Law Times

PAGE 2 NEWS November 15, 2010 • Law Times for her conduct on behalf of collections agencies in a matter her counsel says should be seen as "a test case." Th e Law Society of Upper Lawyer takes on colleague over collections practice A BY MICHAEL McKIERNAN Law Times Markham, Ont., lawyer will face a disciplinary hearing in the new year Canada alleges Deanna Natale's use of draft statements of claim attached to demand letters breaches the LSUC's Rules of Professional Conduct. But her lawyer, Bill Trudell, tells Law Times the lack of clear regula- tions in that area makes a dis- ciplinary hearing an unsuitable venue for deciding whether Na- tale's actions constitute miscon- duct. A hearing was to start this week, but the LSUC granted an adjournment until Jan. 11 due to a clash in Trudell's calendar. "Th is is a new and evolv- ing area of practice," Trudell says. "I'm disappointed it's be- ing dealt with this way. 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This special offer expires December 1, 2010 Ontario Lawyer's Phone Book Considered the industry standard for more than 40 years Perfectbound • December 2010 • P/C 0514140999 • ISSN 0845-4825 Multiple copy discounts: 1-5....$63 • 6-49....$59 • 50-99....$57 • 100 or more....$55 (Please add 13% HST) For a 30-day, no-risk evaluation call: 1.800.565.6967 For a 30-day, no-risk evaluation call: 1 800 263 2037 or 1 800 263 3269 www.canadalawbook.ca Canada Law Book, a Thomson Reuters business • Prices subject to change without notice, to applicable taxes and shipping & handling. www.lawtimesnews.com LT - 1-2pg 4X.indd 1 10/28/10 12:06:33 PM HA1010 better ways to give guidance to lawyers about what's accept- able and what isn't. Th is is be- ing done under the umbrella of a discipline hearing, which is very unfair." Mark Silver- thorn, a lawyer from Kitchener, Ont., has com- plained to the LSUC about Na- tale's alleged prac- tices. He says collections agencies hire law fi rms to draft statements of claim because regulations gov- erning the industry prevent them from doing so themselves. Natale herself espoused the ef- Mark Silverthorn says he's doing penance for 12 years of acting for collections agencies. people who owe money, and those people respond to the letter in an increased per- centage when it is sent from Natale Law Offi ces." Silverthorn says Natale's law fi rm has sent let- ters on behalf of Global Credit & Collection Inc., a third-party debt collector re- tained to recover money owed to fectiveness of the tactic in a blog posting earlier this year on her own web site. "It is very eff ective to send a draft statement of claim for our clients who are creditors," she wrote. "Th e letters are sent to entities such as banks, utilities, and communications companies. Th e statements of claim list the original creditor, who may or may not have retained the law fi rm, as the plaintiff . But Silverthorn believes the practice is illegal under the On- tario Debt Collectors Act, which prevents "every person, whether principal or agent," from send- ing imitation court documents where it's "calculated to deceive" that they're part of a real court process. Besides the law society, he complained to Brian Pitkin, the Ontario registrar of collec- tion agencies at the Ministry of Consumer Services. In a letter to collections agen- cies in October 2008, Pitkin warned them to stop attaching draft statements of claim to de- mand letters, a practice he called "deceitful and misleading." "Th e practice trades on the expectation that debtors will be unknowledgeable about court process and interpret the 'draft' statement of claim as a greater commitment to pursuing the matter than actually exists," Pitkin wrote. He went on to say that re- taining a lawyer to send the drafts shouldn't be seen as a way around the ban given his warn- ing that "where a lawyer does something on behalf of a collec- tion agency, it is no diff erent, as far as I'm concerned, than the agency doing it itself." Silverthorn says Pitkin, who couldn't be reached for com- ment before press time, has failed to follow through on his warning. He suspects as many as 20 lawyers in Canada send out draft statements of claim on behalf of collections agen- cies. "I believe the law society has felt compelled to do this because the reputation of the legal profession is being deni- grated by what's going on," he says. "Th e law society has no jurisdiction over collection agencies, so they're respond- ing to complaints made against Natale." According to Silverthorn, the eff ectiveness of including draft statements of claim means col- lections agencies can't aff ord to ignore the practice in an ex- tremely competitive environ- ment. As a result, creditors regu- larly employ multiple collections agencies in a race to recoup their debts. "Collection agencies will essentially try and get away with whatever they can," Silverthorn says. "Because Global Credit has been taking advantage of the use of draft statements of claim, they have been just creaming the competition." In fact, Silverthorn spent 12 years working for collections agencies to help them recover millions of dollars. In the last four years, he has transformed himself into an advocate for consumers facing diffi culties with agencies. "I'm not exactly happy about that period in my life," he says. "In order to do penance for that experience and to put the ledger straight, I've told myself I have to spend 12 years doing work on behalf of consumers so that I can sleep at night." Trudell, meanwhile, says that while some provinces have clear regulations dealing with draft statements of claim, the situation in Ontario is more ambiguous. Given that civil litigators rou- tinely send demand letters, he feels the law society needs to give lawyers guidance on the issue of draft court documents. "Th is is really a test case," he says. "It's not one where you can fi t the conduct into a pigeonhole. We are looking for guidance from the panel as to whether this is professional misconduct or not, and it's too bad that it's framed in relation to a complaint." Trudell notes his fi rm has visited and examined Natale's practice and was impressed with what she does. "She runs an in- credibly careful, high-quality operation. Th ere are quality controls, checks and balances in her system." He believes draft statements of claim, if properly labelled, can help drive home the message to debtors that they could be fac- ing a legal issue should they fail to pay back what they owe. "Th e bottom line is that these are le- gitimate debts that people are refusing to pay," Trudell says. "Th ey are clearly marked draft, and I would suggest they give people some knowledge about what might happen." LT

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