'Pre-Settlement' Shakedown By ACS:Law Doesn't Seem Quite So Profitable

from the perhaps-not-such-a-good-business dept

Mon, Sep 27th 2010 1:37pm — Mike Masnick

Since late last week, people have been submitting the news that ACS:Law's email archives were revealed and spread widely across the internet late last week. Once again, I find this action somewhat troubling. Like the DDoS attacks that resulted in this leak, I do worry about the backlash that it creates, and I find it a bit shameful that people feel the need to stoop to dirty tricks to try to prove a point or make a statement. I've been debating whether it's worth reporting about the leak at all, or any of what's been found out, and I'll certainly skip over the mundane or merely salacious bits. However, some of the information that's being reported is important in understanding how these "pre-settlement or we'll sue" businesses work, and that's information worth sharing.

ACS:Law, of course, was one of the first, and certainly the most well-known, of the law firms practicing this form of "legal threats as a business model." Since then, however, many other law firms (in Europe and the US) have jumped into the game with much fanfare. ACS:Law's principle, Andrew Crossley, regularly bragged about how profitable his enterprise was, and that certainly was likely some of the thinking behind others trying to get in on the action. However, it appears that, from the data gleaned in the leaked emails, the effort really hasn't been all that profitable.

TorrentFreak has a detailed breakdown showing not only what percentage of people actually responded or paid up to the threat letters, but also what the revenue splits were, and how much everyone made -- covering a period of two years. The results are seen below:


Client	Money Recovered	Paid to Client	Paid to monitoring company	Paid to Firm

Digiprotect	£346,607.90	£151,625.86	£45,060.21	£131,048.38
Topware	£68,127.47	£10,880.48	£10,881.48	£23,551.18
Techland	£22,474.85	£795.93	£590.00	£2,228.43
Reality Pump	£34,866.90	£3519.16	£4,645.28	£7,628.20
Media C.A.T	£164,681.00	£35,350.57	£15,066.06	£55,957.20

Total	£636,758.22	£202,172.00	£76,243.03	£220,413.39

If this truly is an accurate accounting of the money collected and split up, it's really not that impressive. The total amount collected is just a smidgen over $1 million dollars, which means an average of about $500,000 per year. And while it's noteworthy that the law firm ends up with more than the actual copyright holder (funny how that works, huh?), the numbers indicate that Crossley's firm brought in about $350,000 in revenue to his firm over two years -- or about $175,000 per year. It's worth pointing out that Crossley did not appear to work alone, but had at least some staff, so you'd have to reduce that even further -- and you're basically talking about what your average young attorney can make on a job. It's not bad, by any stretch of the imagination, but it's not exactly rolling in the dough. A report from a few years ago about UK starting legal salaries for lawyers fresh out of school put the amount at £63,000 to £65,000 (basically, around $100,000 US), and noted that it was rising quickly. So depending on Crossley's costs for rent, staff and other expenses, it sounds like he might be making a bit over what a recent law school grad can make.

That said, it's also worth pointing out that the biggest copycat firm in the US, which goes by the name US Copyright Group, appears to be sending out a much higher number of letters early on and is asking for noticeably higher fees to "settle," though it's also filing an actual lawsuit (which entails additional costs). ACS:Law, of course, is famous for sending out letters and never actually suing, which helps keep its costs lower.

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Filed Under: andrew crossley, business model, copyright, pre-settlement letters
Companies: acs:law

29 Comments

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Rabbit80, 27 Sep 2010 @ 1:51pm

Salaries
The salaries of the staff were revealed in the emails. The paralegals earned very little - some on £8.50 per hour, some on £18000 per year.
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- Mike Masnick (profile), 27 Sep 2010 @ 2:06pm
  
  Re: Salaries
  The salaries of the staff were revealed in the emails. The paralegals earned very little - some on £8.50 per hour, some on £18000 per year.
  
  I was assuming it's not much, but, honestly, look at the amounts and there's not much room to give. Even at those low amounts, he didn't make that much.
  [ link to this | view in chronology ]
Crosbie Fitch (profile), 27 Sep 2010 @ 1:55pm

Money Extorted
That should be "Money Extorted", not 'Money Recovered'.

