Robert Ambrogi Blog
A Chicago-based, “technology-enabled” national bankruptcy firm that has been under fire for alleged hard-sell tactics and unauthorized practice of law yesterday named a professor of business law and ethics as an independent monitor to oversee its business practices.
UpRight Law, a firm formed in 2013 by the founders of TotalAttorneys, Ed Scanlan and Kevin Chern, also announced a restructuring of its leadership from a member-managed company to a “manager-managed” company. Chern, the firm’s managing partner, will now report to a management committee chaired by Craig Sonnenschein, the firm’s general counsel.
The firm uses non-attorney sales people to sell bankruptcy services nationwide, collects information from clients and prepares documents internally, and then partners with local lawyers throughout the country to file cases and appear in court.
In February, a U.S. bankruptcy judge in Virginia imposed a $250,000 sanction on UpRight Law and $50,000 sanction on Chern. The bankruptcy court found that UpRight encouraged hard-sell tactics on its sales people, failed to adequately supervise them to prevent the unauthorized practice of law, and focused “on cash flow over professional responsibility.”
Also in February, a Louisiana bankruptcy judge sanctioned UpRight Law and a local lawyer for professional negligence in representing a client there. “UpRight’s apparent disregard seems to reflect a business model in which this Chicago based corporation is primarily a marketer of legal services, not a provider of them,” the judge wrote.
In June, another bankruptcy judge, this one in Pennsylvania, ordered sanctions against UpRight for filing bankruptcy petitions without the debtors’ signatures, according to Big Law Business.
And in May, the grievance committee of the North Carolina State Bar censured a lawyer who was associated with UpRight after finding that he failed to supervise UpRight’s non-lawyer sales staff and that he failed to supervise funds entrusted to him by North Carolina clients, instead allowing UpRight to maintain the funds.
UpRight Law said yesterday that it has appointed Nancy Rapoport, a professor at the William S. Boyd School of Law, University of Nevada, Las Vegas, and an affiliate professor of business law and ethics in the Lee Business School at UNLV, as the firm’s independent monitor. Rapoport’s biography describes her as a specialist in business ethics, law and popular culture, professional ethics, corporate governance and bankruptcy.
Yesterday’s announcement said:
In her capacity as Independent Monitor, Ms. Rapoport will evaluate and monitor UpRight Law’s system of policies and procedures implemented to encourage ethical behavior and to reasonably prevent, detect, and respond to misconduct by employees or agents of the law firm. Ms. Rapoport will meet with the Management Committee and other senior leadership at the firm’s Chicago headquarters regularly throughout the next year. She will also participate in meetings with the firm’s Compliance Committee and will speak at the firm’s annual partners’ meeting in June 2019.
UpRight Law’s business model involves working with local attorneys around the country as “limited partners.” These local attorneys have no rights in the management of the firm.
According to the Virginia bankruptcy court that sanctioned UpRight, the company is a d/b/a for an Illinois limited liability company, Law Solutions Chicago. LSC was managed by Chern and another Illinois attorney Jason Royce Allen, who was its COO.
LSC contracted with Scanlan to serve as its executive director, according to the bankruptcy court’s opinion. He had no ownership interest in LSC, but LSC leased most of its employees from a separate company, Mighty Legal, which in turn was owned by another company, Justiva, that was owned by Chern, Scanlan, Allen and others. Justiva also owned a company, Royce Marketing, that provided marketing services to LSC and that licensed it use of the name UpRight Law.
Under the restructuring announced yesterday, Chern will now report to a six-member management committee composed of Sonnenschein as general counsel and committee chair, James MacLelland as COO, Dan Ostrowski as CFO, Jocelyn Galloway as vice president of compliance, Ryan Galloway as vice president of legal delivery, and David Menditto as associate general counsel for litigation.
Former COO Allen has resigned from the company, the announcement said. Scanlan left the company at the end of last year.