Owe You DON'T!

There is no receptionist to greet a visitor venturing into the Law Offices of Bybee and Shaw.

In fact, the law office lacks virtually all of the staff and amenities one would expect to find. There is no secretary, no paralegal, no copy machine, no art on the walls, no library of leather-bound statute books, no Wall Street Journal and dish of hard candy on a rosewood credenza, no elegant conference room with a 20th-floor view of Camelback Mountain.

Attorneys Floyd Bybee and Michael Shaw man the front desk and answer the phone themselves.

Most of the furniture in the three-room office--including a laminated table in the "conference room"--came from Terri's Consignment World. The conference room itself looks out on the parking lot of a strip center on South Rural Road.

The office computer, a reasonably modern IBM, sits on the desk in the reception area where Bybee churns out legal pleadings for both lawyers. Shaw can't type or manage a computer.

Shaw, 36, who once made a living as a "hot walker," someone who cools down racehorses, has been practicing law for five years. Bybee, a 37-year-old former auto mechanic, has been in the business one year longer than Shaw.

Beyond their ages and law experience, the two seem to be opposites in practically every way. Shaw likes to talk. Bybee doesn't much like to converse about anything.

Shaw is a streetwise New Jerseyite who wears a diamond post earring and has acquired a fondness for Harley-Davidson cigarettes and caffeine-laced sodas. Tall, rumpled, unremarkable in appearance, Bybee has the beginnings of middle-age spread; a Mormon, he doesn't drink or smoke.

The attorneys do not socialize much after work.
They aren't rich lawyers, by any means. Bybee himself has just gone through a personal bankruptcy. Each will be pleased if he earns the underwhelming sum of $30,000 this year, a salary the American Bar Association in Chicago asserts is somewhat "low end" for lawyers.

The clientele of Bybee and Shaw is not rich, either. Clients are mostly poor or lower-middle-class people who--because of divorce or illness, job loss or disorganized living--have gotten themselves into financial trouble. Some have filed for bankruptcy. Others have bounced checks. Still others owe money to hospitals, banks, furniture stores, you name it.

Most clients have been in arrears for a long, long time; so long that their debts and bad checks have been turned over to bill collectors.

If the clients are lucky, Bybee and Shaw will examine correspondence and find a technical violation of either state or federal law. A 1978 federal law, called the Fair Debt Collection Practices Act, receives the most emphasis.

If a violation is found--not sending a letter by certified mail, for instance--Bybee and Shaw are accommodating. They offer to "settle" with the debt collectors, who are often attorneys themselves. Those settlements can include the debtor's attorney's fees, forgiveness of the debt and associated fees, and a payment for "damages."

If no settlement is forthcoming, Bybee and Shaw sue the debt-collecting attorneys in federal court.

In Maricopa County, Bybee and Shaw appear to be the only lawyers who devote most of their practice to hounding debt collectors.

The Maricopa County Bar says it continues to refer most callers with gripes about collection practices to Bybee and Shaw, who are, after all, lawyers in good standing with the State Bar of Arizona.

The referrals create an ironic situation, because many of the debt collectors targeted by Bybee and Shaw are themselves attorneys. And those lawyers, who think they are trying to collect legitimate debts for merchants, can wind up owing money.

"Collection attorneys think we're lower than spit," says Shaw.
This seems to be true.

Collection attorneys who have faced off against Bybee and Shaw voice exactly the same complaints that the general public often makes against lawyers. Collection attorneys say Bybee and Shaw are more interested in fees than clients, that they twist everything out of proportion by making a very big deal out of minor, technical violations of the federal debt-collecting law.

Dale States is a Phoenix attorney who says he recently paid $2,000 to Bybee and Shaw. The settlement ended a lawsuit Shaw filed on behalf of Laura Ramirez, who owed $120 to a doctor. States had been trying to collect that debt for the doctor.

The Ramirez lawsuit alleged States violated the federal debt-collecting law by writing a letter to Ramirez that, among other things, threatened a lawsuit when none was intended. This empty threat violated the federal law, the suit says.

States first denied the allegations, then admitted liability and paid Bybee and Shaw $2,000, plus another $1,000 to his own lawyer. Laura Ramirez's debt was forgiven.

Shaw and Ramirez split the $2,000 settlement.
States doesn't seem thrilled with the outcome of his encounter with Shaw.
Everyone seems to agree that the 17year-old federal debt-collecting law was needed to protect debtors from the frequently predatory tactics of unscrupulous bill collectors. These days, very few debt collectors engage in that sort of behavior, collections lawyers say.

And States says the well-intentioned federal law is "very vague and very broad," and technical violations are "very easy to find."

His chief beef involves Shaw's method of increasing legal fees. States claims he offered to pay Ramirez $1,000 before the case went to court, but Shaw insisted on suing so he could earn more in attorney's fees. (If a case goes to court, Bybee and Shaw charge an hourly rate of $160. Additional expenses vary from $50 to $1,000 per case.)