And how much on average has been squeezed out of the fundamentally innocent individual for their act of cultural liberty, that may or may not have actually been infringing?
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Anonymous Coward, 27 Sep 2010 @ 1:55pm

I would suspect he was doing quite well for himself, considering that he was toying with the idea of buying a "lambo" for himself.

"What's a paralegal do?"

"The same thing as the guy who's name is on the door, only I get $11 an hour so that he can charge $200."
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- Jay (profile), 27 Sep 2010 @ 2:03pm
  
  Re:
  Yes, but he ended up buying a jeep.
  
  Regardless, this may be used to put him in even MORE hot water with the Tribunal.
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  - Anonymous Coward, 27 Sep 2010 @ 3:41pm
    
    Re: Re:
    Someone on torrentfreak commented on that:
    
    He also has terrible taste in cars, the Jeep Compass 2.4CVT does 20 miles to the gallon, has a terrible whiney geabox and handles like a barge. They only sold about 300 in the UK then Jeep dumped it after a year. He probably got it as they were heavily discounting them at the end, so more evidence his finances are not that good.
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- Mike Masnick (profile), 27 Sep 2010 @ 2:07pm
  
  Re:
  I would suspect he was doing quite well for himself, considering that he was toying with the idea of buying a "lambo" for himself.
  
  It sounds like that was just him bragging (again) with little basis in reality.
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Peter Boyle, 27 Sep 2010 @ 2:12pm

ACS:Law
As an old retired 60's Civil Action advocate I applaud the actions, ingenuity, and perseverance of the various 'anons' that brought this to public attention in a way that can not be hidden in legalese, spin and cover ups. I wish I had the technical expertise to fight back this way. Money = Power in government, the courts and the media. The internet was designed to be a free and open sharing of information. Basically, if you put something on the internet it WILL become free to all, even if it wasn't designed to be. Just as we, as individuals, have little chance of fighting them in court or in government, they have little chance of beating us on the web...if we all use our abilities for the 'liberation of information' freely. While I HAVE to pay for access to the internet, I REFUSE to pay for content.
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- Crosbie Fitch (profile), 27 Sep 2010 @ 2:30pm
  
  Re: ACS:Law
  You should certainly have no compunction about making and sharing your own copies and derivatives of published works, but it would be churlish to refuse to pay artists to produce and publish more.
  
  Is there no artist you would pay even a dollar to if they produced a new work in exchange? No favourite musicians or novelists? No bugs in software you'd pay a small amount to have fixed?
  
  I don't think there's anything wrong in paying artists to produce new works.
  
  The wrong is either in being forced to pay (levy) or in being denied your cultural liberty (to grant a monopoly).
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- vivaelamor (profile), 27 Sep 2010 @ 3:26pm
  
  Re: ACS:Law
  "While I HAVE to pay for access to the internet, I REFUSE to pay for content."
  
  I find this statement troubling and feel it needs exploring. While you refuse to pay for content, do you seek out ways to support artists you like in other ways; such as the means by which you access that content, or buying merchandise?
  
  I often pay for content for the sole reason that by supporting an artist I help ensure that I have new content to enjoy. While relying purely on fan investment probably isn't a good business model for artists, as a fan direct payments can be a more useful way to spend your money than buying endless merchandise.
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Anonymous Coward, 27 Sep 2010 @ 2:14pm

Apparently those emails came about because someone exposed them to a public area outside the DMZ bla bla bla.

No tricks there, the government call those "target of opportunity".
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Rabbit80, 27 Sep 2010 @ 2:15pm

There are some more figures in his response to the SRA. As of July, the firm had collected over £900000
How much money has been recovered from alleged infringers by your firm in relation to file sharing matters. £936,570.72 1.3. How much of this money has been paid to each of the Clients as damages. Allan Eshuijs, Manuel Reuter & Yann Peifer £29,718.96 Media C.A.T. £103,235.35 Digiprotect £171,282.08 Topware £10,880.48 Reality Pump £3,519.16 Techland £795.93 1.4 How much money has now been paid to your firm in costs. £341,078.92"
http://acsbore.files.wordpress.com/2010/09/acs-law-response-to-sra.pdf - Page 11. On page 30 are salaries for anyone interested (no names tied to them although positions held are)
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cc (profile), 27 Sep 2010 @ 2:18pm

While the contents of the leak aren't that particularly interesting, the personal information of ACS:law's many victims are present in those emails. Apparently a list of over 10k names, addresses, bank details etc has been found (though I haven't looked for it personally).

