Ford Motor Co. is accusing three California law firms of running a years-long scheme to defraud automakers by inflating legal fees in Lemon Law cases. Ford filed a federal lawsuit on May 21, alleging that the firms conspired to overbill in consumer cases, knowing California law requires automakers to pay legal fees when they lose.
Ford alleges the law firms built a fraudulent and highly profitable operation by abusing the court system, misleading clients and using false billing to steal millions from automakers.
Not to mention, “‘hoodwinked all of the judges and lawyers” involved in the cases.
Ford sues California attorneys
According to court documents, Ford alleges a network of attorneys and law firms conspired to submit fake billing in thousands of cases. The scheme came to light about four years ago, when Ford’s legal team spotted suspicious numbers during an audit.
Over several months, investigators said they found attorneys billing for more than 24 hours in a single day and attending court hearings in distant locations on the same day.
Ford claims attorney Steve Mikhov and his firm, Knight Law Group, were the scheme’s ringleaders. The lawsuit uses an example from 2016, when one of Mikhov’s former partners, “billed more than 20 hours per day on at least 66 occasions, 34 of which exceeded 24 hours, including an ostensibly heroic but physically impossible 57.5-hour workday.”
The company claims the scheme involved fake time entries that the firms submitted through email and mail, with some entries dating back to 2018 and still used to seek legal fees as recently as September 2024. The automaker giant claims The Altman Law Group and Wirtz Law APC also participated in the alleged conspiracy scheme.
According to the documents, one of the defendants said they averaged nearly 484 billable hours per month or about 16.5 hours a day, including on the weekends. Records show she did not participate in any trials during that time but instead billed for reviewing and drafting legal documents.
The lawsuit states that under the Racketeer Influenced and Corrupt Organizations Act (RICO), all parties must take responsibility for their actions and compensate Ford for damages. Congress passed the RICO Act in 1970 to target organized crime by prosecuting entire criminal enterprises rather than just individuals, allowing prosecutors to link a pattern of crimes to a broader operation.
What is California’s Lemon Law?
California’s “Lemon Law,” also known as the Song-Beverly Consumer Warranty Act, allows car buyers who win their cases to recover costs and legal fees from the auto manufacturer. The law states that if a manufacturer fails to fix a serious warranty issue after multiple attempts, the car buyer may receive a replacement or full refund.
In order to be eligible, their lawyer must provide billing records and timesheets explaining how their time was used on the case. The attorney requesting the fees must then prove that those charges are fair and properly documented. Ford said it’s this law that attorneys allegedly exploited by seeking compensation for work that was never performed.
“Ford entered into and paid to Defendants based on claims for fictitious legal fees were fraudulent; and the payments Ford made to comply with such court determinations and settlements were unearned and unwarranted,” the complaint said.
The lawsuit also alleges that other auto manufacturers might also want to check their books. According to Ford, the defendants in this case represented consumers in claims against General Motors, BMW, Stellantis and others.
What’s next?
Their records said that, among all the attorneys and law firms, the defendants have filed over 5,000 warranty cases against Ford since 2015. Ford claims it resulted in the company paying more than $100 million to the defendants. They’re asking the court for their money back plus damages according to the RICO statute. Ford is seeking a jury trial to settle this matter.
None of the defendants have commented on the complaint by Ford.