A Houston law firm that has been repeatedly sanctioned for mass-filing more than 1,500 hurricane-related damages claims in Louisiana received as much as $40 million from a Florida hedge fund, according to court transcripts and those familiar with the legal proceedings.
The disclosures occurred in recent weeks as attorneys currently or previously associated with the law firm of McClenny, Moseley & Associates (MMA) sought to lift the suspensions placed on them by the federal court in the Western District of Louisiana. MMA’s founding partner, Zach Moseley, acknowledged under questioning by Judge James Cain Jr. that the law firm has received as much as $40 million from the Florida-based Equal Access Justice Fund, which finances civil litigation, according to insurance defense attorney Matthew Monson.
A transcript of former MMA partner James McClenny’s testimony before the court states that the firm received millions of dollars in loans from B.E. Blank & Co., the general partner of the fund.
“If I'm not mistaken, Your Honor, the collateral for the loan with B. E. Blank was a set of cases that we had obtained for the Zantac litigation, and part of my separation agreement with Mr. Moseley is that I am not financially responsible for any of that,” McClenny testified.
A Securities and Exchange Commission form submitted by the fund last year indicates that it had more than $213 million in sales and 15 investors.
It’s unclear what MMA did with the loan, but the firm has been criticized for paying millions of dollars to the Velawcity marketing firm to obtain clients for property insurance-related litigation.
Monson, who stressed that he is not accusing any of the parties of anything, said the issues raised in the MMA saga go beyond third-party litigation funding.
“Are entities, in general, financing unethical or potential illegal client solicitation?” he said in a comment to the Louisiana Record.
In his court testimony, McClenny said he completed a separation agreement with MMA and “walked away with no money and an absolute need to start fresh.”
MMA has come under criticism in Louisiana for failure to disburse damages awards that clients were owed in property insurance claims.