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The rise and fall of J.D. Barnett

How a smart and aggressive lawyer made it big and lost it all

BY BRUCE LIVESEY

He ran one of Canada's "leading guerrilla consumers' rights legal firms" after launching class-action lawsuits against some of the country's biggest corporations. He was dubbed a "class-action king," while he referred to himself as an agent for social change and a mouthpiece for the poor and downtrodden.

He is James Douglas (J.D.) Barnett, a 39-year-old Etobicoke-based lawyer and consumer advocate who tilted at the windmills of the corporate and legal establishments, becoming a minor media darling along the way. By his mid-30s, he had a dozen offices around Toronto and was running a bustling real estate, litigation and consumer law practice.

Then it all collapsed. In 1998, the Law Society of Upper Canada suspended him for writing a "death list" aimed at his fellow lawyers and alleged that he had misappropriated funds, with disciplinary proceedings pending. Overwhelmed by despair, Barnett had a breakdown and tried to commit suicide. Soon afterward, his practice closed, and now he is apparently unemployed in Mississauga.

Since then, disturbing allegations have emerged about the way Barnett ran his practice, claiming that he disregarded Law Society rules and abandoned most of the lawsuits he instigated. Last year, two of Barnett's former law clerks launched a $125 million lawsuit against him, alleging that he might have hidden large sums of money in offshore bank accounts and had plans to flee to Latin America. "At the time I launched the lawsuit, I figured he was worth millions," says plaintiff Bob Salvador, 49. "What we want is to move on to trial quickly and find out."

Barnett's lawyer asserts that the allegations are unfounded, but he wouldn't agree to put eye in contact with his client, citing Barnett's fragile mental health. Calls to Barnett's former girlfriend, Merle Donawa, and business associates also proved fruitless, and Barnett hasn't appeared at any legal proceedings against him since his breakdown.

Is Barnett to be pitied as a psychologically incapacitated person being relentlessly pursued by disgruntled former colleagues for money he no longer has -- if he ever had it? Or has he devised an elaborate ruse to keep his creditors, the Law Society and former clients at bay?

"I have no idea," says Salvador. "You never know the real game he is playing. His favourite phrase was, 'If it's not being done diabolically, it's not worth doing.'"

Barnett was a rebel who considered himself an innovator. Called to the bar in 1986, he worked briefly for a Bay Street law firm before growing disillusioned with "waiting for your senior partner to die so you can get a corner office," as he put it to one reporter. In 1987 he set up his own firm, focusing on real estate law.

Barnett had intelligence and drive. "He must have an IQ of 300," recalls Salvador. "He could have two phones with people talking on each and switch back and forth using the mute button, while holding a meeting and typing on his keyboard. And people wouldn't know he was having other conversations."

Barnett considered all lawyers who worked for him "independent contractors," ensuring that if a mistake were made on a file, it was theirs. Barnett would meet with clients initially, then hand them off to one of his contracted lawyers -- although he did little checking on them, despite the fact that correspondence went out on his letterhead. One of his lawyers, Sam Campese, has said that Barnett never did a real estate transaction or title search from beginning to end.

Instead, Barnett's primary role was to market his firm -- which he did brilliantly. He offered low prices, and allowed his firm's name to appear in a real estate agent's newspaper ad. In 1994, he promoted a "Lawcard" credit card. He appeared on TV and did interviews and seminars for home buyers.

By the early '90s, Barnett's firm was processing hundreds of real estate deals a month. His staff eventually grew to more than 40, and in 1991 he bought a mansion in Mississauga which was valued at $855,000 last year.

But in 1993, Barnett's workaholism cost him his marriage. His wife was his office manager, and the practice fell into chaos after she left. Moreover, clients and other lawyers began complaining to the Law Society about delays in receiving documentation from Barnett and not being able to reach him. One client, Pierre Julien, hired Barnett to pursue $5,000 he'd paid as a deposit. Yet for over two years Julien had a hard time reaching him. Eventually, he took the case to another lawyer, and the Law Society said Barnett "failed to represent his client in a competent, diligent and efficient manner."

After conducting an investigation, the Law Society alleges that Barnett is guilty of professional misconduct in relation to his handling of $150,151.20 between 1992 and 1996 held in his mixed trust account on behalf of all his clients. Disciplinary proceedings are pending.

In 1993, the Society tried to persuade Barnett to enroll in its Practice Review Program to help him reduce his client complaints. He resisted. As complaints accumulated, the Society's discipline committee began an investigation. Its 1997 report said Barnett emphasized generating clients over professional responsibilities. "He has treated the practice of law as one of general commerce. That is offensive," the report said. They also found his advertising methods and "Lawcard" problematic.

Barnett's defence was that the problems were due to his ignorance of the Law Society's regulations and the fallout after his wife left. He pointed out that only a handful of clients complained among the 4,000 cases he dealt with in his first six years. Nevertheless, in 1997, the Law Society suspended Barnett for one month and fined him $5,000.

Barnett was angered by the criticism, especially from his competitors. In 1995, he drew up a bulletin for his staff. Labelled "Monthly Lawyer Death & Courtesy Lists" and "Most Confidential," it listed the names of 38 lawyers -- including Laura Legge, a Law Society bencher. "For any lawyer on this list, we must make life very hard, and screw them up any way we can," he wrote. "The main purpose is for word to spread among the legal community that if you fuck with J.D. Barnett, bad things will happen to you." The bulletin suggested ways staff could achieve this, including sending documents late and badmouthing lawyers to real estate agents.

Barnett clarified that the word "Death" should not be taken literally, but his staff was horrified. He withdrew it, but it would come back to haunt him.

