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Usury--Attorneys' Fees--Bank's Collection Of In-House Legal Department Costs On Default Judgments Constitutes Usury And Illegal Fee-Splitting, William Kirschner

Fordham Urban Law Journal

At the request of the Attorney General, the Administrative Judge of the Civil Court of New York brought an action against Chemical Bank to recover all attorneys' fees collected by the bank in obtaining numerous default judgments during 1973 and 1974. These judgments resulted from unpaid consumer loans and were based on certain notes signed by each borrower. The consumer notes included provisions for the recovery of attorneys' fees even though the defaults were not prosecuted by an independent law firm but by the bank's salaried in-house counsel. The plaintiff in Thompson v. Chemical Bank argued that Chemical Bank, by …