Shaw doesn't deny running up fees--at least, not exactly.
Look, Shaw says, a collection attorney carping about another attorney running up fees is somewhat nonsensical.

"To say an attorney wants to collect fees is kinda like a statement of the obvious, isn't it?"

Sharolyn Charles, a 43year-old data-entry operator, sits in the conference room of Bybee and Shaw. Outside, a car door slams as someone races to an appointment with the massage therapist who offices next door.

Shaw pulls on a Mountain Dew.
Bybee shuffles back and forth between the phone and the fax machine. "This is long distance," he says, apologizing for not sitting at the conference table.

Sharolyn is something of a celebrity in this shoestring law office. She is the lead plaintiff in a recent federal class-action lawsuit Shaw filed against a California attorney and a Utah company.

Sharolyn Charles has not led a particularly charmed life. She's gotten herself into a number of fixes.

She married, had twin sons, divorced and married again, only to divorce her second husband.

Charles, who earns only $6 to $7 an hour working for a temporary employment agency, filed Chapter 7 bankruptcy in 1989. All her debts were canceled.

Her financial problems began anew this summer, when she took her boys out to a Poncho's restaurant to celebrate the Fourth of July. She wrote Poncho's a check for $17.93.

The check bounced.
"I didn't know I was bouncing it," Charles says. "I had the account for 15 years."

That same week, Charles bounced a $3.27 check to Auto Zone.
She says she immediately paid off the Auto Zone check, which included a $25 service charge.

But she says she had no money to pay the Poncho's check plus the service charge. She sort of let things slide.

From July to August, Charles received two letters from Check Rite Ltd., a Utah-based company that collects on bad checks for merchants. The letters asked for the $17.93 plus a service charge of $25.

Next, in September, Charles received three letters from a California law firm, Lundgren and Associates, demanding a "settlement amount" of $127.93. If the settlement amount was not paid, a Lundgren letter said, the law firm might take the case to court, incurring costs of $317, which Charles would have to pay if she lost the legal battle.

After the first letter from the lawyer, Sharolyn Charles says, she sent Lundgren a money order for $17.93, the original cost of the Fourth of July feast at Poncho's.

Lundgren, according to Charles, returned the money order.
Charles says by then she was terrified of being sued by Lundgren. If she could barely scrape up the $17.93, how in the world could she pay hundreds of dollars for legal costs?

Charles called her lawyer, who referred her to Shaw.
Who smelled an opportunity.
In mid-October, Charles filed a federal lawsuit in Phoenix against Lundgren and Associates and Check Rite Ltd., alleging their letters to Charles violated the Fair Debt Collecting Practices Act in a number of ways. Among the alleged violations: Lundgren threatened to sue Charles when the law firm had no intention of suing.

What's more, Charles alleges, neither Lundgren nor Check Rite corresponded with Charles by certified mail or in person--again violating the law's technical provisions.

The suit asks for statutory damages, which federal law says cannot exceed $1,000 per debtor. However, the suit also seeks "actual damages" for things like pain, suffering and consternation, which can be decided by the courts.

And, of course, the suit asks for attorney's fees and costs.
Shaw hopes to add other check bouncers who have dealt with Check Rite and Lundgren to the lawsuit.

No one, except Check Rite and Lundgren, knows how many check bouncers they deal with.

In fact, no one knows how many checks are bounced nationally. Or in Arizona. The Federal Reserve does not monitor bounced checks.

But in Maricopa County, at least, the check-bouncing problem grows each year, says Norm Keyt, chief of the Check Enforcement Bureau of the Maricopa County Attorney's Office.

Keyt's division collects on bad checks--in 1994 alone, the county collected on 22,000 bad checks.

Mostly, though, Keyt concentrates on criminal check writers who issue checks from closed accounts or purposely bounce checks to buy expensive merchandise.

Bouncing one or two checks for low amounts is not necessarily a high offense, he says. There could be an innocent explanation.

Sharolyn Charles, for instance, does not seem to be a criminal type. But she is not a particularly sympathetic figure, either. She really did have a couple of chances to respond to Check Rite after her check bounced.

But whether Sharolyn Charles inspires sympathy does not concern her attorneys. "The bottom line is: Did the debt collector follow the statute or not?" Shaw says.

Check Rite's attorney, Mark Morris, of the prestigious law firm Snell & Wilmer, refuses comment on the suit because he has yet to file an answer. He says the company will "vigorously defend" the suit.

"Snell & Wilmer," says Shaw, when he learns that his adversary comes from one of the cushiest law firms in the Southwest. "They have a very good reputation."

Alvin Lundgren, of Lundgren and Associates, says he can't comment on the Charles suit because he has not seen it.

