation efforts for potential clients. As part of this scheme, Michael, Jimmy, and Cyndi would give money to Walker, Seymour and others who in turn would then pay case runners to work below them.
For instance, if Maxwell and CMV Investigations received $1,000 from Michael, Jimmy, and Cyndi for a potential client, Maxwell and CMV Investigations would give a “mid-level runner” working below them, $100 to $250 of the $1,000 for recruiting the potential client. And the mid-level runner would give a “low-level runner” who worked below him, $20 to $30 of the $100 to $250 if she recruited a potential client while working under the mid-level runner’s umbrella.
In other words, as part of the barratry pyramid scheme, low-level runners would receive $20 to $30 for each potential client that was recruited, mid-level runners would receive $100 to $250, less the amount given to the low-level runner, for each potential client that was recruited, and Maxwell and CMV Investigations would keep the remainder of the $1,000 given to them by Michael, Jimmy, and Cyndi for each potential client that was recruited.
If all of this wasn’t enough, Michael, Jimmy, and Cyndi also instructed Walker, Seymour as well as other runners to go door to door to contact potential clients. Michael, Jimmy, and Cyndi told these individuals to tout Jimmy’s experience as a plaintiffs’ lawyer who had participated in the original Deepwater Horizon litigation and his experience with the BP settlement claim process.
Jimmy provided Walker, Seymour and the others, including the runners, with promotional materials to give to potential clients. The information given to potential clients “always indicated that the potential client could have a lucrative Deepwater Horizon oil spill claim against BP, which naturally led to Walker, Seymour, Ladner, Maxwell, and the runners presenting the potential client with an attorney-client]contract for Michael, Jimmy, and Cyndi.
One runner, Magdalena Santana, was recruited by Michael and Jimmy for a “marketing position” that required her to find potential]clients with claims against BP related to the Deepwater Horizon oil spill] and sign them up to be represented legally by Michael, Jimmy, and Cyndi. According to Santana, her position required her “to make cold calls on business owners and managers to try to get them to sign blank [attorney-client] contracts with Michael and Jimmy.”
Santana was paid $250 for each potential client that she signed up. Santana received payment through Precision Marketing Group, and Michael told Santana that he could not pay her directly for her solicitation efforts because “it was illegal for him to pay [her] directly, and that’s why the money had to go through some company.”
As for potential clients, Michael told Santana to target businesses in the high-paying settlement zones such as beachfront properties, hotels, taxi companies, commercial fisherman, nightclubs, and other tourism businesses. Jimmy instructed Santana to go business to business and door to door asking people if they had losses from the Deepwater Horizon oil spill. Jimmy, like Michael, also told Santana to target businesses in high paying settlement zones and in tourism zones, since they were getting higher payouts from the BP settlement claims process. And she was told to target churches because they were easy as they didn’t have to provide tax returns. If she had trouble signing up a “big fish” as a potential client, then Michael and Jimmy would visit that potential client personally.
The clients also claimed that Santana was given a map showing the high-paying settlement zones, and, like other runners, she was given a binder with blank attorney-client contracts for Michael, Jimmy, and Cyndi and pamphlets with Jimmy’s name on them to distribute to potential clients.
Santana allegedly solicited seventy-seven potential clients in her first week in her “marketing position” and she was paid bonuses personally by Jimmy for signing up “the big fish clients.”
Michael and Jimmy knew that Santana was cold-calling businesses to get potential clients. In total, Santana signed up 1,500 potential clients for Michael and Jimmy and none of them were her friends, family members, or colleagues. After Santana solicited potential clients for Michael, Jimmy, and Cyndi, Michael would meet her at a restaurant to sign the attorney-client contracts that she had obtained from potential clients.
According to clients, by the end of 2012, as many as ten thousand individuals had been improperly solicited through Michael, Jimmy, and Cyndi’s barratry scheme!
Finally things got so crazy that Jimmy began to get nervous. Jimmy said he wanted out. But Michael continued to fund and operate the barratry scheme on his own, and he directed Walker, Seymour and the runners to send any new potential clients only to him.
The clients say that in April 2013, Walker learned that he was under investigation by federal authorities, unrelated to the barratry scheme. Michael, Jimmy, and Cyndi then all became fearful that their barratry scheme would be discovered.
If it’s possible to make a bad situation worse, they figured out a way to do so. According to the lawsuit, in an effort to distance themselves from any misconduct, they decided to belatedly decline or to terminate representation of their improperly solicited clients. Beginning in May 2013 and continuing on, Michael, Jimmy, and Cyndi terminated the attorney-client relationship with about 8,000 improperly solicited clients through letters.
The letters sent by Michael, Jimmy, and Cyndi, “gave the impression that they were terminating their representation of a client either because the client’s claim was not good or because of the client’s fault.”
Michael, Jimmy, and Cyndi worded the letters to discourage their former clients from seeking new legal representation because they feared that the barratry scheme would be discovered. Because Michael, Jimmy, and Cyndi owed their clients fiduciary duties, the clients believed that their claims against BP related to the Deepwater Horizon oil spill were not worth pursing or that they could not proceed on their claims. A “majority of [the] terminated clients” were dissuaded from pursuing their claims against BP by Michael, Jimmy, and Cyndi, making them unable to collect substantial awards through the BP settlement claims process. Additionally, some terminated clients were barred from bringing their otherwise viable claims against BP because certain deadlines passed soon after Michael, Jimmy, and Cyndi terminated their representation of their former clients.
According to appellants, in 2017, Michael, Jimmy, and Cyndi’s terminated clients first learned of the barratry scheme devised by Michael, Jimmy, and Cyndi. Yet, Jimmy still had his assistant, Brenda Kellen, make calls to the terminated clients in 2017, advising those clients that any claims of barratry against Michael, Jimmy, or Cyndi were a “scam.” That date is critical because that is when the bulk of the claims were filed against the three lawyers.
Several hundred clients sued Jimmy, Michael and Cyndi. Their claims included civil barratry, civil conspiracy, and aiding and abetting. Ultimately those claims were dismissed. The court ruled that the clients waited too long to file their suit. Several appealed and in late May the dismissals were upheld.
Since the original case was filed, Jimmy died. Cyndi and Michael are still practicing law.
*The claims and quotes used in this post are from a Texas Court of Appeals decision that simply repeats the allegations found in the lawsuit. None of the claims listed were ever proven as the cases were dismissed prior to any trial. We only used the first names of the lawyers Cyndi and Michael because they were neither convicted of any wrongdoing nor disciplined by the state bar. We may never know the entire story because the courts ruled the claims were made too late.
Are You the Victim of Ambulance Chasing / Barratry?
We have very strong opinions on legal advertising and solicitation of clients. The bar rules found in all 50 states are an attempt at balancing a lawyer’s right of free speech with the public’s right to be free from misleading advertising or high pressure sales tactics.
If a lawyer employs runners, makes direct solicitation or pays referral fees to non-lawyers, chances are good that the lawyer is violating state ethical rules and that state’s laws on barratry.
Depending on the state, you may be able to get back your legal fees or be able to switch lawyers without any penalties or fees.
Obviously, we can’t provide legal advice in a blog post. If you think you have been scammed by a lawyer, give us a call.
For more information, contact us online, by email [hidden email] or by phone 877-858-8018. All inquiries are protected by the attorney – client privilege and kept confidential.
We only accept cases where we are licensed. In some cases we may affiliate with local counsel and provide services in a state where we are not licensed. We may also be able to help you find a lawyer if we are unable to take your case. Please note that we do not consider legal malpractice cases arising from criminal or child custody matters.