The recent news that Kerry Steigerwalt’s Pacific Law Center will closing its doors for good has shot through the San Diego legal community with the ferocity and speed of a lightning bolt. The opinions, like the reactions, are both plentiful and all across the spectrum. Most express surprise or shock that a firm once so bold, brazen, and if nothing else, immensely lucrative, could fall so far, so fast, and so hard.
Amongst those with a closer knowledge of the way the firm was run, and the institutional practices it implemented, there is far less surprise. In fact, if there is any surprise at all, it is at the length of time that the firm was able to keep its proverbial bow above the squalls under the weight of a massive advertising budget, mismanagement at all levels of the operation, and a literal flood of State Bar complaints. It was never a question of if, but rather when it would finally happen. Now that it has, perhaps the only thing more abundant than the opinions, are the questions about how and why it did.
Pacific Law Center opened for business in San Diego in March of 2003, and at a mercurial pace, unabashedly rose to the top of the San Diego legal scene. This was no accident. Pacific Law Center is an offshoot of the powerhouse Phoenix law firm, Phillips and Associates, which specializes in bankruptcy, criminal defense, and personal injury. San Diego and its unusually small, tight-knit legal community for a city of its size, was the perfect target market in which to re-apply a proven, successful formula.
The formula itself is really quite simple: run a law firm as you would a car dealership to maximize profits. The application goes something like this. First, inundate the airwaves with flashy, expensive, constantly recurring advertisement on both television and radio. Second, hire a team of sales people and experienced managers that know how to manage a sales force and close deals, and label the sales people “intake clerks” (or “IC’s” as they are known within the firm’s walls). Third, train the army of IC’s to quote exorbitantly high fees and promise clients the moon (fourth DUI with an accident, serious bodily injury, and a .28 BAC? No problem! Our attorneys will get your case dismissed). Fourth, assemble a staff of attorneys, who couldn’t possibly adequately represent the volume of clients that have been assigned to them, and pay them as little as possible. Fifth, laugh all the way to the bank as the money comes pouring in. Sarcasm aside, this is essentially the formula that Phillips and Associates, and then Pacific Law Center very successfully followed to make millions and millions of dollars.
Invariably though, such tactics lead to dissatisfied, unhappy clients that become angry, demand refunds, and often file complaints with the State Bar, the County Bar, the Better Business Bureau, or, frankly, whoever will listen. When these types of practices began to catch up with Pacific Law Center, Kerry Steigerwalt was brought aboard in February of 2008 with the idea that he would manage the firm much better than it had been before, and he would run a much tighter ship, so to speak.
In reality, the opposite happened. I spoke to an attorney that used to work for the firm, who felt that Steigerwalt only made matters worse. According to him, “morale was so low, it is a wonder anyone is left”. Another former employee, Thomas Slattery, who had been with the Pacific Law Center since early 2004 and had been the supervising attorney of the firm, was fired in May of this year. Slattery has since filed suit against Steigerwalt and the firm alleging wrongful termination and numerous other causes of action. In his complaint, Slattery alleges that he repeatedly made Steigerwalt aware of a multitude of violations of the rules of professional responsibility that govern all attorneys in California, but that Steigerwalt, as a matter of course, ignored all of his warnings. Eventually, Slattery blew the whistle and was fired for doing so.
The ultimate demise of Kerry Steigerwalt’s Pacific Law Center may, however, have more sinister elements than mere mismanagement and unscrupulous business practices that at last brought a tide of negative publicity that no amount of advertising money could overcome. One former non-attorney employee, who wished to remain anonymous, was certain that Steigerwalt has been keeping two sets of books. He claimed that he knew there were two computer systems at the firm. One was the main computer system that was managed by the firm’s I.T. manager, and another that nobody at the firm could access – not even the I.T. manager. Rather, the second system could only be accessed by Steigerwalt’s accountant, Ellen Bolden, and an outside I.T. technician.
Then there is the part about the “no refund policy” that Steigerwalt has allegedly implemented in recent weeks. According to one former employee, both the supervising paralegal, Maria Vargas, and the firm’s C.F.O., Bill Simon, informed every employee that no more refunds would be given to any clients. If true, such a policy would be a direct violation of the Rules of Professional Conduct §3-700(d)(2), which require an accounting and the return of any unearned fee – regardless of the terms of the retainer agreement.
In the end, only time will tell how underhanded the powers that be acted under the watch of Kerry Steigerwalt, and how they factored into the collapse of a once mighty stalwart of the San Diego legal community.