One of Minnesota's oldest bankruptcy law firms has filed for Chapter 11 bankruptcy protection after losing a five-year legal spat with another bankruptcy law firm over mutual claims of false advertising and "click fraud."
St. Cloud-based LifeBack Law Firm, which has eight Minnesota offices, filed for protection from creditors Saturday in U.S. Bankruptcy Court in Minnesota. The petition notes LifeBack owes $290,000 to Hoglund, Chwialkowski & Mrozik, part of Hoglund Law in Roseville.
LifeBack President Wesley Scott could not be reached for comment.
According to the bankruptcy filing, the money owed to Hoglund stems from a court-approved arbitration award.
The bankruptcy filing is the culmination of a legal wrestling match that dates back five years.
In January 2019, Hoglund first sued LifeBack in Hennepin County District Court alleging false advertising, unfair enrichment, contract interference and deceptive trade practices.
Hoglund mainly contended that LifeBack, formerly Kain & Scott, had engaged in a costly scheme of "click fraud."
Hoglund accused Scott of "excessively" clicking on trigger words on the internet in an effort to force Hoglund's paid advertisements to appear again and again on the screen. The repetitive action was allegedly intended to interrupt Hoglund's online marketing efforts and to make the law firm quickly spend through its entire Google advertising budget and render its advertisements ineffective.
Hoglund's lawsuit said that about 63% of its bankruptcy practice revenue was generated from Google Ads online marketing. At the time of its lawsuit, Hoglund had been using Google Ads for almost 15 years.
LifeBack denied the allegation and countersued Hoglund with its own list of complaints, most of them identical to Hoglund's allegations.
In February 2023, the case went to arbitration.
There LifeBack alleged Hoglund engaged in false advertising because Hoglund was listed on Google as having more than 200 law-office addresses in multiple states. LifeBack asserted Robert Hoglund had just one Roseville law office.
In May 15, 2023, the arbitrator, retired Hennepin County District Judge Thomas Fraser ruled against LifeBack, saying it had engaged in click fraud. Fraser issued an interim financial award in Hoglund's favor.
Fraser's ruling acknowledged there were many incorrect addresses listed online for Hoglund, but said the error was made by Google, not Hoglund. Fraser also noted that Hoglund "spent a lot of time and money attempting to eliminate Google's unsolicited, erroneous compilations."
LifeBack appealed.
In late January 2024, Hennepin County District Court Judge Francis Magill upheld the prior arbitration ruling in Hoglund's favor. He also denied LifeBack's motion to dismiss the award and various aspects of Hoglund's original lawsuit.
Judge Magill further ruled the Hoglund law firm has the right to be reimbursed attorney fees.
Shawn Perry, Hoglund's attorney, said LifeBack attorneys signaled during a meeting last week that their client was considering a bankruptcy filing.
"And that is just what they did," Perry said.
According to the bankruptcy filing, LifeBack has nearly $1.2 million in assets and nearly $1.8 million in total liabilities. Liabilities include the $290,000 owed to Hoglund, $293,000 owed to Scott and $1.18 million in property against which creditors have claims.
LifeBack, according to its website, specializes in Chapter 7 liquidations and Chapter 13 debt-repayment plans. The company has been operating since 1972 and has offices in St. Cloud, Minneapolis, St. Paul, Eagan, Maple Grove, Duluth, Brainerd and Eden Prairie.
