Attorney Gary Nitzkin has been accused of misleading advertising by the Michigan Attorney Grievance Commission. JC Reindl/Detroit Free Press
A metro Detroit lawyer who battles debt collectors and credit reporting agencies has been accused of misleading clients by not being upfront about his practice of taking attorney fees out of settlements for services that he says — and promised to his father on video — are entirely free.
The Michigan Attorney Grievance Commission, which investigates allegations of attorney misconduct, filed a six-count complaint in February against Gary Nitzkin, 55, owner of a Southfield law firm that goes by the names Michigan Consumer Credit Lawyers and Credit Repair Lawyers of America.
The complaint accuses Nitzkin of “false, fraudulent, misleading or deceptive” communications and other alleged misconduct that can reflect badly on the legal profession. Nitzkin denies all the allegations and contends there is nothing misleading on his websites or client paperwork.
“I’ve done the best that I could to be as clear as possible,” he told the Free Press.
Nitzkin’s firm sues on behalf of consumers who have errors on their credit reports because of inaccurate information, such as nonpayment of bills that the person actually did pay or never owed.
In addition to fixing the reports and stopping erroneous debt collection, these lawsuits can result in modest monetary damages awards for the consumer, paid out by the erroneous credit agency or biller.
The size of the awards are typically limited to $1,000 under the Fair Credit Reporting Act, which allows the plaintiffs also to collect attorney fees from the corporate defendants.
However, the credit agencies will often settle these cases for $4,500 to $5,000. The additional amount over the maximum damages is intended for paying the plaintiff’s attorneys, according to Free Press interviews with several Michigan lawyers who do consumer credit cases.
If a consumer were to file such a lawsuit by themselves, he or she could only expect to get at most the $1,000 for damages, plus a couple hundred dollars for their filing expenses.
Attorneys rely on the beefier settlement amounts, the lawyers said, because clients in these small cases aren’t paying out of pocket for the legal work.
Still, the size of Nitzkin’s take came as a surprise to some clients, according to the complaint.
The complaint describes how one of five Nitzkin clients, a Lansing woman, signed up with his firm in 2015 to contest an allegedly inaccurate debt on her credit report involving a car loan for a Kia Optima.
Nitzkin’s went on to file a lawsuit on her behalf against two credit reporting agencies, and won two $5,000 settlements in December of that year. The case then continued into 2016 as Nitzkin’s firm pursued a credit union that was also a defendant.
The woman asked at least twice for information about her case’s attorney fees, but was rebuffed by the law firm’s staff, who told her to wait until the case was concluded, the complaint says.
The law firm ultimately billed $13,086, including $300 to $350 an hour for attorney fees, $110 an hour for administrative staff and $140 to $160 an hour for paraprofessionals. The billings subsumed all of the woman’s settlement, leaving her with no money from the case.
In a formal response to that case, Nitzkin’s own attorney conceded there was no money left for the woman after executing the client agreements that she signed.
In another case, an Arenac County man sought help from Nitzkin for an allegedly inaccurate credit report related to cell phone bills.
Nitzkin’s firm ultimately got $22,000 in total settlements for the man’s case. But the man was dismayed to learn how the firm would take $19,545 of that amount for its fees, leaving him with $2,455.
He fired off an angry e-mail to Nitzkin, calling him a “greedy ass” attempting to rip off a disabled veteran. “You think you get it all???,” the man wrote.
Nitzkin’s attorney, in response to the case, told the grievance commission that the man ultimately reviewed and approved each settlement.
The grievance complaint takes issue with one of the websites for Nitzkin’s firm, micreditlawyer.com, which carries banner headlines stating that his legal service is “100% free.”
The website also features a video, titled “Gary promises Dad to not charge his clients a fee,” that depicts Nitzkin assuring his father, Don, that he doesn’t charge clients because defendants pay his firm’s attorney fees and costs.
“Your mother and I raised you to tell the truth,” the father says in the video. “Look at me in the eye, and tell me that you’re not going to charge these clients a fee.”
“Dad, I will not charge these clients a fee — promise,” Gary Nitzkin says in response. “No boy is going to lie to his dad.”
The grievance complaint accuses Nitzkin of violating that pledge because he takes attorney fees out of his clients’ settlements. These fees can eat up most — and in at least one case, all — of the settlement money that clients would otherwise have coming to them, the complaint says.
It also accuses him of not being forthcoming with clients about their likely attorney fees until cases are completely over.
The complaint claims that Nitzkin’s practices “are designed to induce clients to use his ‘free’ services, handle a high volume of cases, keep his clients in the dark about his fees, and leave any fee disputes until the end of his matters after (Nitzkin) has already disbursed his fees and costs to himself.”
Nitzkin has denied all of the misconduct allegations.
A newer website for his law firm, creditrepairlawyersam.com, does explain on an inside page that money from client settlements will go toward the firm’s attorney fees.
“After we take our costs and fees from the settlement pot, the rest is yours,” the website states. “As tantalizing as this sounds, in reality, our services and costs usually eat up most of the money.”
In a written response this month to the grievance complaint, Nitzkin’s own attorney, Donald Campbell of Southfield-based Collins Einhorn Farrell, emphasized how Nitzkin’s fees aren’t coming out of clients’ pockets, but rather from the defendants — “the client pays zero.”
This fee arrangement is explained to clients in the law firm’s retainer agreement, which is called a “No Fee Agreement,” Campbell wrote. The agreement also states there is no guarantee that all clients will get $1,000.
The grievance complaint “paints a picture that is so far from the truth that sanctions are appropriate,” Campbell wrote. “Attorney Nitzkin more than most attorneys, relies upon on a good reputation and referrals from satisfied customers. Indeed, he tracks and will present client satisfaction metrics that will expose the fallacious and malicious nature of many of these allegations.”
In a phone interview Friday, Nitzkin said his firm files 300 to 350 lawsuits a year and has thousands of happy clients after a decade in the consumer credit repair business, evidenced by his positive reviews on lawyer review websites.
He insisted that his service is indeed free for clients because they don’t pay any of their own money.
Nitzkin said he tried to seek guidance from the grievance commission on how he can better explain his billing practices to potential clients, but didn’t get any feedback.
“They were hell bent on going into a prosecution — so now I’ve gotta fight back,” he said.
Grievance Administrator Alan Gershel declined comment for this story.
The case is scheduled for a June 14 hearing before a three-person panel of the Attorney Discipline Board, which ultimately could dismiss the complaint or take disciplinary actions, such as a reprimand, suspension or disbarment.
Contact JC Reindl: 313-222-6631 or [email protected] Follow him on Twitter @JCReindl.
Read or Share this story: https://on.freep.com/2qTkH52