That's terrible news, because the people on that list may now be set to suffer even more from ACS:law's evil scheme.

On a brighter side, a consumer group has reported ACS to the information commissioner and has announced it's planning to take legal action against them for not following proper data protection procedures.

More here:
http://www.privacyinternational.org/article.shtml?cmd[347]=x-347-566663
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- Anonymous Coward, 27 Sep 2010 @ 3:14pm
  
  Re:
  This one action alone is liable to wipe out any and all profit they ever gained.
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Anonymous Coward, 27 Sep 2010 @ 2:20pm

I know it's already been pointed out about the low salaries of the paralegals, but the recent law graduate earning £65,000 is a bit misleading.

Sure, they can earn that much if they secure a place at a Magic Circle law firm, but by in large, they won't. They'll end up as a two-bit, poorly paid lawyer at some pathetic law firm like ACS:Law.
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- Richard (profile), 28 Sep 2010 @ 3:12am
  
  Re:
  Earning is one thing - but in the UK barristers don't actually get paid straight away. A friend of mine, who earned the (then) record first year income of around £25k (it was a long time ago) didn't actually see the money for months - if not years.
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Anonymous Coward, 27 Sep 2010 @ 3:10pm

Conflicted
I'm conflicted.

One part of me thinks "Yah, f*** ACS:Law. They had it coming". But another part of me feels kinda sorry for all those people that got their info spilled all over the internet. I am also not entirely sure if DDOSing anyone is really gonna help. It just gives them more justification to lock down the internet.

But gotta say, it feels kinda good to see those scammers being hit hard.
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Anonymous Coward, 27 Sep 2010 @ 3:19pm

WTF????? "No bugs in software you'd pay a small amount to have fixed?"
So when did 'sell a crappy product cheap, and rake in the bucks 'fixing' the 'bugs' in the first release' become a valid business model... I mean what kind of company tries to pull off that kind of underhanded crap?

Oh wait.... PeopleSoft, Oracle, JD Edwards, Microsoft, Electronic Arts, Blizzard, etc, etc, etc.

Okay, you got me. I guess that's a perfectly valid business model for software that's been making companies money for years.

I hate it when something that sounds so stupid you wouldn't think it could possibly be true turns out to be what's actually happening in reality.
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- curtis (profile), 27 Sep 2010 @ 3:29pm
  
  Re: WTF????? "No bugs in software you'd pay a small amount to have fixed?"
  why don't you try writing some software and make it perfect for all users the first time. when you get done with that show us how you can walk on water and part the seas.
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Freak, 27 Sep 2010 @ 3:22pm

That reminds me . . .
I was looking through the news sites on this, and I do believe that BBC actually did accurately report on this.

Including that the anon group did it in retaliation, that ACS:law was a secondary target, that they are continuing to attack anti-file sharing sites, as well as the codename of the operation and, in an image, the name of the IRC channel used to organize the attacks.

http://www.bbc.co.uk/news/technology-11418962

I think I read another article on this subject from BBC yesterday, that was also accurate, too. Someone from BBC news is anonymous . . .
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- Anonymous Coward, 27 Sep 2010 @ 3:49pm
  
  Re: That reminds me . . .
  Either someone from BBC News is Anonymous, or just a good reporter (they exist).
  [ link to this | view in chronology ]
  - freak, 28 Sep 2010 @ 5:09am
    
    Re: Re: That reminds me . . .
    Well, this isn't the first time BBC has been the only main news source to accurately report on anon issues, and none of the images, for example, are found on other sites, even lesser news sites.
    In this case, I was surprised to see BBC be correct in some places where torrentfreak had made a mistake, for example.
    
    That indicates to me, that rather than hearing about anon through another source, that they are at the source themselves, and interested in the source material.
    
    But yeah, there's a possibility it could be only good reporting.
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IronM@sk, 27 Sep 2010 @ 5:02pm

If this truly is an accurate accounting of the money collected and split up...
...then it failed miserably. None of the figures add up. Not even remotely close.

