Big law firms circle burn scar to get some of $2.5 billion NM fire payout

The intent of the compensation program is that a lawyer isn’t necessary. Lawyers disagree. 

By: - October 11, 2022 5:05 am

The wreckage of a home in Las Dispensas, the first area destroyed by the Hermits Peak fire in early April. (Photo courtesy of Kathryn Mahan)

Now that a huge compensation program is on its way to the burn scar of the biggest fire in state history, private law firms are increasing efforts to convince victims that they need a lawyer to get a piece of the $2.5 billion pie. 

But attorneys with New Mexico Legal Aid say Hermits Peak-Calf Canyon Fire victims should think twice about signing any contract with a law firm. Also, New Mexican members of Congress who wrote the legislation say the law’s intent was that fire victims should be able to get money they deserve without the help of a lawyer.

“We are asking (the Federal Emergency Management Agency) to provide technical assistance, and something akin to navigators, so that survivors can receive compensation without the need for attorneys,” U.S. Rep. Teresa Leger Fernandez (D-N.M.) said. “I will continue to push FEMA to make sure the claims process under my legislation is as straightforward as possible.”

In April, a botched prescribed burn ignited by the United States Forest Service north of Las Vegas, N.M. escaped and, combined with another errant prescribed burn, scorched more than 530 square miles of forest and farmland, destroyed more than 500 homes and ushered in deadly flooding and watershed damage. 

A prescription for disaster

Just weeks after the fire started, advertisements appeared on Google and Facebook seeking clients who suffered damages, according to a review of Google and Facebook ad libraries. Several of the firms are from out-of-state but partnered with local firms. 

Antonia Roybal-Mack, a lawyer who grew up in Mora and who is also representing fire victims, said she’d never seen anything like the amount of lawyers who swooped in.

In 2000, the last time the federal government botched a prescribed burn in New Mexico and caused billions in damage, there weren’t huge firms like now that specialize in mass tort lawsuits, she said. 

“We’ve really never seen this many lawyers come in and capitalize on a disaster like this in New Mexico,” she said. “They do it all over the country all the time, but this is definitely new for New Mexico.”

And what explains it?

“Money,” she said.

In recent weeks, online ad buys have increased. The push for clients comes weeks after Congress passed the Hermits Peak-Calf Canyon Fire Assistance Act, which supplies $2.5 billion supposed to fully compensate victims for their losses from the fire, including for burned structures, lost income, flood damage and more. 

There is no cap on the amount an individual can receive. 

It’s a historic amount of money for a disaster, elected officials have said, and is nearly triple the last time the federal government screwed up a prescribed burn in New Mexico. The $2.5 billion equals about 30% of the entire New Mexico state budget. 

Hoping to find clients, law firms have held meet-and-greets in town at restaurants, civic centers and elsewhere. They’ve mailed advertisements to trawl for clients. One law firm pasted a sign on a piece of plywood in Mora’s main drag, calling to “FIRE VICTIMS” in big, red letters and advertising a law clinic and a phone number. 

“Your rights to compensation from the federal government will be explained!” it reads. 

Fiona Sinclair stands in the ruins of what used to be a friend’s house in the burn scar of the Hermits Peak-Calf Canyon Fire on Monday, Sept. 12, 2022. (Photo by Megan Gleason / Source NM)

A 20% cut

Source New Mexico obtained an unsigned contract with a different firm, Singleton & Schreiber from San Diego. It tells would-be clients that they don’t have to pay any money up-front but that the firm would take 25% of any verdict, settlement or damages the client receives at any time. 

It also notes that clients who qualify for the Hermits Peak-Calf Canyon Fire Assistance Act might also be able to file a lawsuit in district court. 

But Leger Fernandez said the act is intended to give FEMA resources necessary to guide fire victims toward compensation without an attorney who takes a cut. The agency now has a little more than a month to set up a system for paying out the money, and that program will include employees whose whole job is to help people file claims. 

