Lien on Me

A new game in town combines getting a loan and hiring a lawyer.

A new lending institution, which some suspect is nothing but a novel way to lure personal-injury clients to hungry attorneys, has several local lawyers crying foul. Even Franklin D. Azar, the personal-injury attorney whose shameless television commercials have made him a household word, disapproves.

"Somebody's going to be in a lot of trouble," Azar says curtly when reached at his Denver office. The "somebody" to whom Azar is referring is a new corporation called the Litigation Finance Group. LFG offers money up front to those who have been injured in an accident, in exchange for a lien on "any and all proceeds" of the borrowers' anticipated settlements. Conveniently, of course, LFG also offers borrowers "free lawyer referral."

Which, according to Azar, they're going to need.
Azar says that so far he's had two clients ask him to sign on to an LFG lien--basically promising the company "any and all proceeds" from their settlement--including anything paid to the attorney. The way Azar reads it, it's like agreeing to represent a client for free.

"No attorney in their right mind is going to sign a lien like that," Azar says. He certainly didn't. And when he refused, his clients went back to LFG and asked for the "free referral" that is so heavily advertised. They got it. Both of them were referred to an attorney by the name of Edward C. Kusick Jr.

Kusick denies that he has cooked up any deal with LFG, but Azar isn't convinced.

"It's like a bait and switch," Azar says. "People are desperate, they get hurt, and they have to get money right away...but these guys won't give it to them until they see Kusick." Azar says one of his former clients told him outright that LFG would not give him a loan until he saw Edward Kusick.

Azar isn't the only one upset about the deal. Bill Keating of Fogel, Keating and Wagner, a Denver workers' compensation firm, says one of the owners of Litigation Finance Group called his firm and asked if Fogel, Keating would take referrals from LFG. "Then there was an additional piece of information conveyed," says Keating. "The essence of it was [LFG] needs lawyers who will guarantee repayment of a loan. Colorado statutes prohibit liens to be filed against workmen's compensation. At that point we declined to be involved, because I don't know how you can be involved with a lending program at the same time you're representing a client. It seems to me it's a clear conflict of interest."

Both Keating and Azar say they smelled a rat from the moment they saw LFG's newspaper advertisement, which promises loans with "No interest/No application fee." As Keating puts it: "It tends to make you wonder, how does the person who's lending the money get compensated for lending the money? Banks charge interest...but apparently this company doesn't."

That and a number of other questions about LFG's practices remain unanswered by the company's principals, Dale Sande, Michael Steinke and attorney William E. Peters. Peters and Steinke could not be reached for comment. The name Steinke may raise eyebrows among some radio insiders. DJ Michael Floorwax, from station KRFX/The Fox, fiercely tries to keep his real name, Michael Steinke, private. When asked whether he is the same Michael Steinke who is an LFG owner, Floorwax doesn't come to the phone but relays a "no comment" through operations manager Jack Evans. (The station itself isn't completely mum; LFG has advertised on the Fox.) Dale Sande refuses to return repeated phone calls from Westword--even after assurances from Sande and his secretary that he will.

Other local attorneys are only too glad to talk. Stephen Kaufman, another Denver lawyer specializing in personal injury, has complained by letter to the Colorado Bar Association's ethics committee chair about LFG's advertised practices. "When you have attorneys working with groups that loan money, you run into a problem with who everyone's loyalty is to," Kaufman says. "If you're depending on LFG for referral to cases, rather than risk a situation of making these guys mad, you may encourage your client to settle the case for less than you would've, to guarantee repayment of the loan."

And that's the reason, say Kaufman and Al Wolfe, state bar ethics committee chairman, that Colorado prohibits attorneys from either paying money for referrals or lending clients money for anything except case-related expenses.

But, says Wolfe, it's not evident that LFG or Kusick are doing either.
"If they're totally separate entities," Wolfe says, "there doesn't seem to be anything wrong with it."

Which is exactly what Kusick claims is the case.
"I don't know why they refer to me," he says. "I'm not paying them for referrals." And, Kusick says, he owns no part of LFG and hasn't received any money from it.

But there is a connection between LFG and Kusick: Peters, an LFG principal, just happens to be Kusick's old law partner.

"I used to practice law with him, yeah," Kusick confirms. "I was an employee at a firm called Peters and Murphy, and then I had an association with Bill Peters, under the firm of Peters and Kusick."

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