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Bankruptcy law firm files for bankruptcy

Posted Jan 23, 2014 8:00 AM CST
By Debra Cassens Weiss

A bankruptcy law firm in Michigan has filed for Chapter 11 protection.

Frego & Associates, one of the state’s largest bankruptcy firms, filed a Chapter 11 petition last month, according to the Wall Street Journal blog Bankruptcy Beat. The firm hopes to use the bankruptcy to lower its advertising costs and renegotiate payments to a former firm of name partner James Frego.

The former firm, Frego & Brodsky, dissolved amid a dispute between Frego and his former partner, Dennis Brodsky, Bankruptcy Beat says. Brodsky says in a lawsuit that he paid more than $120,000 for a half interest in the firm, but Frego got buyer’s remorse. He alleges that Frego gave him too much work and spent too much of the firm’s money—allegations denied by Frego.

Brodsky says he was informed that he had been ousted from the firm when he returned from hip surgery in 2009 and found that the locks had been changed on the firm’s main office, according to the blog account.

The receiver for Frego & Brodsky is seeking $220,000 in fees paid to Frego’s new firm for business that originated with the former firm.

Frego & Associates allows clients to file for bankruptcy and pay some of their attorney fees later. According to Bankruptcy Beat, the business model appeals to clients but it “can also lead to a lot of unpaid bills.”

Frego tells Bankruptcy Beat that his firm's business remains steady and its lawyers will continue to file about 100 bankruptcy petitions each month for its clients.

Background Photo Credit: Kasia Broussalian © 2015