But he denies he would ever threaten to sue bad-check writers without meaning it. "Our office sues on every size of check," he says. "The smallest one we sued on was a $3 check. We are an ethical office. We don't say or do things we don't intend to follow through with."

Collection lawyers make their money on volumes of checks, he says. He won't discuss his fee arrangement with Check Rite.

And then he focuses on the tactics of lawyers like Bybee and Shaw.
"Unfortunately, what happens very frequently is you have a group of attorneys out there who has more interest in making money than solving a social problem [check bouncing]."

Like other collection attorneys, Lundgren says the federal law is highly detailed and subject to "technical violations."

"Technical violations," hoots Shaw. "'Technical' to me means that it's accounted for right on the face of the statute. ... If debt collecting is their field of choice, you would think they would know more about the law."

The Law Offices of Bybee and Shaw open when they open. There are no set hours. Neither lawyer has his own office. Each attorney floats from the conference room to the reception room to the back room, where a few stacked cardboard boxes store closed cases. Judging from the boxes, the two have not been overwhelmed by clients.

This is not the type of practice Bybee and Shaw envisioned when they graduated from law school. But times are tough. Law schools produce too many lawyers, and there aren't enough clients to go around.

Shaw figured out what he calls this "cottage industry" of pursuing statute-violating debt collectors after reading a bar journal. At the time, he was practicing law out of his house. He alerted the Maricopa County Bar Referral Service to his new field of specialty. His first anti-debt-collector case came from the County Bar.

Then, a year ago, he met up with Bybee, a bankruptcy attorney, and in July the two decided to office together. In three months, they've accepted about 45 cases, they say, and only 25 percent of the cases end up in court.

"I don't think I was ever after the big bucks," says Shaw. But when he got out of law school, he wanted to earn reasonable money. Fast. He owed $40,000 on his law school tuition loan.

Today, he owes $35,000 on that same loan.
After graduating from Rutgers' law school in New Jersey, Shaw headed for Arizona. He'd vacationed here, liked it, decided to set up practice here even though he was completely unconnected. He hoped to develop a thriving criminal defense practice. But after a few cases, he learned that he really wasn't cut out for criminal defense work. "Deep, deep down," he wondered if his clients really were innocent.

Next, he tried bankruptcy practice. And whatever other work he could get, excluding divorces.

And then he started going after debt collectors.
Bybee, the father of three young children, has had firsthand experience with debt collectors. In fact, in his struggles to earn enough money to support his family, Floyd Bybee has had plenty of financial problems. In one instance, his need for money led him down a path that resulted in court sanctions.

Bybee graduated from an Oregon law school and headed for Arizona hoping to get into business law. He did, sort of, when he represented clients in bankruptcy proceedings. But he couldn't build much of a practice, and, to make money as a bankruptcy lawyer (he charged $500 per bankruptcy), he needed lots of clients. Bybee did other legal work, too--divorces, criminal defense, whatever he could get.

In 1992, Bybee says, he "got drawn into something I shouldn't have."
Because he was a "brand-new attorney and sole practitioner who needed money," he says, he agreed to be the Arizona counsel for a Texas lawyer named Joe Izen, who represented a woman in a bizarre real estate case in Maricopa County Superior Court. After Izen's client lost the case, Izen and Bybee appealed.

The apellate judges found the appeal to be "incomprehensible and frivolous."
State law says lawyers who file frivolous briefs can be sanctioned, and, in 1993, a judge ordered Bybee and Izen to pay $12,459, the sum of their opponent's legal fees.

Bybee says he had nothing to do with Izen's appeal. Even though Bybee's name was on it, he claims he didn't review it. He was never forced to pay the fee, he says, because it really had nothing to do with him. (New Times could find no court records excusing Bybee from the sanction.)

The next year, Bybee filed Chapter 7 bankruptcy, listing assets of $101,601 and liabilities of $110,503. In bankruptcy papers, Bybee estimated his 1992 income was about $18,000. The next year, he estimated, he earned about $20,000.

Earlier this year, a bankruptcy judge relieved Floyd Bybee of most of his debts.

Bybee will not comment on the bankruptcy, except to say he "dealt" with it. He says the ordeal did not change his perception of his clients, or make him empathize more with their ordeals. He already knew, he says, that bankruptcy laws existed so that people could get out from under their debts and live "some sort of life."

But Bybee didn't escape all his financial woes. Now, just like many of his clients, he's being confronted by a collections lawyer.

In September, a lawyer retained by Bybee's Oregon law school filed suit against Bybee in county court, claiming he owes the school $5,000 in unpaid tuition, plus $1,000 in attorney's fees and $3,215 in collection costs.

Bybee will only say he's trying to work things out.
His professional and personal lives are separate, he says.
And that's all he will say.