�636,758.22 (extorted) - �498,828.42 (paid to...) = �137,929.80 (unaccounted for.)
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Chris, 27 Sep 2010 @ 5:37pm

Doesn't Seem Quite So Profitable
I've read through many of the emails and I pretty much came to the same conclusion as the author here. To me they seemed like a a new small business still figuring out how to operate efficiently. Andrew Crossley was getting e-mails all day long from people demanding money, whether it was the landlord, an employee, another law firm, a client, or from the city for trash being on the property. Then you have the monitoring guy start upping his fees, squeezing Crossley's margins even more. To be honest I began to mentally put myself in Crossley's shoes for a moment and sort of feel for the guy. In between all this are a couple e-mails back and forth between him and his daughter, and maybe I'm just a sucker but he's someone's Dad and I don't think their lives should be ruined.

From reading some of the back and fourth between him and a couple of his advisors, it did seem like they were trying to be on the up and up with everything.

Their main problem in my opinion was outsourcing the monitoring. They left the monitoring up to that guy Ali who was clearly not trustworthy. If they had a couple monitoring geeks in-house, I think it could have been a much better operation.
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- Richard (profile), 28 Sep 2010 @ 3:21am
  
  Re: Doesn't Seem Quite So Profitable
  In between all this are a couple e-mails back and forth between him and his daughter, and maybe I'm just a sucker but he's someone's Dad and I don't think their lives should be ruined.
  
  A pity he didn't think that way when he targeted people like these for his shakedowns.
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Chris, 27 Sep 2010 @ 5:50pm

on the cheap
By the way, another problem I saw was that they were trying to run everything on the cheap too often. They use ACT! software to keep track of offenders. I actually use ACT myself to keep track of sales calls and it works ok for me personally, but I couldn't see it being used in any serious organization. It's too buggy and limited. I wouldn't trust it with really important data. Also, they use OpenOffice instead of MS Office. Not really a big deal, I also use that, but them using ACT! and OpenOffice make me think they're that way with everything, look what happened to their website.

At the end of the day, I don't think these people felt they were doing anything wrong. They're in the business of using their status as a law firm to make a living, and they saw an opportunity in illegal file sharing. The problem is, their operation ended up looking more like a debt collection company than a law firm. Really that's exactly what it had turned into. They might as well have fired the paralegals and advisors, and just hire a bunch of telemarketer/debt collector types and pay them a commission based off what they could squeeze out of people.

But no, the real problem was they outsourced the monitoring and they had no way to really trust the results of the monitoring, plus it would have been much more cost effective in house.

They wanted the quick money without much effort and it looks like it ended up biting them on the ass.
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Wendy Jaimson, 28 Sep 2010 @ 6:56am

ISPs are investigating
Just got off the phone to my isp (Plusnet) who said theyve been getting loads of calls today about ACS:Law. Their website now has a section for concerned customers...

I told them I'd be using my connection to share the leaked secrets of the acs law firm scam...the customer service rep laughed ;) lol

mirrors up here: http://acslaw.blogspot.com/2010/09/breaking-news-andrew-crossleys.html
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Anonymous Coward, 28 Sep 2010 @ 8:54am

Payback
Let's not forget who started this. An anti-pirate company on behalf of the copyright fascists tried DDoS attacks on some filesharing sites. It seems someone failed to report that. And it seems DDoS was ok then. Not so ok now when filesharers retaliate.

ACS:Law scammers and extortionists getting away with. And it was all fine, wasn't it? Business as usual. They got the power and the money. Filesharers have no other recourse than to fight back with the only tools they have.

Let's not forget the key word here - Payback is a bitch, isn't it?
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Anonymous, 28 Sep 2010 @ 3:40pm

ACS:Law = legalised extortion
All UK citizens are encouraged to contact their ISPs and demand they release an official statement ensuring they will NEVER give up any details to the ACS:Law scammers and Andrew Johnthan Crossley.

Download and share the full leak: http://acslaw.blogspot.com/2010/09/breaking-news-andrew-crossleys.html

Don't let those around you get bullied by this scam law firm.
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