A District Court judge in Virginia has issued a consent decree in which a law firm representing a plaintiff in a Fair Debt Collection Practices Act case will pay both the plaintiff and the defendant a total of $50,000 and take corrective action after it was accused of filing one lawsuit and settling another in the plaintiff’s name without her knowledge.
The case, which was filed in the Eastern District of Virginia, involved the law firm Guards Law. The controversy began when Guards Law allegedly filed a lawsuit and later settled another without the plaintiff’s consent or knowledge. This resulted in her not receiving any of the settlement funds despite the firm claiming to represent her.
Frost Echols, representing the defendant — a collection agency — in this case, discovered the irregularities after attempting to depose the plaintiff. When Guards Law moved to withdraw as counsel, leaving the plaintiff unrepresented, Frost Echols was able to speak directly with her. This led to the discovery that she had no idea she was involved in a lawsuit and had not authorized any actions taken by Guards Law on her behalf. Frost Echols and the plaintiff met in person, where she confirmed the firm’s failure to communicate with her and the unauthorized settlement.
As part of the consent decree issued by Judge Arenda L. Wright Allen, Guards Law has acknowledged its failure to comply with the Virginia Rules of Professional Conduct and has taken steps to improve its client communication, including implementing a new CRM tool. The law firm agreed to pay a total of $50,000, with $35,000 going to the collection agency defendant and $15,000 to the plaintiff. Additionally, Guards Law agreed to take corrective actions, including ensuring that all client communications are properly documented and that all claims against the collection agency defendant are released.
