We settled a case yesterday and I want to tell you about it. Almost two years ago, we sued a car dealer for wrongfully repossessing our client’s car. Yesterday, our client went to pick up that car, which she will own free and clear instead of paying 25% interest on the buy-here-pay-here auto financing. Additionally, over the next two and a half years, my client will receive a few thousand dollars and my firm will recoup a little over $10,000 in attorney’s fees and expenses. 

Let me say thank you to some people who need thanking by making a couple of points about this settlement. Then, I want to tell you about a nonprofit law firm I’m starting in 2017 called Commonwealth Justice. 

First, this repossession had a huge impact on my client’s life. Like many people, when my client lost a reliable form of transportation, it set off a cascade of negative consequences in her life. Because she lost her only car, she could no longer hold down one of the two jobs she was working at the time. Because she lost one of her two jobs, she wasn’t able to make rent and had to leave her apartment. For a year, she lived with her minister and his family. She wasn’t able to transport her daughter to the far-away clinic to treat a chronic medical condition. Wrongful, abusive repossessions create huge problems in individual’s lives and—based on the number of people we have contacting my firm—are a widespread problem in our state. 

This settlement doesn’t come close to compensating my client for the violent upheaval this repossession caused in my client’s life. But, collection of a larger sum from the dealer was going to be challenging and, as in most settlements, we weighed the value of the prospect of recovering more money later versus some money in the near future and decided the risk of pursuing a larger sum of money wasn’t worth the benefit. 

The only way we were able to get this case settled is because Josh Goodnewt did an outstanding job getting summary judgment granted in our client’s favor on her Truth in Lending Act claim and having the Defendant’s counterclaims for fraud and breach of contract thrown out with a separate Motion for Summary Judgment. Josh is a brilliant, thorough, passionate attorney and I miss him every day. 

Are you kidding me? 

The only way that we are able to afford to settle cases in a way that spreads out the payments to my firm over two and a half years is because I  have a wife with a steady job and health insurance benefits. In other words, without Sarah, I don’t have the luxury of a) reducing the amount of attorney’s fees I recover and b) agreeing to accept that amount over two and a half years. Sarah makes Ben Carter Law possible and anyone who likes the work that we do needs to know that it doesn’t happen without her. 

Now, to Commonwealth Justice: 

We need more people working on behalf of consumers in Kentucky and defending them from debt collection abuse, unscrupulous landlords, reckless mortgage servicers, and car dealers that put profits over people.  

I have had a lot of opportunity as a Legal Aid attorney and as a private attorney to reflect on why more attorneys do not practice in the area of consumer law in Kentucky. I think there are two main reasons. 

First, consumer law is a challenging area of law. Lots of federal statutes. Lots of regulations. Lots of math. It’s not easy to gain the substantive knowledge you need to succeed in this field. Most people can only do it by—like me—starting at Legal Aid. 

Second, even if they learn the law, not many attorneys have the financial ability to defer payment on a case over the course of two and a half years. I can do it because UK gave me a scholarship to law school and I have a beautiful wife with a steady job. 

Nevertheless, my experience with Ben Carter Law over the last four years proves that consumer attorneys can make money in Kentucky. Last year—the fourth full year of Ben Carter Law—we had enough money to pay modest but nontrivial salaries to Josh and me and for the briefest of time employed a paralegal, as well. We may need to be flexible in how we settle some cases and sometimes cash flow is challenging, but—over time—it is possible for attorneys to make it in this area. 

So, the way I see it: the two main barriers to entry into the consumer law field are 1) lack of opportunity to learn the substance of the law and gain litigation experience and 2) the inability, at the outset, to make the financial tenuousness of a consumer practice work.   

Over the next few weeks and months, you will hear more from me about Commonwealth Justice, a nonprofit law firm I am committed to start in 2017. My hope is that this nonprofit law firm will address both barriers to entry for attorneys wanting to get started in consumer law. By raising funds from individual donors and with grants from foundations, I hope to be able to provide attorneys with the opportunity to develop substantive experience in consumer law. Over time, the goal will be to supplement the organization’s budget with the recovery of attorneys fees in many of our cases. Meanwhile, the support from our donors will provide us the runway necessary to get this plane off the ground. 

Over time, I believe that an organization like Commonwealth Justice can be a game changer for low- and middle-income Kentuckians whose financial or familial stability is threatened by a wrongful repossession, an abusive debt collector, or a corner-cutting landlord. By expanding the number of attorneys working in this field, we can expand the number of people we help, the number of cases that go to trial, and the number of cases that establish valuable precedent to guide the conduct of business owners around the Commonwealth. 

So, stay tuned. And, if you’re interested in helping in any way, I’m easy to find.  

The New York Times wrote a good article a couple of weeks ago on a phenomenon I’m seeing more and more in my car fraud practice: used car dealers are now installing GPS and SID (Starter Interrupt Devices) on the cars they sell. While everyone knows what a GPS does, these GPS devices don’t sit on the dashes of cars and help drivers navigate to their destinations. Instead, they allow dealers and finance companies to track the whereabouts of cars for repossession. 

Meanwhile, the Starter Interrupt Device is less well-known and even more dangerous. It does exactly what it says it does: it allows a dealer or finance company to interrupt (i.e. prevent) the car from starting. Dealers and finance companies can “flip the switch” on the SID remotely. So, they never have to leave their office (and sometimes can deploy it from a smartphone) and with the flip of a digital switch can make a vehicle stop working. (If properly installed, the SID will not stop a vehicle that is in motion, but that does not fix the safety concerns of being stranded.)

Some dealers disclose the existence of these devices to consumers, some don’t. Those who do disclose their use of the device often try to explain that these devices “help locate the vehicle if it is stolen”. While that may be true, the actual purposes are to a) locate the vehicle for repossession and b) incentivize the consumer to make payments by preventing the consumer from using the vehicle if he or she misses a payment. 

The used car industry’s expanding use of these devices raises many potential legal issues that have yet to be litigated in Kentucky. A leading attorney advising the used car industry has described both 1) failing to disclose a GPS or SID and 2) charging consumers for the devices as among the “Ten ‘Worst Practices’ for Dealers”. Failing to disclose the existence of a GPS and/or SID on a new or used vehicle may be a violation of the Motor Vehicle Retail Installment Sales Act. 

Another area ripe for abuse is in the repossession of a vehicle by use of a Starter Interrupt Device. Aside from the safety issues raised by someone crippling a vehicle remotely, a dealer’s use of a Starter Interrupt Device can potentially violate, among other laws, the Uniform Commercial Code and the Kentucky Consumer Protection Act. 

If you discover that a car dealer sold you a vehicle equipped with a GPS or SID unit without disclosing it to you, you need to contact an attorney to explore your legal rights. You can find a consumer attorney in your state at the National Association of Consumer Advocate’s website.