CLASS-ACTION KING

Barnett might have run his firm in obscurity if he hadn't seen the potential in class-action lawsuits. One of his first was typically audacious: in 1995 he sued Quebec Premier Jacques Parizeau and the Parti Québécois on behalf of all Canadians, arguing that the PQ's separatist agenda was harming the country. Assuming the role of lead plaintiff, he demanded $198 billion in damages.

Barnett's use of class-action lawsuits took off in 1996 after he met Salvador, a paralegal who set up a consumer rights department for him. In Salvador, Barnett found a kindred spirit -- aggressive and eager to challenge corporate interests. Over a two-year period, Salvador helped Barnett launch 30 class-action lawsuits, seeking more than $12.5 billion in reparations.

In 1996, they sued DeVry Inc. for $400 million on behalf of DeVry students who felt ripped off by the allegedly substandard education they were offered. They also launched a $10.67-billion lawsuit against Zellers and another retailer for selling blinds that contained lead. Other corporations they went after included Chrysler Canada (over a defect in minivans), Microsoft (over Internet billing irregularities) and London Life (over alleged false promises to insurers).

In 1997, Barnett launched a $300-million suit on behalf of a woman who got a headache on a Northwest Airlines flight because of people smoking. The papers were served at Pearson Airport by a process server wearing a gas mask.

For Barnett's staff, those were heady times. Allan Szuch, a paralegal, says they suspected they were being spied on. "There were hundreds of millions of dollars involved," says Szuch. "What was it for a big corporation to hire a private investigator to follow us?"

But by fall 1997, the Law Society was investigating Barnett over the "death list" -- which had been leaked by a former employee -- and for possibly misappropriating client monies. Meanwhile, he didn't have the resources to take the cases forward. Only one of his suits was certified, and many were thrown out, including the DeVry and Zellers cases.

Other clients also complained. James and Evagelia Tsiagos hired Barnett after they were sued over a dispute with a business supplier. Barnett failed to appear at the hearings, but sent them a bill for $4,476.88 -- of which they paid $3,000. In the end, the Tsiagoses had to hire another lawyer to settle the case.

The couple had Barnett's bill assessed by the courts, but Barnett didn't appear at the assessment hearings, either -- and was fined $500 for that. Prior to another hearing in December, 1997, Barnett sent letters saying he couldn't attend because he would be recovering from plastic surgery on his stomach and chin. "It was really necessary surgery," remarks Victoria Tsiagos Politidis, the Tsiagoses' daughter, sarcastically. An assessment officer eventually found that Barnett had overcharged the Tsiagoses by $3,029.40. To date, "he's not paid anything," says Politidis. He did offer to pay the Tsiagoses $500 last year as a settlement, but they turned him down.

Meanwhile, Salvador claims Barnett's employees were unhappy because of cash-flow problems -- though Barnett seemed to have money for plastic surgery and a hair transplant. And documents needing his signature remained unsigned for weeks. "In retrospect, he was not his normal self," says Salvador. "He was very withdrawn."

By March, 1998, the relationship between the two men had deteriorated to the extent that Barnett fired Salvador. But in a four-page termination letter, he wrote, "This is the saddest day of my life, even sadder than my divorce or separation dates, because unlike my ex-wife, you are a person who deserves the highest respect and regard."

That June, the Law Society announced it was suspending Barnett for six months over the "death list," saying, "Behavior such as this contributes directly to what we in the profession would hope is an undeserved reputation for sleaze." Barnett was remorseful, saying it was "wrong and stupid" to write the bulletin.

Two months later, Barnett tried to commit suicide. In a deposition, Donawa said she found him in a bathtub in his mansion after he tried to slash his wrists. Since then, he has been in and out of hospital at least four times and received counselling while his offices were closed and files given to other lawyers.

Last year, just as Barnett's mansion was about to be sold, Salvador and another former paralegal, Miroslava Price, launched their $125 million lawsuit seeking what they claimed were unpaid wages. Salvador says the sum is high because it represents potential winnings from the class-action lawsuits he researched -- although only a couple of those are proceeding.

Salvador believes Barnett might have hidden money abroad. In the months leading up to Barnett's breakdown, Salvador's court submissions allege that he was accumulating information on offshore bank accounts and on moving to Costa Rica.

In court motions, Salvador cites a note, allegedly written by Barnett, in which he says he plans to find a bank in the Bahamas and "get a letter in advance about procedure for transferring a large amount of cash." Salvador also alleges that Barnett ordered two "camouflage passports" and books explaining how to hide money offshore. None of the allegations has been proven in court.

Was Barnett planning an escape? His lawyer, David Boghosian, denies it. In September, the court allowed Boghosian to respond to the allegations. "Every juicy item in those motions is being denied," he says.

Indeed, Barnett's statement of defence calls many of Salvador's assertions "irrelevant, inflammatory, scandalous, prejudicial and improper," and says he does not owe Salvador or Price any money. Donawa stated in an affidavit that the allegations of Barnett's plans to flee were without foundation. Court documents state that Barnett has not worked for two years, and Donawa testified that Barnett owes her $30,000 and Revenue Canada $12,000, and "is barely making ends meet."

Meanwhile, Boghosian describes Salvador's lawsuit as harassment, calling him "obsessed" in pursuing a "ridiculous" case against a psychologically unwell man. "He is obsessed with bringing [Barnett] down," he says.

Whether Barnett is truly ill and destitute or has managed to create an elaborate front to hide behind remains unclear. Either way, it will add another bizarre chapter to his story.

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