Alabama Lawsuit Shines a Light on Fee-Sharing Agreements for Storm Claims
Insurance defense attorneys say a pair of lawsuits filed by a law firm and a claims consulting business – against a national personal injury law firm – raises questions about the proper relationships between legal counsel and the professionals they hire to assist with the claims process.
ATA Loss Consulting filed a lawsuit on April 7 in Mobile County, Alabama, against Shunnarah Hair Trial Attorneys and associated law firms alleging they owe ATA $2.4 million in fees for assisting 700 property owners with their claims.
On the same day, Fortius Law Group also filed a suit in Mobile County Circuit Court alleging that it lost $6.2 million in income because of “tortious interference” by the same law firms. The suit says Shunnarah and Hair failed to pay promised referral fees equal to 25% of the attorney fees that were collected.
Both lawsuits also name Birmingham, Alabama attorney Alexander Shunnarah and Metarie, Louisiana, attorney Galen M. Hair as defendants.
ATA is an Alabama corporation owned by Austin Tanner, who also is a co-owner of the Fortius Law Group in Washington D.C. The District of Columbia is one of only three jurisdictions in the United States that allow non-attorneys to own a law firm. (Utah and Arizona are the others.)
Curiously, the other co-owner of Fortius Law Group is Shane Welch, who is listed as an attorney for InsuranceClaimHQ, which operates a website “powered by Hair Shunnarah Trial Attorneys.”
In a LinkedIn post, insurance defense attorney Steve Badger, a partner with the Zelle law firm in Dallas, asked how Welch could be listed as an attorney for a website associated with Hair Shunnarah while at the same time earning referral fees through the Fortius Law Group.
Badger also questioned how Tanner could earn fees for his loss consulting services while also earning referral fees through Fortius.
“Certainly, Tanner did not have both roles in the same claim,” he said. “Or did he? Was this disclosed to the insurance companies?”
The Fortius lawsuit says it referred “nearly 400 client matters” to the Shunnarah law firm from March 2021 through December 2022 and the law firm made recoveries in many of those cases. Both Shunnarah and Hair promised to pay 25% of the amount recovered on those claims, the lawsuit says.
The ATA lawsuit says the firm performed consulting services for approximately 700 clients during the same time period. The Shunnarah firm, known for its billboards and TV advertisements in Alabama, Florida and Georgia, regularly paid invoices up until March 2022, when the firm said it had a cash flow problem and asked to set up a payment plan. The firm stopped making any payments in October 2022, the suit states.
Normally, a law firm cannot pay a non-attorney for referrals, but Fortius is co-owned by Welch, who is a licensed attorney.
Tom Benton, the Mobile, Alabama lawyer who filed both lawsuits, said there was nothing wrong with the arrangement.
“Shunnarah decided to get into the storm damage business and this entire setup was approved and or created by him along with his firm in New Orleans,”he said in a lawsuit. “After I filed the lawsuit, he began threatening his lawyer who also a member of Fortius.”
While Alabama law may prohibit attorneys from sharing legal fees with non-attorneys, Benton said Alabama law does not apply. He said the claims that were referred to Shunnarah and Hair came from throughout the Southeast except for some that were related to Superstorm Sandy.
New Orleans insurance defense attorney Matthew Monson posted a notice about the pair of lawsuits on his LinkedIn page last week. Later, he posted a copy of a discovery request filed by Fortius that asks the Shunnarah law firm to disclose any communications it has had with the Alabama Department of Insurance and the Mobile County District Attorney’s Office.
Monson said in the post said the discovery request makes him wonder whether Shunnarah and Hair had filed complaints against Fortius.
“A HUGE question that should be asked by all is how did Fortius Law Group based out of Washington, D.C. acquire 400 clients to refer to Hair Shunnarah Trial Attorneys and the other named defendants such that Alabama was the preferred venue?” he said.
Reached by telephone on Monday, Monson said that the arrangement demonstrates why non-attorneys should not be allowed to have an ownership interest in law firms.
“Non-attorney ownership of law firms leads to circumstances where policyholders get hurt and attorneys can be improperly influenced by their non-attorney partner,.” He said.
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