Hurricane Claim Law Firm Paid Almost $14M for ‘Prescreened’ Client Leads
The McClenny Moseley law firm agreed to pay $3,000 to $3,500 in advance for each prospective client referred to it by a marketing firm, at a total cost of nearly $14 million, according to documents submitted this week to a federal judge in New Orleans.
Judge Michael B. North, a magistrate with the US District Court for Eastern Louisiana, said the contracts that MMA submitted to his office contradict statements made by William R. Huye III, the managing partner of the law firm’s Louisiana office.
Huye had told the judge during a Feb. 1 hearing that the marketing company, Velawcity, provides advertising for his law firm and not client leads.
North said he is considering further sanctions against MMA, which has already been sanctioned by him and two other federal court judges for filing lawsuits on behalf of homeowners that it did not represent.
MMA caught the attention of judges in both the Eastern and Western Louisiana districts after Huye bragged in a marketing video that he had filed more than 1,600 hurricane-damage lawsuits against insurance companies over the course of several days. As it turned out, many of those civil complaints duplicated lawsuits made by other attorneys.
North ordered Huye and MMA founding partner Zach Moseley into his courtroom for a Feb. 1 hearing after he learned the law firm had filed a lawsuit on behalf of homeowner Tricia Rigsby Franatovich, even though she testified she didn’t hire the law firm but had signed paperwork given to her by an employee of Apex Roofing Co. who was walking door to door.
Huye admitted that his firm did not represent Franatovich but was representing Apex under an assignment of benefits.
Insurance defense attorney Matthew Monson filed a brief with the court alleging MMA using Velawcity, an online marketing firm, to send it the names of prospective clients that were obtained through various disaster-related websites.
During the hearing, Huye told the judge Velawcity did not send his law firm any leads, but was paid for advertising services, according to a transcript of the proceedings. Founding partner Zach Moseley said Velawcity is paid a “marketing budget” to negotiate advertisement buys with Facebook.
Velawcity’s website says the firm provides “lead acquisition services” for law firms that focus on mass torts, class action and mass arbitration. The firm was founded in 2017 by Tinghe Wilhelmy of Scottsdale, Arizona, according to Wilhelmy’s LinkedIn profile, which is linked to the website.
North ordered MMA to submit copies of all of its contracts with Velawcity for his personal “in camera” review. After he received them on Monday, he ordered the clerk of the court to immediately make them a part of the public record.
The documents submitted by MMA show that that the law firm did pay Velawcity, in advance, for “potential client leads.”
The first contract, signed by Moseley on Dec. 8, 2021, called for MMA to pay $3 million for 1,000 “prescreened client leads.” The law firm agreed to buy a second batch of client leads on Feb. 5, 2022 for $3 million. The price increased to $3,500 for each lead in a contract signed on May 2, 2022, in which MMA paid $938,000 for 268 client leads. On May 23, 2022, MMA agreed to pay $3.5 million for another 1,000 leads and on Aug. 1, 2022 it agreed to pay another $3.5 million for an additional 1,000 leads.
All told, it add up to $13,938,000 for 4,268 prescreened client leads.
“The Court has reviewed the information and documents provided by MMA and finds that they should be immediately filed into the record,” North said in an order Tuesday. “This includes the information provided for in camera review [the Velawcity contracts], as the Court finds that these documents do not appear to be subject to any privilege and, in any event, they appear to directly contradict statements made in open court by Mr. Huye concerning the services that company provides (or does not provide) to MMA.”
North also ordered MMA on Feb. 1 to submit a list of all lawsuits filed, settlements reached and letters of representation sent to insurers on behalf of homeowners such as Franatovich that it did not actually represent.
MMA’s response was submitted on Tuesday by William P. Gibbens, a defense attorney that the law firm hired last week. The letter says the law firm filed only one lawsuit for an insured that it did not represent — Franatovich. But MMA did settle nine claims and sent letters or representation on behalf of 856 insureds in cases where it actually represented a restoration contractor. MMA said it has received “unconditional tenders” from some of the insurers, but the claims have not been settled.
Huye did not respond to a request for comment on Wednesday.
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