Lynda Siggers of Glen Burnie had fallen behind on her credit-card bill when the Mann Bracken law firm threatened to garnish roughly one-sixth of her monthly wages as a day-care worker. She panicked and said she called the firm to plead her case, agreeing to scrape together $100 as a good-faith payment after a firm representative indicated that might be enough to have the garnishment lifted. But soon after that December call, Mann Bracken had $154 docked from her paycheck anyway. She was forced to turn to her church for help paying rent.
"I just feel victimized," said Siggers, adding that she used credit to pay for necessities like food and does want to make good on her debts.
Today, Rockville-based Mann Bracken finds itself as the target. The abrupt collapse of the firm and an affiliate left behind millions of dollars in debt and upended tens of thousands of Maryland cases that now must be dismissed. Last month, the Montgomery County Circuit Court appointed a receiver over Mann Bracken at the firm's request, an alternative to bankruptcy.
But the spectacular fall did more than just shutter Mann Bracken, once one of the nation's largest debt-collection law firms. It also lifted the veil off a business - and an industry - whose aggressive practices were not only persistent but are alleged to have been ruthless and perhaps even illegal.
Some consumer advocates hope the firm's collapse and the extra regulatory and court scrutiny brought to bear in the aftermath will prompt debt-collection reforms nationwide. Mann Bracken's reach was unusual, consumer attorneys say, but the way it did business was not.
"There's the potential here for the entire model to change," said consumer lawyer Peter Holland, a visiting professor at the University of Maryland School of Law. "It's shining a light on a very oppressive industry."
Managing partner Connell A. Loftus did not respond to numerous attempts to reach him at his home and through the firm's attorneys. In a short statement in January, Mann Bracken said the firm had nothing to pay creditors after the bankruptcy of Axiant, its collections-agency spinoff, and was left with "no alternative but to wind down its business operations."
Axiant listed 2,400 creditors and estimated liabilities of up to $50 million in court filings. The largest claim - for more than $8 million - came from Mann Bracken. Mann Bracken's receivership request lists more than 500 creditors and at least $5.9 million in expected claims.
Scores of lawsuits and complaints to state regulators describe Mann Bracken as a hard-nosed legal operation that employed unfair tactics. They accuse the firm of taking debtors to court even after they made upfront payments in an attempt to avoid legal problems, harassing debtors' relatives in violation of consumer-protection laws and garnishing wages for debts that had already been paid.
Moreover, the debt-collection process used by Mann Bracken appeared to be rigged against consumers from the start.
The firm routinely took unpaid-debt cases to the National Arbitration Forum, which billed itself as neutral ground for disputes, even though - a state attorney general alleged - it was connected to Mann Bracken through a common ownership structure. Consumers typically consent to that kind of arbitration in the fine print of credit-card and other applications.
Arbitrators almost always ruled in favor of creditors, and from there Mann Bracken would go to court to get those decisions confirmed by a judge and turned into wage garnishments or liens on homes. The setup reduced the time lawyers had to spend in court. And cash-strapped debtors rarely defended themselves.
Minnesota Attorney General Lori Swanson sued the National Arbitration Forum in July, contending that it aggressively marketed services to creditors as a slam-dunk way to get debts repaid and would sometimes refer creditors to Mann Bracken for debt-collection help. The attorney general also alleged a carefully concealed common ownership between the forum and Axiant, the Mann Bracken spinoff. The detailed lawsuit "was a bombshell," said Deepak Gupta, a staff attorney at watchdog group Public Citizen, which had long criticized the forum as unfair.
Five days after the suit was filed, the forum agreed to stop hearing consumer cases as part of a settlement. Axiant, which had been struggling with cash-flow troubles even beforehand, filed for bankruptcy protection at the end of last year and folded, laying off more than 300 in Rockville and Frederick locations.
And Mann Bracken, which had 25 offices across the country and was dependent on Axiant for its case files, its office leases, even its computer systems, could no longer function. In Maryland, officials estimate that at least 40,000 court cases filed by Mann Bracken will be dismissed in the wake of the firm's shutdown.
It was "a huge empire," said Mark Steinbach, president of the Maryland Consumer Rights Coalition.
And it disappeared virtually overnight.