Tens of thousands of lawsuits against Maryland debtors over unpaid bills are being tossed out of court because the law firm pursuing the debt-collection cases has abruptly shut down.
The move gives a temporary reprieve to Marylanders in default on a variety of bills, particularly credit card payments, and burdens the already strained District Court system, which now has to sort through the legal morass left behind. It is unclear whether the creditors will refile the lawsuits seeking payment.
0The Mann Bracken law firm, based in Rockville, and its clients have been accused in civil lawsuits and by regulators of not complying with debt-collection laws and of using high-pressure tactics and harassing borrowers. The firm collapsed after an affiliate filed for bankruptcy in November.
The dismissal of the lawsuits is "a big win for consumers and consumer advocates, especially in today's economy," said Cory L. Zajdel, a Towson consumer-law attorney who has sued Mann Bracken on behalf of clients.
Phone calls to an attorney representing Mann Bracken seeking comment were not returned.
The Maryland commissioner of financial regulation and the state's court system are still trying to determine how many clients - and corresponding lawsuits - Mann Bracken LLP had. It operated 24 offices around the country that specialized in debt collection.
Past clients of Mann Bracken and its affiliates include American Express and a credit services subsidiary of M&T Bank, according to a bankruptcy court filing.
But only a few clients working with the firm have been identified in Maryland, where Mann Bracken's entire client list is expected to contain about 100 names, each with potentially thousands of associated lawsuits pending against debtors.
One current client, debt collector Midland Funding LLC, was sued in Baltimore federal court by consumers in September for the alleged "prolonged, illegal, and systematic abuse of thousands of Maryland residents."
State regulators also investigated Midland and other companies accused of violating debt-collection laws. They reached a $1 million settlement last month, with the companies agreeing to change their business practices.
More than 90 percent of Midland's cases were handled by Mann Bracken, and now about 27,000 of those cases will be dismissed in Maryland.
Mann Bracken was ordered to cease its Maryland operations Monday by the financial regulation office, a division of the Department of Labor, Licensing and Regulation, which was alerted to Mann Bracken though a Midland investigation.
By the time the order was given, the company had practically disappeared. Its phone numbers had been disconnected, payment checks sent to the firm were not being cashed and its Web site had been taken down.
Hundreds of lawsuits, including some alleging high-pressure and deceptive practices, have been filed against the company since 2005. The Baltimore Sun highlighted the firm in a 2008 article about unfair hospital debt collection. Mann Bracken represented Johns Hopkins Hospital at the time and was characterized by debtors as unnecessarily aggressive.
A call to Mann Bracken's Rockville location yielded a recorded voice that said the number had been "temporarily disconnected." The local office sent a letter, dated Jan. 1, to Maryland District Court clerks saying it was closing at the end of the month.
"We are working with our clients to transfer all of our cases to new counsel as quickly as possible," wrote Mann Bracken attorney Scott Kramer, one of four partners. He warned the court of the possibility that substitute attorneys might not be found before some of the cases come up for hearings and asked that those cases be stayed - for up to 90 days - or dismissed without prejudice, meaning that they could be refiled later.
Assistant Attorney General W. Thomas Lawrie, who works within the financial regulation commissioner's office, advised the courts in an e-mail to dismiss the lawsuits, but he wasn't yet sure how to handle ongoing cases in which judgments have been granted, in some instances allowing for wages to be garnished or liens to be filed.
Based on the advice, District Court Chief Judge Ben C. Clyburn told his judges to dismiss the cases.
"We took immediate action that was the fairest option to the citizens," Clyburn said in a statement.
Things started to fall apart for Mann Bracken after it consolidated its legal and debt-collection offices under one firm and moved the support operations into a company called Axiant, which filed for bankruptcy in November, cutting Mann Bracken off from its files.
"Due to the bankruptcy filing by the company that provides computer, phone, staffing, and almost all other support services to its law offices ... Mann Bracken LLP does not have the resources necessary to handle and pursue pending litigation, and is in the process of winding down all legal business operations," an emergency motion filed in Maryland District Court by Mann Bracken attorneys states.