Philadelphia law firm used nonlawyers to file foreclosures, suit alleges

A Philadelphia law firm has been accused of the “unauthorized practice of law” by using nonlawyers to file hundreds of foreclosure cases and collect attorneys’ fees, according to a lawsuit. In a further indictment of the mortgage industry, it also contends that banks, loan servicers and other creditors knew of the practice. Patrick Loughren, a Pittsburgh, Pa., trial lawyer with Loughren, Loughren & Loughren, sued the law firm of Goldbeck, McCafferty & McKeever, along with 35 employees of the firm, according to the case, filed in Allegheny County, Pa. Messages seeking comment were left with the Goldbeck firm and Loughren. They could not be immediately reached for comment. A story in the Philadelphia Business Journal said outside counsel retained by the firm would be handling external communication regarding the lawsuit. The suit alleges that nonlawyers at GMM filed “hundreds, if not thousands of foreclosure lawsuits” in Pennsylvania that were written, signed and filed without attorney reviewing or signing the documents. “These documents serve the ultimate purpose … which is to maximize recovery of ‘attorney’s fees,’ ” the lawsuit contends. “The defendants make it appear as if a lawyer has read, reviewed and signed the document by either typing lawyers’ names on the documents, signing lawyers’ names … or both.” The lawsuit refers to a Sept. 21 deposition in a separate case, Kimberly A. Robinson v. Countrywide Home Loans, in which named partner Gary McCafferty admitted that foreclosure complaints in 2006 could be filed without an attorney review. He also said the firm allowed administrative staff to sign attorneys’ names to the documents knowing that an attorney had not reviewed them. A deposition from Joseph Goldbeck, a former shareholder and former attorney at the firm, also confirmed the practice occurred in 2006. In a 2009 deposition in a different case, named partner Michael McKeever said it was standard practice in 2007 for attorneys to authorize others to sign foreclosure documents on their behalf. During that December 2009 deposition, McKeever also said the firm’s practice at that time was to allow cases to be filed without attorney reviews “unless there’s issues that arise that indicate an attorney should review the file.” The lawsuit contends that some foreclosure cases involve mortgage loans insured by the Federal Housing Administration. If FHA regulations were violated, that can be used as a defense in a foreclosure action. McCafferty testified that the firm was not examining whether FHA regulations were met. He also said the firm’s nonattorneys filing the cases were not trained in FHA regulations. The firm knew that most of the borrowers were either too unsophisticated to know they could defend themselves against such practices or too destitute to hire an attorney, according to the suit. The unauthorized practice of law is considered a criminal offense, according to the Pennsylvania Supreme Court. County courts may also enjoin parties from the unauthorized practice of law. Loughren contends in his suit that the criminal remedy is inadequate to protect the public and that an injunction is needed. Pennsylvania requires a judicial settlement in foreclosure cases. Loughren notes that he doesn’t seek to enjoin creditors from legally pursuing their rights. But he also contends that “nonlawyers” prefer foreclosure rather than reinstatements because they can claim higher fees with a foreclosure. The lawsuit seeks a declaration that the conduct of nonlawyers at GMM constituted the unauthorized practice of law. It also seeks an injunction from prosecution of any foreclosure case that involved GMM’s nonattorneys and a “rule to show cause” as to why every judgment in favor of the firm’s clients in foreclosures shouldn’t be opened or vacated. Write to Kerry Curry.