A Call for Practical Innovations In Consumer Credit Litigation

Monday, April 5, 2010 - 00:00

The financial crisis has deeply affected a vast cross-section of New Yorkers, and its effects will ripple throughout the state and its civil courts for years to come. The New York City Civil Court is at the epicenter of the consumer credit crisis with over 300,000 consumer credit cases filed in civil court for each of the past three years in the five boroughs. In each year, these consumer debt litigants constituted approximately 40 to 60 percent of all cases filed in civil court. While less than four percent of consumer credit defendants are represented by counsel, all plaintiff creditors are represented by counsel. Hence, the number of judgments against debtors can be described, at best, as overwhelming.

The impact of these judgments against debtors can be devastating to the debtor and to society in general. A single consumer credit judgment can severely impair a person's attempt to become self-sufficient, thereby further perpetuating poverty and draining increasingly sparse government resources. The New York City Civil Courts, led by the Honorable Fern A. Fisher, Deputy Chief Administrative Judge, has been a national leader in establishing practical programs and reform aimed at improving both debtor litigant access to information, e.g., through computer terminals or legal clinics, and equal access to justice. According to Judge Fisher, the lack of equal access to justice is a denial of due process, which is a fundamental building block of our legal system. The Courts have partnered with NY Appleseed to ensure access to justice for all incomes and backgrounds by providing multiple resources for defendants and by securing nonprofit and government funding for legal service programs. Despite these reforms, the number of cases will continue to escalate as the effects of the current economic crisis, such as increased joblessness and loss of credit, develop into litigation in the coming years ahead.

Over the past year, New York Appleseed and pro bono partner Jones Day, spearheaded by Willis Goldsmith, Partner-in-Charge of Jones Day's New York office and Appleseed board member, have examined trends in consumer debt litigation. Appleseed is a nonprofit network of 16 public interest justice centers in the U.S. and Mexico. Jones Day is among the world's largest and most geographically diverse law firm, with over 2,500 attorneys in 32 locations worldwide. Together, they have identified new and recurrent problems areas in consumer credit litigation: 1. barriers consumer debt litigants face going to court; 2. barriers consumer debt litigants face in court; and 3. continued systemic barriers to due process. They have documented the best practices implemented by the New York Civil Court system and have recommended improvements that would involve minimal expense in this era of fiscal restraint.

The fruits of their labor can be found in a new 38-page publication, Due Process and Consumer Debt: Eliminating Barriers to Justice in Consumer Credit Cases, released at a reception held at the New York office of Jones Day on March 15, 2010. In addition to identifying the systemic challenges and recommended solutions for this crisis, the report identifies available resources for the debtor: 1. CLARO; 2. the Civil Court Help Centers and Volunteer Attorney Program; and 3. the "Civil Court Volunteer Lawyer for the Day Program." The Civil Legal Advice and Resource Office (CLARO) is an organization that provides, among other things, assistance to unrepresented consumer debt defendants. The New York civil courts also have pro se attorneys on staff to assist unrepresented litigants. In addition, the New York civil courts maintain Help Centers in all boroughs, and many of the borough Help Centers offer volunteer attorney advice programs for unrepresented litigants. The Volunteer Lawyer for the Day Program, funded by the ACE Rule of Law Fund and the New York State Courts Access to Justice program, pairs consumer debt litigants with volunteer attorneys who provide limited legal representation to the litigants on the day of their court appearance. Unlike the pro se programs, this program provides individual litigants with a courtroom advocate to negotiate a settlement or, if necessary, to make a limited appearance before a judge. The purpose of these programs is not to try to get people out of their proper debt. Rather, it is to provide them with otherwise unavailable assistance to receive consumer debt-related information and equal access to justice.

The participants who wrote Due Process and Consumer Debt: Eliminating Barriers to Justice in Consumer Credit Cases hope that it reflects the shared call for practical innovations and reforms, which however modest in the face of limited budgets, nonetheless, will have a profound impact on the experience of unrepresented consumer debtors in the legal system and benefit society as a whole.

Please contact David Tipson at NY Appleseed at dtipson@appleseednetwork.org or 212-848-5468 for more information about this program and the report.