State Bar considers punishment for law firm in alleged settlement scam

LOS ANGELES (AP) A Beverly Hills law firm that sued thousands of small businesses for minor violations such as forgetting to give a customer a receipt bilked those companies of thousands of dollars and should be barred from practicing law, a State Bar attorney said Thursday.

The Trevor Law Group and its partners should have their law licenses revoked because they pose a threat to ``commit fraud again,'' Jayne Kim told Judge Richard A. Honn of the State Bar of California's trial court.

An attorney for Trevor Law Group argued that the firm did nothing wrong, adding that its lawyers were simply making a living.

``Making money goes to the heart of the capitalistic system,'' Kevin Gerry told the judge.

What's more, he said, the state provides ``monetary incentives'' for attorneys who sue businesses that allegedly cause public harm.

The hearing was to continue Friday.

State Bar officials contend the firm filed baseless lawsuits, committed mail fraud, violated court orders and engaged in illegal fee-splitting.

``Their extensive misconduct entailed numerous acts of moral turpitude, dishonesty or corruption,'' chief trial counsel Mike Nisperos said.

Attorney General Bill Lockyer sued Trevor Law Group for allegedly violating the state Business and Professional Code, accusing the firm of forming a shell corporation, Consumer Enforcement Watch, to sue thousands of auto repair shops and restaurants, owned mostly by immigrants.

A Los Angeles Superior Court judge dismissed the suits against approximately 2,000 auto shops, and the law firm later dropped its actions against the restaurants when it became clear those cases would also be dismissed.

In court Thursday, Kim described Consumer Enforcement Watch as a ``shell corporation created solely for the corrupt purpose of making money.'' State Bar investigators found evidence that ``Trevor Law is CEW,'' she said, with the latter having no real employees or office.

Kim said lawyers typically contacted defendants and threatened to report them to immigration officials in order to obtain thousands of dollars in ``quick settlements.''

Gerry argued that settlements are normal and even encouraged by the State Bar.

``Ninety percent of civil cases settle before they go to trial,'' he said. ``The notion that my clients are doing something wrong by trying to settle is frankly absurd. It's exactly what they should be doing.''

(Copyright 2003 by The Associated Press. All Rights Reserved.)