The plaintiffs’ lawyer that Florida insurers love to hate could see his two-year suspension completed soon. But allegations by the state Bar could result in new sanctions or further suspension.
A 25-page complaint charges that Miami attorney Scot Strems and his law firm in 2018 informed a client of a settlement with a property insurance company but then secretly settled with the insurer for twice as much and attempted to pocket a large, unauthorized fee.
“Even more troubling is the fact that respondent maintains that this pattern of conduct is how his firm handles its business in the ordinary course,” reads the complaint, filed by the Bar’s grievance committee with the Florida Supreme Court.
Strems also provided false and misleading information to the Bar when investigators asked him about his actions in representing the 85-year-old homeowner, Margaret Nowak, in a Hurricane Irma claim, the Bar argued.
“The thrust of this case is simple: Respondent betrayed his ethical obligations to his elderly client in order to enrich himself at that client’s expense,” the complaint reads. “As the record exhaustively shows below, respondent committed a litany of ethical violations both in his representation of Mrs. Nowak, and during the Florida Bar’s investigation.”
The complaint was filed in 2020 but has seen little coverage until now. Strems’ attorney, Ben Kuehne, pointed out that the case is on appeal to the Florida Supreme Court, and that a referee in the matter has recommended that disciplinary action run concurrently with Strems’ suspension for other Bar rule violations.
Strems had become the poster child for what insurance groups said was widespread abuse of the legal system by some Florida plaintiffs’ attorneys. He was charged with filing thousands of suits against insurers, many of them on the same claim, and was suspended from law practice in 2020. The Bar had asked for disbarment, but a referee in the case recommended a two-year suspension. The Supreme Court granted an emergency suspension in June 2020, noting that the lawyer is suspended until further order from the court.
The Nowak case would not affect his current suspension but could lead to new sanctions, said Jennifer Krell Davis, communications director for the Florida Bar.
The Nowak matter began in 2017 when the homeowner filed a claim with her insurer, Florida Peninsula Insurance Co. The Bar complaint did not explain how Nowak came to hire the Strems Law Firm, but the contingency agreement noted that the firm would charge a 25% fee. If the claim went to litigation, the firm would receive 30% of the award or the court-awarded amount, whichever was greater.
Strems’ firm hired Contender Claims Consultants, a public adjuster firm, which estimated that Nowak’s home had suffered $64,000 in damages in the storm. Contender Claims is also well-known to Florida insurers. Carriers and attorneys have said the firm worked closely with Strems to exaggerate damages in many assignment-of-benefit and other claims. In May, the adjuster firm, a restoration company and Strems agreed to settle for $1 million a lawsuit brought by Citizens Property Insurance Corp. that had accused the principals of fraud in hundreds of insurance claims.
In the Nowak claim, Florida Peninsula informed Strems’ firm that it would settle the claim for $30,000, leaving $22,500 for the homeowner and a $7,500 attorney fee for Strems. One of Nowak’s sons agreed, but Strems law firm attorney suggested he could get a little more, the Bar complaint explained. Despite several attempts by Nowak’s son to reach Strems’ firm in the following weeks, though, the law firm did not readily respond.
It turned out that Strems’ firm had negotiated a $45,000 settlement with Florida Peninsula, and arranged for the insurer to send a $22,500 check for Nowak and another $22,500 check to the Strems firm. When informed of the 50% attorney fee, Nowak’s sons objected strenuously.
“I actually just reviewed the documents and I am shocked to see that you actually secured an additional $22,500, but none of which will go to benefit my mother,” Ken Nowak wrote to a Strems staff member. “That is unacceptable to me. Unless you can net my mother the $30,000, we will reject this settlement.”
The law firm responded that Florida statutes allow for higher fees. But Dennis Nowak fired back.
“The Florida statute cited in your closing statement does not override the provisions of your engagement agreement and, in any event, applies only to court-awarded fees, not negotiated settlements,” he wrote. “So unless you are telling me that this case went to judgment, the fee statute you refer to is irrelevant.”
After that, the Strems firm stopped pursuing a settlement and litigation, except to file a notice with the court that the matter had been “amicably settled.” The court closed the file.
“To date, the global settlement agreement of $45,000 has not been consummated,” the Bar said in the complaint. “Based on information and belief, (Florida Peninsula) still has the settlement proceeds, and stands ready to tender them. To date, Mrs. Nowak has not received a dime due to respondent’s representation in this matter.”
It wasn’t clear if the Nowak family complained to the Bar. But when the Bar investigators asked Scot Strems about the case, the lawyer offered a “gross misrepresentation of fact.” Strems said Nowak had never been a client and that he had not personally provided legal services, the Bar said. He also failed to turn over all documents requested by the investigators but did say that the attorney fee practice was “standard procedure.”
“From the foregoing facts, it is apparent that the allegations in this complaint are not the result of an isolated indiscretion,” the Bar complaint argues. “Rather, the misconduct alleged in this complaint is systemic within respondent’s practice.”
In answer to the Bar complaint, Strems’ attorneys argued that the case “was, at its essence, a fee dispute between an experienced law firm and its client and her sophisticated sons concerning the amount of legal fees to which the law firm was entitled for its successful representation of the client in a first-party property lawsuit against a recalcitrant insurance carrier.”
The appointed referee in the case, Miami-Dade Judge Dawn Denaro, concluded that the fee dispute could have been avoided with better communication between the parties and found Strems violated a Bar rule that requires informed communication with the client.
“Disappointed with the referee’s findings and conclusions, the Florida Bar presents its appeal by failing to present the record facts in the light most favorable to the referee’s findings and arguing
factual matters in a manner inconsistent with the scrupulously detailed Report of Referee,” Strems’ answer brief reads.
After Strems’ 2020 suspension, the Bar moved to find Strems in contempt over the way his law firm was dissolved, with most firm attorneys simply moving to a new firm known as The Property Advocates. The referee, denied the motion last year. But the Bar is now urging the state Supreme Court to take a harder line, arguing that the referee misunderstood the nature of Strems’ actions, which were aimed at avoiding some of the impact of the earlier suspension on his law firm.
Strems also notified his clients of his suspension in a way that the Bar said was misleading, Bar attorneys wrote.
Correction: An earlier version of this article included an incorrect date on the Nowak case complaint. The complaint was filed in June 2020 and the case is now on appeal to the Florida Supreme Court. The Insurance Journal apologizes for the error.
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