“We passed this legislation so that survivors would not have to file a lawsuit to receive compensation, but would instead be compensated through an administrative process that a special office in FEMA will administer,” Leger Fernandez said. 

Proposed $2.5 billion for wildfire victims is almost triple the last time feds lit NM on fire

She also noted that the act limits the amount of fees attorneys can take from any compensation to 20%, not 25% as those who signed the contract with the San Diego firm. 

Gerald Singleton, managing partner at the San Diego firm, told Source New Mexico that the firm will update its contracts – and send letters to those who have already signed contracts – to inform clients that the firm’s fee will be reduced to 20%, now that the act has passed Congress.

Those who file separate lawsuits will still see 25% of their awards go to the law firm, however. 

He also defended his firm as highly competent and said that hiring it is necessary to maximize compensation. A person filing by themselves might not know how to document the extent of multiple types of damages, he said. Singleton’s firm will pay for specialized fire and flood experts who can calculate current and even future damages caused by the fire. 

“No one has to hire an attorney for this process, just like no one has to hire an attorney to represent them in a court suit,” he said in an email. “However, the vast majority of people will get a great deal more (even after paying a 20% attorney fee) if they hire an attorney than if they attempt to do it on their own.”

He did not respond to a request for comment on how many victims have signed retainers with his firm. 

The Singleton-Schreiber contract also states that the firm will place a lien on clients who leave without good cause. The lien would be for any damages the victim receives and for costs the firm had incurred in filing a claim, plus interest. 

U.S. House Speaker Nancy Pelosi and Rep. Teresa Leger Fernández stand in front of community members and elected officials affected by the Hermits Peak-Calf Canyon Fire in Albuquerque on Sept. 26. Soon after, Congress approved $2.5 billion for for fire victims. (Photo by Shelby Wyatt for Source NM)

‘Makes me want to vomit’

Even if victims decide they need a lawyer, there are other options than an out-of-state, for-profit firm, said Edna Sprague, litigation director for New Mexico Legal Aid. For example, Legal Aid will do much or all of the same work as private firms for free, she said, as long as a victim’s household income is less than 200% of the federal poverty line. 

For a family of four, that’s $55,500. The median household income for Mora County and San Miguel County are both about $29,000, according to Census figures. So Sprague says the “vast majority” of fire victims will qualify, and the agency is working on finding money to fund legal services for those who earn above the limit. 

In addition to being free, she said, New Mexico Legal Aid has local expertise and connections to the community affected. 

Private injury firms like the one in San Diego “can really conserve a great function for people,” she said.

“But they can also be predatory. And the idea of having a law firm out of San Diego representing a northern New Mexican who doesn’t have Internet, frankly, makes me want to vomit,” she said. 

She recommends anyone affected by the fire call NM Legal Aid for advice, which she said is more trustworthy than a private law firm seeking to earn a profit. 

But Legal Aid is having difficulty recruiting clients, said spokesperson Paxton Patrick. Sprague said the organization hasn’t had the same ability to advertise as monied private firms. 

And she said a lot of folks might have signed agreements with private law firms early in their first wave of advertisements, when the fire was still burning and FEMA was facing widespread criticism for denying claims and providing minimal financial compensation to those who lost everything. 

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“There was some real disconnect between what FEMA was trying to do with New Mexico’s disaster legal services program,” Sprague said. “I think that a lot of it had to do with the lack of cultural competence about the landscape of northern New Mexico and what those communities are. And people didn’t want to, or seemingly didn’t want to, put their feet on the ground.”

The amount of time it took for the Hermits Peak-Calf Canyon Fire Assistance Act to pass Congress might also have meant more people sought an attorney, Roybal-Mack said.

It took about five months since the fire started for Congress to pass the $2.5 billion fund legislation, which was modeled after the one passed in 2000 in response to the Cerro Grande Fire in  Los Alamos. 

