Scouts Lawyer Seeks to ‘Shine a Light’ on Mass Tort System Flaws

At this stage of his career, Larry Friedman didn’t envision being a finger-pointing court reformer.

The part-time litigator and bankruptcy services consultant had settled into a comfortable routine, splitting his time between his northern Michigan home and the Florida waterfront condo that affords him morning walks on the beach.

But now Friedman, 69, finds himself unexpectedly representing Boy Scouts abuse victims who assert they were being ripped off and lied to by a firm with more than 14,000 claimants in the multibillion-dollar settlement that emerged from the organization’s 2020 bankruptcy.

That’s opened a window to what the onetime trustee has long asserted is a blight on the bankruptcy system: the growth of factory-like mass tort operations designed to lock down mountains of potential plaintiffs at high fees and provide minimal representation, at best.

In the Boy Scouts case, former clients of Slater Slater Schulman LLP approached Friedman, he said, after the settlement trustee said she stopped processing thousands of Slater claims for irregularities. The New York-based firm acknowledged its claims were being investigated over “procedural and factual problems.”

A Delaware judge next week is scheduled to hear Friedman’s unusual request to take over some Slater clients and, more pointedly, reduce or outright deny Slater’s 40% contingency fees in the case, which he estimates could top $50 million.

Slater on Thursday lashed back at Friedman, filing a response that called his motion an improper bid to interfere with their clients and “wholly untethered to any recognized legal authority.”

Friedman insists he didn’t seek out the role or the clients, saying that they approached him after reading his past public criticisms about mass tort firms gaming the system.

“I didn’t ask for this,” he told Bloomberg Law last week in an interview near his Stuart, Fla. home.

But the lawyer sees it as a golden opportunity to go beyond talking and writing about the need for change. With clients in the case, he can actively litigate the problems he says have followed mass torts into the bankruptcy system.

“If I don’t shine a light on this, it won’t get fixed,” he said.

Trustee With a Camcorder

Friedman became a student of the US bankruptcy code as a young lawyer in the 1990s, taking trustee assignments in Chapter 7 cases in the Eastern District of Michigan.

He grew skeptical, he said, after noticing a surge of personal bankruptcies in which people listed no assets beyond what was exempt from being liquidated, like a home and standard furnishings.

Some were residents in affluent Detroit suburbs who claimed their household goods and furnishings were worth just $1,500, Friedman recalled.

In one case of someone with a manicured lawn and nice cars in a neighborhood he knew, Friedman drafted a motion seeking approval to search the home with a camcorder. He later showed the packed courtroom footage of assets worth more than 20 times what the individual had attested to, including a large porcelain doll collection.

The tactic won him accolades from seasoned Chapter 7 trustees, he said, but some also warned him that devoting time and resources to root out fraud in consumer cases wasn’t a path to a profitable practice.

He didn’t care, he said.

“It was wrong, and it didn’t make sense to me,” he said. “That’s what the law said to do.”

Over the next decade, Friedman spent time testifying in support of legislation to improve the bankruptcy code, including making it more stringent towards consumer debtors.

In 2002, he was appointed executive director of the US Trustee Program—the Justice Department’s cop on the bankruptcy beat.

While there, he shepherded into law the Bankruptcy Abuse Prevention and Consumer Protection Act and created enforcement divisions to increase vigilance in cracking down on consumer fraud.

“I am about not letting people exploit the efficiencies of the bankruptcy system—whoever you are—for your own benefit,” he said.

Aviva Lehmann of Heritage Auctions and Boy Scouts of America’s settlement trustee, Barbara Houser, discuss paintings being put up for sale as part of the youth organization’s bankruptcy plan.

Photographer: Alex Wolf/Bloomberg Law

Mass Tort ‘Shakedown’

Friedman left the public role for private practice in 2005, taking a job at Bear Stearns and later, other corporate roles. In recent years he has become more vocal about bankruptcy policy, often railing against mass tort trial lawyers.

Several of his public papers have taken aim at the Boy Scouts case, which Friedman has called a “mass tort shakedown.”

It’s not unusual for lawyers working on more typical civil litigation to charge clients contingency fees up to 40% on favorable outcomes because they are “fronting all the expenses and taking the risk that they may get nothing,” said Friedman.

“We don’t have any of that in a mass tort bankruptcy case,” he said.

Instead, with tens or hundreds of thousands of potential victims, such settlements often end with most claimants getting some form of compensation, and their lawyers having much less to do—but still collecting 30% or more of the payout.

More than 60,000 Boy Scouts abuse victims are set to share a settlement that is expected to be at least $2.4 billion but could grow higher, with individual payments owed ranging from $3,500 to more than $1 million.

The diatribes against firms like Slater and others that banded together to form their own majority bloc in negotiations during the Boy Scouts case are easy to find online.

Friedman’s writings put him on the radar of Boy Scout claimants who have grown outraged over dimming prospects that they’ll recover more than just a fraction of what they’ve been told their claims are worth.

Attorney ethics prevent a lawyer from soliciting another firm’s clients, so Friedman said he has told people who contact him that he can’t represent them unless or until they fire their attorneys.

“It’s all inbound traffic,” he said. “I didn’t send a solicitation.”

Still, he saw the request as his chance to lean into the issue he had been railing about.

“This Motion is the culmination of what happens when you let trial lawyers run amok in the bankruptcy system,” his filing began. “After the Boy Scouts filed this bankruptcy case, the race was on amongst a group of technology firms and law firms to bundle or aggregate as many claims as humanly possible to be filed in the bankruptcy case to take the largest portion of available funds they could.”

Friedman said he threw a 20% fee contingency into the agreements, but the primary intent of his motion is to prove the allegations, get relief and get compensated in the form of sanctions against Slater.

“If that is to occur, our clients won’t pay any other fee because the whole point is to put money back in the pocket of survivors, not to pile on,” he said.

Tom Patton, a claimant in Maine who defected from Slater in September after the firm informed clients of the claim investigation, said he was encouraged by Friedman’s approach and his willingness to take calls at any time of the day.

“It’s a completely different type of attorney,” said Patton, 50.

In its reply last week, Slater said Friedman lacked standing to weigh in, failed to provide any evidence of its failures or clients who wanted to join him and said his argument was flawed in multiple ways. At its base, Slater called it a flimsy publicity campaign.

“The transparent purpose of this opportunistic effort by movants’ counsel is to wrongfully interfere with SSS’s relationships with its clients, to alienate them from the firm and induce them to retain movants’ counsel in its stead,” it said.

First Steps

With a hearing less than two weeks away, Friedman is confident that the facts are on his side and that Judge Laurie Selber Silverstein is obligated to rule on whether Slater has the right to seek a share of the payouts from clients who fire them.

“The question is: How deep and how broad is she going to go?” he said.

Friedman doesn’t expect a decision at the Nov. 13 hearing, but a sense of how the motion will proceed, and next steps for when and how she’ll take evidence.

If all goes as he hopes, the court will agree to take on the question of what constitutes a reasonable fee for Slater’s work in the case, he said. That’s the key to moving his goal forward.

“We have clients from other firms and we’ll be going there,” he said. “We’re not going away if we get relief here.”