Collection law firm Linebarger Goggan Blair & Sampson will pay $3.4 million to settle accusations it practiced law in California without having any lawyers in the state, according to a settlement approved by a federal judge. The settlement includes more than $900,000 in attorney fees and expenses.

The settlement ends litigation dating to May 2013, when plaintiff 4EC Holdings sued Linebarger, a firm that contracts with governmental agencies to collect debts. 4EC alleged that Linebarger illegally - under California law - sent debt collection demand letters to California residents. Linebarger denied the allegations.T

The class-action lawsuit was filed by a company that paid $90 to the city of San Francisco after receiving two demand letters from the law firm. According to the amended complaint, Linebarger Goggan had no lawyers in California until September 2013, and that lawyer wasn’t properly supervised.

The judgment and order of dismissal with prejudice said the court found approving the settlement would save time and resources, further the interests of justice and that it was fair, reasonable and adequate for class members. The settlement doesn't show the validity of any of the claims or any wrongdoing by Linebarger, said the judgment.

The court also awarded $850,000 in attorney fees and almost $53,600 in costs to 4EC.   Class action notices were mailed to 82,906 class members, said a motion for court approval of the settlement in 4EC Holdings v. Linebarger Goggan Blair & Sampson, filed in the U.S. District Court for the Northern District of California in San Francisco. Under the settlement, Linebarger deposited $3.4 million into a settlement fund, which includes $2 million in automatic payments to class members. The motion said that Linebarger agreed going forward to use California lawyers and supervise them in sending letters.Linebarger’s attorneys Vinson & Elkins argued that the court should dismiss the lawsuit, alleging that 4EC lacked standing to bring the claims. The motion stated that Linebarger's purported misconduct didn't cause any injury because even if 4EC didn't get a demand letter it still owed the money. Among other things, the firm alleged that any claims for debts paid before May 2009 would be time-barred. The motion added that it's incorrect to say that sending a debt collection letter is the practice of law.

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