With that fire, passage took a little more than a month. The Cerro Grande Fire Assistance Act was intended to stave off mass lawsuits and the need for private lawyers. Roybal-Mack, a fire attorney in New Mexico for decades, said it had the desired effect. 

But it was different this time around, Roybal-Mack said.

“Until the Act was passed, the only recourse was for people to hire a lawyer and prove liability,” she said. 

Is FEMA up to it?

Roybal-Mack said a lot of residents are skeptical about FEMA now and that a law firm like hers is necessary to ensure FEMA pays up, even if members of Congress intend victims to be able to navigate the system themselves. 

“People are sick of FEMA, and FEMA is sick of us,” she said. “So we might be in a good place to say, we need some independent investigators, evaluators to help look at this stuff.”

Cerro Grande fire victims were ‘fully compensated’ decades ago. NM gov seeks the same in 2022.

The bill allows for the appointment of an independent manager to evaluate claims, someone like a judge who would be independent from FEMA. The Cerro Grande Fire Assistance Act also had the same provision allowing for an independent manager, though none was appointed. Many of the victims in that fire lived in a subdivision, were wealthy federal employees and were fully insured, which made for a smoother process.

But with the different demographics and complications that presents this time around, Roybal-Mack hopes an independent manager is appointed.

U.S. Sen. Martin Heinrich (D-NM), did not respond to a request for comment about the influx of private law firms into the burn scar. 

But he has said he thinks Congress can hold FEMA’s feet to the fire as it builds the compensation program to make sure it is designed to fit New Mexico’s particular needs, including the lack of deeds on many properties and the destroyed acequia system.

“FEMA doesn’t have a challenge spending resources,” he said after the bill passed Congress. “They have a cultural challenge … And they still have a long way to go to prove that they can do that as well as we want them to, but they are also the only game in town.”

A lawsuit or a claim

Victims of the Hermits Peak-Calf Canyon Fire who hire a lawyer will be able to receive money from the $2.5 billion Hermits Peak-Calf Canyon Fire Assistance Act or file a lawsuit separately against the government. 

Attorneys who spoke to Source New Mexico said a few things can factor into that decision for clients.

For one, a San Diego-based law firm seeking to represent fire victims will get a 25% percent cut of any settlement or verdict from a lawsuit, but only 20% of damages from a claim under the Hermits Peak-Calf Canyon Fire Assistance Act, a senior lawyer there told Source New Mexico. 

Antonia Roybal-Mack, an attorney from Mora representing hundreds of fire victims, said a lawsuit might be the best way to go in certain, egregious cases. For example, a wrongful death lawsuit could be best because the Fire Act might not provide the same amount of damages for emotional distress or loss of a family member. Another would be the loss of a major ranch or farm, she said. 

But it’s still too soon to say, given that regulations aren’t yet written, she said. 

Also, Edna Sprague, litigation director for New Mexico Legal Aid, said a fire victim should consider the toll a lawsuit could take and the risk of coming up empty. It could be years of no awards before a case comes to a resolution. The Fire Act might be a safer bet given that the government has agreed to pay victims $2.5 billion and has six months after a claim is filed to pay it out. 

“If I’m the government, and I’ve agreed to give out this pot of money, I am happily handing out pieces of pie at the market,” she said. “Whereas if I’m the government who’s being sued individually, I am not happily giving you anything, and I am striving, in fact, to defeat any attempts you make at getting money.”

 

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Patrick Lohmann
Patrick Lohmann

Patrick Lohmann has been a reporter since 2007, when he wrote stories for $15 apiece at a now-defunct tabloid in Gallup, his hometown. Since then, he's worked at UNM's Daily Lobo, the Albuquerque Journal and the Syracuse Post-Standard. Along the way, he's won several state and national awards for his reporting, including for an exposé on a cult-like Alcoholics Anonymous group and a feature on an Upstate New York militia member who died of COVID-19. He's thrilled to be back home in New Mexico, where he works to tell stories that resonate and make an impact.

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