Phil Gallegos, who silk-screens printed circuit boards, retained Floyd Bybee in 1993 to represent him in a Chapter 13 bankruptcy proceeding. Saddled with debts, Gallegos, 37, filed for reorganization of his finances so he could pay his bills. Very, very slowly.

In August 1994, in the midst of his financial woes, Gallegos wrote Smith's Food and Drugs a check for $6.39.

The check bounced.
Gallegos, who works overtime and weekends, says he ignored the calls from Smith's Food and Drugs on his answering machine. Gallegos says he figured the check would be redeposited, sent back through his account a second time. Then, he thought, it would clear. A few months later, he closed his account.

Smith's, however, doesn't redeposit bounced checks for 75 days, spokeswoman Marcia Gilford says. The store routinely calls check bouncers on the phone, and mails at least four letters first, she says.

By the time Smith's redeposited Phil Gallegos' check, Gallegos had closed his account.

Smith's sent the Gallegos check, along with several hundred other bad checks, to Valley attorney Craig Decker.

Decker claims he wrote Gallegos several times.
By then, collection fees had run the $6.39 check up to a $141 debt.
Gallegos says he received one letter from Decker explaining "potential liability if suit is filed" of $416.39.

Frightened by the idea that he might have to pay legal fees, Gallegos says, he paid the $141 for his $6.39 bad check.

Gallegos later filed suit against Decker, claiming the attorney's debt-collection letters violated the federal law.

Decker, who denies Gallegos' allegations in court records, will not comment on the lawsuit.

And, like other debt collectors, Decker observes that check bouncers have ample time to settle up before they are turned over to him.

"The nature of what they [Bybee and Shaw] are doing is highly, highly technical," says Craig Decker.

The phones are ringing like crazy in the Law Offices of Bybee and Shaw.
A collection agency in Florida wants Floyd Bybee to be its registered agent in Arizona. Bybee refuses. "Seems that would be a philosophical conflict of interest," he says.

At the same time, Shaw takes a call from a collection agency that corresponded with Shaw's client on the stationery of another collection agency, which it had recently purchased.

Shaw says that, by using the stationery of a nonexistent firm, the collection agency has technically violated federal law.

The collection agency wants to settle for $250 and forgiveness of the debt.
Ridiculous, Shaw says.
"I appreciate the offer," he says on the phone. "I took it to the client. She turned it down. My client went to the state banking department and found out this company doesn't exist. [Pause.] Well, $1,233 sounds reasonable. I'll be honest. ... As a matter of course, we generally don't go below $1,500."

Another pause.
"She may be a little unreasonable, my client, but I have to do what she instructs me to do. She might go to $1,000, but I know she wouldn't drop below $1,000."

Shaw hangs up after the collection agency promises to come up with a more "reasonable" offer next week.

Next, a former postal worker named Joe comes into the office. His tee shirt says "I Hiked the Canyon." Joe, who won't give his last name, likes good walking shoesCR>. When he quit his job a few months ago (because the U.S. Postal Service is a "very unhealthy place to work"), Joe celebrated by buying himself a pair of Nike Cross-Trainers at Foot Locker.

To help pay for the shoes, Joe used a $50 shoe voucher that the post office had given him while he was still an employee. The federal government distributes such vouchers to help letter carriers pay for expensive footwear.

But the post office wouldn't honor Joe's voucher when Foot Locker submitted it. The reason: Joe didn't use the voucher while he was employed by the post office. Foot Locker sent the voucher to an out-of-state collection agency, with orders to collect the $50 from Joe.

"The whole thing is just absurd," says Joe, who turned the matter over to Shaw, whom he calls his "gunfighter." Shaw says he "recovered" $1,750 from the collection agency. Neither Joe nor Shaw will say howthe settlement was split.

While most of the money pocketed by these shoestring lawyers comes from settlements with collectors, occasionally a client has to pay a fee. No wedding rings, VCRs or golf clubs are accepted for payment at the Law Offices of Bybee and Shaw.

Personal checks are carefully screened.
Cash is preferred.
"That was a client," says Shaw, answering yet another phone call. "She wants to know if she can pay cash to Floyd. I said, 'Hmm, let me talk to the office manager.' She's coming in this afternoon, Floyd. Don't forget the receipt book."

A former nurse enters the law office with her three children. After taping a debt collector onthe phone, she scored amajor settlement, because she really had paid her bill months before the collector got involved. She's signed a nondisclosure agreement with the collector, which means she can't say how much she got.

The phone rings. Shaw answers. "Law Offices," he says. "Yeah. Mmmhmm ..."
The other telephone line rings. It is loud. It is annoying. But Bybee focuses on the ex-nurse's kids, who drink sodas from Shaw's back-room cacheCR>. The phone rings again. Shaw, still carrying on a conversation with the first caller, waves his arms and points to the phone.

Finally, Shaw covers the mouthpiece with his hand.
Floyd, he says. Answer the phone.


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