Chicago law firm Katten faces malpractice lawsuit

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A ruling last week by a California court opens the door to a historic sum if Orange, Calif.-Based CashCall wins by showing that Katten offered ill-advised legal advice, causing the business to collapse. Read the decision at the bottom of this story.

CashCall’s lawyers say the lawsuit represents “the most significant legal malpractice case of all time.” The decision was reported by the National Law Journal.

“We are limited in what we can share due to ongoing litigation, but we can say that the allegations against our company are unfounded,” said Katten spokeswoman Jacquelyn Heard, former press secretary for former Chicago Mayor Richard M. Daley, who is currently Of Counsel at the law firm. “Further, CashCall has presented no factual basis or credible expert analysis to support its grossly exaggerated claim for damages.”

The lawsuit accuses a partner in Katten’s Washington, DC, office of advising CashCall to partner with a Cheyenne tribe businessman to circumvent federal and state loan laws. This led to federal lawsuits and complaints when CashCall imposed interest rates between 90% and 343% on borrowers.

The Consumer Financial Protection Bureau sued CashCall in 2013 for engaging in “unfair, deceptive and abusive practices, including the illegal debiting of consumer checking accounts for canceled loans”, and again in April for guiding consumers towards high cost loans through affiliate lenders. CashCall stopped lending money in 2018, according to reports.

The recent ruling ruled that the California negligence standard should apply – and not DC’s more limited definition – since that’s where the alleged wrongdoing occurred.

“Here, CashCall was injured in California. CashCall reportedly sold its business at a loss in California, the CFPB action was taken in California Federal District Court, and CashCall incurred legal costs. . . in California, ”the ruling reads.

Using the California standard, known as the Comparative Negligence Doctrine, the jury could find Katten liable for more damages, even if it determines that CashCall shares some of the responsibility for his fate.

“California uses the much fairer comparative negligence doctrine, in which the trier of fact allocates the blame between the parties,” CashCall attorney Jennifer Keller said in an email.

The DC standard, called contributory negligence, means that a plaintiff cannot recover any damage if it is found to be responsible for even 1% of his own injury, Keller said.

The lawsuit, first filed in Orange County Superior Court in April 2017, names Katten and one of his Washington-based partners as defendants.

Katten has offices in the US, UK and China. It was founded in Chicago in 1974, according to its website, and employs nearly 650 lawyers around the world. It ranked seventh on Crain’s latest list of Chicago’s largest law firms with more than 240 local attorneys and 2019 revenue of nearly $ 670 million.


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