The heavily advertised Pacific Law Center was once San Diego’s best-known law firm, but its most controversial. Two years ago, Kerry Steigerwalt, a criminal lawyer who is regularly quoted on local television, gained control of the firm and changed its name to Kerry Steigerwalt’s Pacific Law Center. It became a household name.
In a deposition for a lawsuit filed against the center last year, Steigerwalt claimed that the firm’s previous owners had wooed him and fed him false information. He said he was the “fall guy.”
Steigerwalt has indeed fallen. The firm, which specializes in driving-under-the-influence, personal injury, and defective-product cases, while purportedly counseling those with financial woes, intends to take no new cases but will wrap up old ones and eventually close down. Just recently, the Yellow Book sued the firm, saying it hasn’t paid for more than $200,000 in advertising. UTC Properties has also sued, saying the firm hasn’t paid rent at its posh La Jolla suite since the beginning of the year and owes almost $200,000.
Tom Slattery, a former lawyer at the firm, filed a massive complaint about its practices with the California State Bar, sending copies to state officials including the attorney general’s office. Some current and former lawyers say that the bar is probing the matter, but the bar won’t confirm that. Last week, Slattery filed suit against the firm, claiming that early this year, Steigerwalt’s firm was trying to stave off an “imminent collapse.”
The law firm has a D+ rating with the Better Business Bureau, generating 79 complaints in three years. That D+ is a slight improvement on an earlier F rating. Since 2004, there have been more than 40 superior court suits filed against the firm under both its names.
Steigerwalt blames most of his problems on the weak economy forcing criminal defendants to go to public defenders. But the inescapable truth is that he didn’t do his homework when taking over Pacific Law Center. On June 30, a new law firm registered with the secretary of state: Steigerwalt Law Firm, APC.
One key suit was filed in 2008 by Carl Hancock, who worked for Pacific Law Center for only nine months. The suit charged that Steigerwalt’s entrance into the firm was a “sham sales transaction for the purpose of protecting the assets” of the firm’s founders, Larry Majors, his son Austin Majors, and son-in-law Jeffrey Phillips, a Phoenix attorney. Hancock settled the suit early this year.
Another suit was filed last year by Dagoberto Llamas, who alleged he was blatantly cheated by the firm, which took big bucks from him to handle a criminal case in which he was charged with driving under the influence, battery, hit and run, and contempt of court. He was initially assured he could win the case but subsequently told it was hopeless. Llamas’s case against the law firm was handled by well-known criminal attorney Michael Pancer, his son Ian, and Doug Gilliland.
The suit says that the business model of both Kerry Steigerwalt’s Pacific Law Center and its predecessor “is the brainchild of a convicted felon and car dealer from Arizona named Larry Majors. After serving time for fraud in Arizona, Majors, a non-lawyer, opened a law firm in San Antonio, Texas, using a down-on-his-luck lawyer.… Majors launched a massive television advertising campaign to attract clients.” But Majors fled Texas after a bankruptcy judge called the firm “a borderline criminal enterprise.”
Then, according to the Pancer team’s account, Majors set up shop in San Diego with a lawyer who was eventually disbarred. Majors vamoosed when Texas authorities charged him with absconding with clients’ money. In 1993, Pacific Law Center opened in San Diego with son Austin Majors as executive director. The office was in La Jolla, but the listed address was that of son-in-law Jeffrey Phillips’s Phoenix law firm.
There has always been controversy about who owned and ran Pacific Law Center. According to Slattery’s testimony, Phillips was the owner. When Steigerwalt came in two years ago, he put in no money and got 51 percent of the firm, although at around the same time he gave part of his own practice to Phillips. Steigerwalt claims that Robert Arentz, then a member of Phillips’s Arizona firm and also one who hung around the La Jolla firm, had 100 percent of Pacific Law Center and then 49 percent of the successor after Steigerwalt took control. In any case, Phillips basically ran Pacific Law Center, according to the Llamas and Slattery suits. Phillips did not respond to calls, and Arentz would not comment.
Phillips and Arentz have run into trouble with the State Bar of Arizona for using the same tactics that the San Diego firm used, both pre- and post-Steigerwalt. Phillips was censured and placed on two years of intensive probation by the Arizona bar in 2002. One of the reasons: so-called “intake personnel at his firm” who interviewed potential clients and failed to identify themselves as non-lawyers.
Late last year, the Arizona bar acted again: it recommended that Phillips be suspended for six months and a day and Arentz be suspended for 60 days. The bar said that the two “acted for their own immense financial benefit, overusing non-attorney employees for inappropriate tasks…to squeeze every last penny out of their clients.”
The Arizona Supreme Court upheld Arentz’s suspension but agreed to review Phillips’s. The bar had investigated 22 complaints, mainly on aggressive sales practices of non-attorney personnel.
And that goes to the heart of the complaints against Kerry Steigerwalt’s Pacific Law Center and its predecessor, both of which spent almost $5 million a year on advertising, according to Llamas’s suit. So-called “intake coordinators,” later called “legal administrators” (similar to those used by Larry Majors in Texas and Phillips in Arizona), greet the often impecunious people who have been swayed by the advertising.
According to the Pancer team, the intake coordinators are often former car salesmen who con the clients, asking initially for a high price and then coming down when meeting resistance. “The fee is based on how much the client is able to pay, not on traditionally recognized criteria such as complexity or novelty of legal issues and consumption of attorney time,” says the suit, which was dismissed on summary judgment and is now on appeal. Pacific Law Center’s intake coordinator told Llamas that the firm wins 90 percent of its Department of Motor Vehicles hearings, when the figure is actually 25 percent.
If Llamas would pay the firm’s price, the coordinator said he could guarantee Llamas would not lose his driver’s license, according to the suit. But in the end, an attorney told Llamas his case was indefensible and he should plead guilty.
The Llamas, Slattery, and Hancock suits stress that the sales personnel engage in the unauthorized practice of law.
Under rules of the California bar, a lawyer has to sign a retainer agreement in front of a client. But at Pacific Law Center, the lawyer who signed the document would say he was not the one who would handle the case. Thus, the potential client did not learn his rights or the strength of the case from an attorney handling it. Steigerwalt said in his deposition that he changed this procedure but couldn’t remember when.
In his deposition, Steigerwalt said Pacific Law Center lawyers “were schleps,” according to the Llamas suit. Also, Steigerwalt admitted that he knew of the pressure tactics used by the intake coordinators. But he didn’t change things significantly, say the Llamas and Slattery suits. Indeed, Steigerwalt, said in the Slattery suit to make $900,000 yearly, was constantly checking to see if the firm was bringing in the daily gross receipts it needed to keep its head above water.
Says Steigerwalt, “In forming [Kerry Steigerwalt’s Pacific Law Center] I realized there were challenges. I just did not realize the extent of those challenges.”
He won’t answer questions about the Llamas suit because it was dismissed. Ripostes Michael Pancer, “It is true that the summary judgment motion was granted, but that does not affect the validity of statements made under oath in support of our lawsuit.” That includes deposition statements made by Steigerwalt.
Says Pancer, “I will give Kerry Steigerwalt the benefit of the doubt when he claims he wanted to turn [Pacific Law Center] around. But it was obvious to those of us who practice criminal defense that the business model was ethically flawed and could not be saved no matter what his best intentions were.” Steigerwalt’s adventure represented a “desire for profit overwhelming good judgment.”