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Prenda, the Law Firm Pretenda — and Lessons for the Future of Law

Alas poor  Prenda – it coulda been a contenda in the future of law.  Instead, Prenda now faces its likely demise inside a California federal district court room for questionable tactics in connection with hundreds of copyright lawsuits.

Once upon a time, Prenda Law — one of the largest copyright trolling operations — had all of the hallmarks that futurists revere.  Take technology, for example.  According to this 2010 Chicago Tribune piece, Prenda (formerly known as the Media Copyright Group) shelled out $250,000 to develop a piece of software that tracked illegal file sharing and captured users’ IP addresses which were then popped right into a federal lawsuit. As for the possibility of suing the wrong people or the need for human oversight before filing a suit, no worries — the lawyers behind Prenda were believed that their technology was infallible. Or so they claimed.

Like a true firm of the future, Prenda didn’t use a pedestrian model like a law partnership or professional corporation to run its operations. Likewise, Prenda used a trade name as its moniker rather than the names of the principals (SteeleHansmeier?). But whatever. The fiduciary duty and accountability that these relics of practice would have conveyed are just so 20th century.  Instead, John Steele – one of the lawyers originally behind Prenda (maybe ) structured his operations as an  amorphous alternative business structure comprised of a network of of counsel and free agent lawyers. No miserable associates here, just desperate young lawyers left holding the bag.

Because of Prenda’s shape-shifting structure, Judge Wright, the federal district court judge investigating Prenda’s actions, may not even have the jurisdiction to haul John Steele and his (former) Paul Hansmeier into court for for sanctions. If Prenda were a real law firm rather than a “pretenda,” it seems to me that the court would readily have jurisdiction over all of its members and employees. But because Prenda is (or at least claims to be) merely a network of loosely affiliated attorneys, the judge may only have jurisdiction over those lawyers who entered an appearance in the case.

Problems with Prenda aside, I strongly believe that law firm networks and alternative business models hold lots of promise for replacing the antiquated law firm and helping solos and smalls in particular make the most of their limited resources. Nevertheless, transparency is always paramount. Fairweather firms – lawyers that hold themselves out as law firms to take advantage of the benefits (such as conveying an impression of being larger than they actually are individually) shouldn’t be able to dump the law firm designation to evade liability or take advantage of relaxed advertising and conflicts rules.

Moreover, as more lawyers experiment with alternative business models, not only must we ensure make that clients can distinguish between a law firm, a network and a non-legal entity  but also, that our courts have the tools to sanction unlawful and fraudulent conduct.  Until we can come up with a method to address these serious concerns, I’m terrified at the thought of introducing non-lawyer investment into the mix. (While it’s true that Prenda happened without any outside investment, think of how much worse the damage might have been if Prenda had been funded by investors lured by its software investment and the $15 million it generated in extorted settlement payments).

As the saying goes, be careful what you wish for.   Prenda represents one iteration of the future of law – and it’s not pretty. What can we do to make sure that the future is better than our past?