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Legal Ethics

New York AG Sues 35 Law Firms, Seeks to Void 100,000 Default Judgments

Posted Jul 22, 2009 3:16 PM CDT
By Martha Neil

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The attorney general of New York has sued 35 law firms and two collectors in a case that could overturn 100,000 default judgments in consumer debt cases.

In a lawsuit filed today in Buffalo, Andrew Cuomo seeks to compel cooperation from firms that had relied on what may be faulty service by a Long Island process server that has previously been criminally charged concerning its work, according to the New York Daily News and the New York Law Journal.

The Erie County action was filed by Cuomo on behalf of the court system, and does not allege any wrongdoing by the law firms, the legal publication reports. However, it asks a state trial court to require the defendants to identify all cases they handled in which American Legal Process provided required service, and provide information about all default judgments obtained and any payments made to satisfy these judgments.

It also asks the court to order the firms to notify affected consumers of their right to be heard and seeks restitution on behalf of those against whom faulty default judgments were issued. The total amount of the default judgments could exceed $500 million, reports the New York Times. Although court orders allowed creditors to seize money directly from consumers' bank accounts, it isn't clear how much of this amount was actually collected.

Under some circumstances, it appears that default judgments could be re-entered (assuming they are voided as Cuomo requests) if proper service is established, according to the New York Law Journal.

The defendants include the New York City-based law firms of Stephen Elnstein & Associates; Eltman Eltman & Cooper; Jones Jones Larkin O’Connell; and Leshack & Grodensky, the Daily News reports.

A lawyer representing American Legal Process didn't immediately return the Times phone calls. None of the articles includes any response from the law firm and debt collector defendants.

Earlier coverage:

ABAJournal.com: "AG to Sue NY Law Firm, Charges Process Co. Over Alleged ‘Sewer Service’"

Updated at 3:40 p.m. to include information from subsequent New York Times article.

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