Judicial debt collection processes need sunshine, not secrecy

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Legendary US Supreme Court Justice Louis Brandeis once remarked, “Sunlight is said to be the best disinfectant.”

Brandeis didn’t talk about daily cleaning around the house. He was concerned about the importance of transparency in rooting out or preventing corruption or abuse in the workings of any program, organization, or government entity.

He was particularly concerned about what he called “the wickedness of people who shielded wrongdoers and passed them off as honest men (or at least allowed them to pass themselves off).

Were he alive today, the learned justice of a century ago could prescribe a healthy dose of sunshine for a lawsuit my friend, investigative journalist Clark Kauffman, exposed in the Iowa Capital Dispatch last week.

In 2010, the Iowa Judicial Branch contracted with a national law firm from Austin, Texas called Linebarger Googan Blair & Sampson LLP. The firm was hired to collect unpaid fines and fees for the state court system.

The contract stipulated that the state would receive 75% of the funds raised and the law firm would receive 25% of the funds raised.

In 2020, Iowa Legal Aid, a nonprofit law firm that represents low-income Iowans in certain types of litigation, sued the Linebarger law firm. The lawsuit spotlighted Linebarger’s debt collection tactics, including allegations that the company used threats of contempt of legal process and possible revoking of people’s driver’s licenses if they failed to pay their court fines and court fees.

The lawsuit also alleged that when Linebarger sent collection notices to Iowans, their debt – what the company called its court-ordered obligation – increased by 25%. As a result, the Iowa law firm’s revenue increased because its share of each collection was calculated from a larger base amount.

Before Linebarger’s contract ended in January 2021, the law firm raised $58.6 million for the Iowa government in court money and fees. The company was paid $12 million for her work, Kauffman reported.

This matter needs a dose of sunshine from Judge Brandeis, as Linebarger and Iowa Legal Aid agreed last September to settle the litigation, with one important but very troubling catch: They agreed to keep the terms of their settlement agreement private .

Confidentiality was imposed by the agreement, even though it was ordinary Iowa and Iowa businesses that were exposed to Linebarger’s debt collection tactics, which Iowa Legal Aid said were illegal, and even though Linebarger had access to these Iowans by virtue of his contract with an arm of the state government, the Iowa Department of Justice.

The Iowa court system was not a party to the lawsuit. Otherwise, an Iowa law prohibiting secret settlements by state or local governments would have opened Judge Brandeis’ window and allowed the public to see what the parties have agreed to.

Linebarger and Iowa Legal Aid are still fighting in federal court over the legal fees that Iowa Legal Aid wants reimbursed for the lawsuit. That question could end up in the lap of the federal judge if the two parties don’t work it out themselves.

Linebarger claims the lawsuit is without merit. The Firm alleges that its work on behalf of the Iowa Judicial Branch was not covered by state and federal collections laws because the Firm believes court fines and fees are not legally considered debt.

Alexander Vincent Kornya, litigation director for Iowa Legal Aid, told Kauffman the lawsuit addresses accountability and whether private law firms that collect debt for the government are outside the reach of debt collection laws.

“We believed that when we filed the case that they broke the law, we believed that they were responsible, and we still believe that,” he told Kauffman.

Kornya said the issues in the lawsuit were broader than just unpaid fines and also focused on defense fees for those in need.

Poor people who cannot afford a private lawyer when charged with a crime have to rely on court-appointed lawyers or public defenders to represent them. In Iowa, Kornya said, a person is billed for their impecunious defense even if they are found not guilty.

Poor people face dire consequences if they fail to pay these court-appointed attorney fees. They can be denied their case wiped from their criminal record, or they can have their tax refunds withheld and used against the debt.

Kornya said Iowa Legal Aid provides free civil legal assistance to thousands of Iowans each year. The lawsuit aimed to “reduce the number of people in crisis walking through our doors who are unable to make a living because of unjustified and unlawful threats of jail, license suspension and other penalties.”

And so full sun must fall on this settlement agreement.

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