First-year law students battle Internet payday lender

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Aspiring attorneys Nicholas Watt and Meredith Gray spent a good portion of their summer literally dotting i’s and crossing t’s.

As enrollees in the current session of the University of Wisconsin Law School’s Consumer Law Litigation Clinic, Watt and Gray recently helped draft one of the more substantial settlements in the 17-year history of the program.

The two first-year law students, under the tutelage of supervising attorney Sarah J. Orr, helped attain a preliminary settlement in a class-action suit against online payday lender Tremont Financial, LLC.

“I’ve never been one for details,” said Watt. “But this really forced me to make sure every word was perfect because of its impact.”

As stipulated in the July 25 ruling by Dane County Circuit Court Judge Sarah B. O’Brien, Tremont could be responsible for $60,000 in restitution to an estimated 137 Wisconsin residents who entered into loan contracts that the clinic alleges are in violation of the Wisconsin Consumer Act.

“As far as the scope of cases we take on, this is one you would see coming more out of a law firm rather than a law clinic,” said Orr, who is the director of the clinic. “It’s one of the biggest settlements we’ve gotten.”

Cutting Edge

While approval of the settlement is only preliminary and the court has yet to rule on the merits of the class filed in Dec. 2007, Orr said the case served as a unique opportunity for the law students to develop precedent.

“There is not a lot of precedent for state class-action lawsuits,” said Orr, who added that the clinic collaborated with the Wisconsin Department of Justice on the case. “A lot of the negotiation included what is the best process for notifying class members and how do we reach the highest number of class members.”

Another unusual aspect was that Watt and Gray were the second set of students who worked on the case. Since the clinic only caters to first- or second-year students, the original case workers were forced to hand off the case this spring.

That meant Watt and Gray were largely responsible for making sure the language of the settlement did not have any “loopholes.”

Watt said the weeks of research and drafting were grueling, but he credited his colleague with working through some of the more labor intensive details. Gray was on vacation and could not be reached for comment.

“Certainly there was a period of getting up to speed on the case,” said Watt. “It probably slowed things up a bit, because we had to review case files and see where the numbers were coming from.

“But basically, the ball was handed off to us and we took it the last yard for a touchdown,” continued Watt.

Orr said many cases which are referred to the clinic often get resolved prior to litigation, but that when one does make it to court, it is ultimately her reputation on the line.

“It’s my state bar number out there and from the beginning, the cases are [the students’],” said Orr. “But I do trust them and I’m not lying awake at night worrying about this, because they are so dedicated.”

Knowledge is Their Reward

Law students who enroll in the clinic spend an entire year working on cases, and Watt readily admitted that students are not lining their pockets during their 400 hours of required practice experience during the summer alone.

Both he and Gray will earn a $2,500 stipend for their experience in the clinic as well as free tuition for the 7-credit course.

“I didn’t take the clinic with any ideas of getting rich,” said Watt, who earned his undergraduate degree in political science. “Maybe I didn’t get the perks of a summer associate, but I liked the situation.”

Orr said both Watt and Gray may have the rare opportunity to witness an end to the case while they are still enrolled in the clinic. A fairness hearing is scheduled for Dec. 19, at which time objectors to the suit can come forward to comment on the agreement.

Orr hopes that disbursements to eligible parties can start as early as February.

“In a bigger case, students don’t often see the fruits of their labor, because they tend to drag out for several years,” said Orr.

Watt, who plans to pursue a career with a public interest agency or an advocacy group, is already diving into another internet payday loan class-action suit at the clinic. Orr said Watt and other students are in the early negotiations with Arrowhead Investments on behalf of almost 1,200 plaintiffs.

“That case is almost like the Tremont one, but it’s a little bigger and dicier,” said Watt.

“But I just hope we can make a little bit of difference in that one too.”