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Lawsuit on judicial debt collection needs sunshine, not secrecy

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Lawsuit on judicial debt collection needs sunshine, not secrecy

May 07, 2022 | 10:00 am ET
By Randy Evans
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Lawsuit on judicial debt collection needs sunshine, not secrecy
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A lawsuit over the legality of work performed on behalf of the Iowa Judicial Branch has been settled out of court with the terms of the deal kept confidential. (Photo illustration by Iowa Capital Dispatch using Iowa Judicial Branch records and U.S. District Court records.)

The legendary U.S. Supreme Court justice Louis Brandeis once observed, “Sunlight is said to be the best of disinfectants.”

Brandeis was not talking about everyday cleaning around the home. He was concerned about the importance of transparency in rooting out or preventing corruption or abuses in the workings of a program, an organization or an entity of government.

He was especially bothered by what he called “the wickedness of people shielding wrongdoers and passing them off (or at least allowing them to pass themselves off) as honest men.”

Were he alive today, the learned justice from a century ago might prescribe a healthy dose of sunshine for a legal dispute that my friend, the investigative journalist Clark Kauffman, brought to light last week at the Iowa Capital Dispatch.

The Iowa Judicial Branch entered into a contract in 2010 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 provided that the state would get 75% of the money collected, and the law firm would receive 25% of the amounts it collected.

In 2020, Iowa Legal Aid, a nonprofit law firm that represents low-income Iowans in certain types of legal disputes, sued the Linebarger firm. The lawsuit shined the spotlight on Linebarger’s debt-collection tactics, including allegations the firm used threats of contempt-of-court actions and possible revocation of people’s driver licenses if they did not pay their court fines and court fees.

The lawsuit also alleged that when Linebarger mailed collection notices to Iowans, it inflated their debt — what the firm called their court-ordered obligation — by 25%. That had the effect of boosting the law firm’s Iowa revenue, because its share of each collection was calculated from a larger base amount.

Before Linebarger’s contract ended in January 2021, the law firm collected $58.6 million for Iowa government in court fines and fees. The firm’s compensation for its work was $12 million, Kauffman reported.

A dose of Justice Brandeis’ sunshine is needed in this matter because Linebarger and Iowa Legal Aid agreed to settle the lawsuit last September with one important, but very troubling catch: They agreed to keep the terms of their settlement agreement secret.

Confidentiality was imposed by the agreement, even though it was ordinary Iowans and Iowa businesses that were subjected to Linebarger collection tactics that Iowa Legal Aid said were illegal, and even though Linebarger had access to these Iowans because of its contract with an arm of state government, the Iowa Judicial Branch.

The Iowa court system was not a party in the lawsuit. Otherwise, an Iowa law that prohibits secret settlements by state or local governments would have thrown open Justice Brandeis’ window and let the public see what the parties were agreeing to.

Linebarger and Iowa Legal Aid are still squabbling in federal court over the legal fees Iowa Legal Aid wants reimbursed for the lawsuit. That issue could end up in the lap of the federal judge if the two parties do not work that out themselves.

Linebarger claims the lawsuit has no merit. The firm asserts that its work on behalf of the Iowa Judicial Branch was not covered by the state and federal debt-collection laws because the firm believes court fines and fees are not legally considered to be debt.

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

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

Kornya said the issues in the lawsuit are broader than just unpaid fines and focus on indigent-defense fees, too.

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

Poor people face significant consequences if they do not pay these fees for court-appointed attorneys. They can be denied expungement of their case from their criminal record, or they may have their tax refunds taken and applied against the debt.

Kornya said Iowa Legal Aid serves thousands of Iowans each year, without charge, on civil legal issues. The lawsuit was aimed at reducing “the number of people in crisis walking through our doors who can’t cover life’s necessities because they are presented with unwarranted and legally baseless threats of jail, license revocations and other penalties.”

And that is why there needs to full sunshine falling on this settlement agreement.

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