June 8, 2012 by Robert Tharp at 12:00:00 am
The number of lawsuits filed against debt collectors under the Fair Debt Collection Practices Act has skyrocketed from 3,200 in 2006 to more than 12,000 last year, in part because of a litigation business model in which law firms that specialize in Fair Debt Collection Practice Act (FDCPA) claims file large volumes of cases in which successful plaintiffs collect a relatively modest award while the law firms reap significant legal fees paid by the defendant.
That model could change now that the U.S. Supreme Court is set to weigh in on whether plaintiffs who unsuccessfully sue debt collectors can be required to pay the defendant’s legal fees. Dallas collections attorney Brandon Starling of Shackelford Melton & McKinley says a ruling that upholds the lower court’s opinion has the potential to shift the legal landscape and reverse the trend.
“This might make law firms that file massive numbers of these fair debt collection suits think twice,” Starling says. “If the Supreme Court were to say these debt collection firms can be awarded fees and costs in their legal defense, it might make these plaintiff firms more reasonable and easier to deal with.”
Writes the ABA Journal: The case turns on the interplay between the federal rule and this provision of the Fair Debt Collection Practices Act: “On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney’s fees reasonable in relation to the work expended and costs.”
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