Daily Report Article names Daniel DeWoskin foe of Frederick J. Hanna & Associates

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Governor’s Office of Consumer Affairs appeals Cobb judge’s ruling that says probe violates separation of powers

By Andy Peters, Staff Reporter
Published in the Daily Report
December 22, 2009

Georgia consumer regulators are continuing their fight to get details about the debt-collection practices of Marietta firm Frederick J. Hanna & Associates.

The state is appealing a decision by a Cobb County judge last September that said efforts by the Governor’s Office of Consumer Affairs to investigate complaints about Hanna’s debt-collection practice violated the Georgia Constitution’s principle of separation of powers.

Only the Supreme Court of Georgia can regulate the practice of law, held Judge S. Lark Ingram of Cobb County Superior Court.

In an appeal to the Supreme Court, lawyers from the state Department of Law argued that Hanna’s firm is much more of a business that can be regulated by the state government than a law firm that cannot.

“Although Mr. Hanna refers to his corporation as a ‘law firm,’ its organization bears no resemblance to that of a traditional law firm,” state lawyers argued, noting that the firm employs about 450 people, of which only 10 are attorneys.

In a telephone interview last week, Hanna dismissed that argument, saying, “because I only have 10 attorneys with 400 employees, they’re saying I’m not running my law office right.”

Hanna wins in Cobb

The action at the state Supreme Court follows a Sept. 4 order by Ingram that rejected an attempt by the Governor’s Office of Consumer Affairs to enforce an investigative demand on Hanna’s law practice. The Consumer Affairs office said it had received more than 200 complaints that Hanna and his employees were engaging in abusive debt-collection practices.

But Hanna, represented in the Cobb County litigation by former state Attorney General Michael J. Bowers, successfully argued that his business consisted of a law practice that is not subject to the authority of the governor’s consumer affairs regulators.

Hanna said that he typically has more than 150,000 active cases throughout the state, and that he files about 8,000 new suits and 2,000 new garnishments each month, making him one of the state’s busiest lawyers.

In its appeal of Ingram’s order, the Consumer Affairs office said the attorneys are specifically subject to the federal Fair Debt Collection Practices Act, which overrides state law. The appeal was filed on Dec. 7 by Attorney General Thurbert E. Baker and Law Department staff attorneys Isaac Byrd, Sidney R. Barrett Jr., Amy C. M. Burns and Jeffrey W. Stump.

The state also cited a 1975 Supreme Court case that says the separation of powers doctrine “is not a rigid principle.” Greer v. State, 233 Ga. 667, 668-69.

“This Court’s exclusive power to admit, discipline, suspend, or disbar attorneys does not preclude the legislative or executive branches from taking action that may affect attorneys or the practice of law,” the state wrote in its application for discretionary appeal.

The first contact that Hanna’s firm makes with subjects from whom it’s trying to collect a debt is a demand letter, the state’s attorneys said. In that letter, the subject is told, “at this time no attorney with this firm has personally reviewed the particular circumstances of your account.” Follow-up calls are also made by non-attorneys, the state said.

The Supreme Court’s authority to regulate lawyers is “not intended to enable lawyers to staff corporate businesses with hundreds of non-lawyers, put them in direct contact with consumers, and then claim a special dispensation that shields their activities from investigation,” the state wrote.

Hanna said in briefs filed in the Cobb County case that all of the debt-collections matters his firm pursues are overseen by a licensed attorney. Hanna said his firm has about 450 employees in Marietta and St. Louis.

The state used those facts in its appeal, saying that “given … the lopsided ratio of attorney to non-attorney personnel within the corporation, it is plain that a substantial amount of Hanna’s day-to-day business is conducted by its 440 non-attorney employees with no direct involvement by the ten attorneys.”

The state also noted in its appeal that the State Bar has received about 50 complaints about Hanna’s debt-collection practices but has taken no disciplinary action.

“They’ve taken the position that the State Bar doesn’t do a good job of monitoring attorneys and there needs to be another government body overlooking law firms,” Hanna said in the phone interview.

The state’s appeal before the Supreme Court is Doyle v. Frederick J. Hanna & Associates, Nos. S10A0395 and S10A0397. The Office of Consumer Affairs’ original case in Cobb County Superior Court is Doyle v. Frederick J. Hanna & Associates, No. 08-1-11567.

Hanna’s counsel on the Cobb County case and the Supreme Court appeal are Bowers and two colleagues at Balch & Bingham, partner J. Matthew Maguire Jr. and associate Marlie A. McDonnell. The response from Hanna’s attorneys is due Dec. 28. Oral arguments in the case are scheduled for Feb. 16.

Another foe

Hanna recently picked up another foe—an Atlanta attorney whose practice focuses on representing consumers in debt-collection matters.

At issue was a 2008 suit brought by Alpha Receivables, one of Hanna’s clients, against an Atlanta woman, Jennifer Chattman. Alpha claimed in DeKalb County State Court that Chattman owed it $1,505.

Chattman’s lawyer, Daniel E. DeWoskin , proved that Chattman never had such a debt and filed a counter-claim. Alpha admitted it made an error and withdrew the case.

In June, DeWoskin sued in federal court, saying Alpha Receivables and Hanna’s firm committed fraud and violated state and federal laws regulating debt-collection practices by creating a fictional debt and trying to collect it from Chattman.

Hanna’s law firm and Alpha Receivables are the same company, DeWoskin said .

“Alpha Receivables has no employees other than Fred Hanna,” DeWoskin said . “Its address is the same as Hanna’s law firm.”

Hanna said in a phone interview that there is nothing to DeWoskin ‘s fraud claims.

“When we first filed the suit, we made an error with the creditor and it was amended,” Hanna said. “We deal with these things all day long.”

DeWoskin is scheduled for Jan. 11 to take the depositions of employees of Hanna’s law firm and Alpha Receivables. In the DeWoskin case, Hanna is being represented by two attorneys from his own firm, James T. Freaney and Scot W. Groghan.

The complaint DeWoskin filed on behalf of Chattman in the U.S. District Court for the Northern District of Georgia is Chattman v. Alpha Receivables, No. 09-CV-1525. The original collections case that was filed against Chattman in DeKalb County State Court was Alpha Receivables v. Chattman, No. 08A87534.