FORT WORTH, Texas -

This time, I’m going to share the story of how I learned the hard lesson that “everything you say can and will be used against you in a court of law.” I did a presentation recently on the importance of compliant advertising and told this story.  The audience responded favorably, so I think it is worth sharing again.

Regular readers of this column know that I often refer back to the first decade or so of my legal career when I had the crazy idea that I was a trial lawyer. I worked for a law firm filled with lawyers that fancied themselves as such, and since I was the youngest, I was at the bottom of the barrel and got to work on the cases that nobody else wanted. Thus was my introduction to working with car dealers and auto finance companies. 

One of my early cases involved a vehicle that had a transmission problem. Although my client had only sold it less than two weeks before the transmission gave out, he insisted that “AS -IS means what it says” and refused to do any repairs or offer the customer back the down payment.  Not surprisingly, a demand letter from the customer’s lawyer arrived quickly, with threats of all sorts of nastiness. That didn’t budge my client, though, who took the “we’ll see you in court” approach despite objections from his young and well-intentioned counsel. 

Long story short, we wound up trying the case, which other lawyers in my firm soon came to refer to as “the butt whooping.” It was a lousy set of facts because there was no question that the transmission was in bad shape at the time of sale since my client had previously repossessed it from another customer that had complained about it.  To make things worse, the plaintiff was a single mother, saved up six months for her down payment, and was very sympathetic. It also didn’t help that the consumer’s lawyer was a wonderful advocate and commanded the courtroom. 

Oh, he was also really smart and had been trying consumer cases for decades. He knew he had a strong factual case, a compelling client and a defendant that didn’t want to settle. He wanted to get in front of a jury as soon as possible, so he didn’t waste time with a lot of pre-trial discovery, and since my client didn’t want to run up his own legal bill, we didn’t either, much to my dismay. In the opening statement, he argued to the jury that “AS-IS” isn’t a license to rob, cheat and steal from the public. There’s a legal concept called a warranty of merchantibilty and fitness for a particular purpose, which he said was breached.  As you can imagine, every juror put themselves in the position of the consumer and was nodding in agreement. 

Next, my adversary did something I thought was really clever, and taught me a lot about how to build and try a case. I expected him to call his client as a witness first, so he could question her and walk the judge and jury through her story. Instead, he called my client as the first witness, and rather than focus on the vehicle at issue, he attacked years of advertising that my client had published. Ads that emphasized “we treat you like family,” “we care about our community because we live here, too” and “dependable transportation at a fair price” were introduced into evidence. The other lawyer relentlessly questioned my client on these statements and whether he truly meant them or just said them to get business. He built the foundation of his case on the perception of the dealership that my client promoted in the community over the years. Only after doing that did he turn his attention to the vehicle in question and the transmission issue. The juxtaposition was obvious.

Needless to say, it was not a good day to be a car dealer or its lawyer. The plaintiff won and got awarded actual and treble damages, and some pretty stout attorney’s fees. My client got a rather rude wake-up call about how judges and juries view a sympathetic customer that got the short end of the stick.

Although it isn’t a pleasant memory, I tell this story because I think it’s important for dealers to realize that this can happen to you. The lessons haven’t changed.  What you say in your advertising does matter, perhaps even more so today because the rampant use of social media gives plaintiffs a lot more ground to cover and possibly use to its advantage.  Statements you make can and will be used against you.  Your business practices better match up pretty closely to the perception that you put out in the public, because you may one day have to defend yourself. 

So what’s a dealer to do?  Take an honest look at your business from a compliance perspective and look at it through the consumer’s eyes.  Have a strong complaint management process and objectively evaluate complaints. Evaluate your advertising and social media content and make sure you can back up what you say. Listen to your customers, show you care, and take responsibility when something isn’t right. If you receive a demand letter, look at the facts from both sides and ask your lawyer to evaluate your case.  Remember, the best time to settle is early, before there are a lot of legal fees at risk.  

Steve Levine is an auto finance lawyer with 30 years of experience helping and protecting car dealers and finance companies. He is chief legal and compliance officer of Ignite Consulting Partners, which offers compliance, operational and best practices guidance. Ignite’s team has broad experience working in auto finance, which allows them to develop successful strategies, overcome internal obstacles and implement meaningful change. You can send a message to info@IgniteCP.com to learn more. Follow Steve on Twitter @LawyerLevine for compliance and industry related content.