The legal blackmail business: inside a P2P settlement factory

When you make people this angry, they tend to complain—and that's just what happened to Crossley. Earlier this year, UK Consumer group Which? noted that it had "heard from more than150 consumers who believed they had been wrongly accused." One letter writer said, "My 78 year-old father yesterday received a letter from ACS law demanding £500 for a porn file he is alleged to have downloaded. He doesn’t even know what file sharing or bittorrent is so has certainly not done this himself or given anyone else permission to use his computer to do such a thing."
Reporters began following up on such stories. One reporter, from the Daily Echo in Bournemouth, e-mailed Crossley about a particular local case—an Aberdeen man who spent most of his time near Bournemouth caring for an ill relative.
"He is accused of downloading the track 'Evacuate the Dancefloor' on October 2 last year," write the reporter. "Mr [name redacted] says he was in Dorset at the time, not in Aberdeen where his IP address is registered, and that he has airline tickets and medical appointment records to prove it. He says he leaves his internet connection switched off when he's away and no one else has access to it. He has no interest in pop music."
There were other problems. One of the firms providing Crossley with data on infringers then began to get balky, wanting more money than Crossley wanted to pay before turning over its information. "This guy is stupid," Crossley noted in an email to a colleague. "And he MUST release ALL data to us. It is ours. We have a deal. I will go to court this afternoon if he does not give it to us."
As if this wasn't enough, Crossley was subject to repeated, probing questions from the Solicitors Regulatory Authority, which controls lawyers in England and Wales. The group had received 400+ complaints about his firm's behavior. This was a big deal; the SRA could put Crossley out of business, and he had been in trouble with them before.
Back in 2002 and 2006, Crossley was disciplined by the Solicitors Disciplinary Tribunal, which ordered him to pay around £5,500 in fines and penalties. In both of these cases, Crossley had not submitted an accountant's yearly report on his firm—needed under UK rules to show that a lawyer does not improperly hang on to client funds.
The problem appeared to stem from a lack of cash. At one point, he told the tribunal handling his case that his lack of paperwork was "because he had been unable to raise the money to pay the accountant who retained the papers."
Crossley suffered "an extended period of clinical depression in 1999" and then a stroke in 2000. "The effect of the stroke, which caused him to lose his sight altogether for a brief period, was that the Respondent could not work full-time for a period and as a consequence he quickly got into financial difficulties." The new investigation wasn't about accounting, but about claims that Crossley was shaking down his targets. Things were bad enough that one of his ACS Law employees noted, "We are constantly being reminded by infringers that we are under investigation by the SRA."
To defend himself, Crossley secured the services of another lawyer. "I am meeting with my retained lawyer today regarding the sra," he wrote. "He is Andrew Hopper QC and he literally wrote the sra rules!"
But Andrew Hopper, QC couldn't save Crossley from the SRA, even if he did write their rules. On August 20, the SRA referred Crossley—once more—to the disciplinary tribunal.
"Absolutely predictable political decision to 'fast track' and give the problem to someone else; therefore SRA is seen by Which etc to be 'doing the right thing' without them actually having to think at all or justify the decision," sniffed Hopper.
The Blackpool municipal government also objected to Crossley's tactics. ACS Law was contacted by Blackpool, which complained that local citizens "have been significantly distressed by your letter and feel compelled to pay. You say that your letters are not demands but compromise agreements, but any bundle of documents sent by a law 'firm' headed with the words 'Letter of claim; Infringement of Copyright' is likely to cause distress and mislead the consumer into making a transactional decision they would not otherwise make... None of the complainants have any recollection of having downloaded the tracks in dispute."
The Blackpool official then notes that under UK law, damages are fixed at "economic loss, either realised or potential." When it comes to music tracks, the loss equals "the approximate market value of the track as a single download—79p. Without further transparency as to the legal costs mentioned above, I would imagine that this would be sufficient to bring the matter to a close."

Meet the US Copyright Group

Indeed, the justice of this remark about damages haunts Crossley. One of his own legal advisors tells him that "establishing damages beyond the value of the gross profit of one copy of the work is problematic." In other words, a few pence for music. The advisor goes on to note that the one court case which would seem to prove the opposite "has, in my opinion, about as much legal force as a Sun newspaper headline regarding the licentious behaviour of a D list celebrity.""Therefore, it is my belief that the rights holder can only rely on the damage resulting from making a single copy of the work in infringement," he concludes, because of the difficulty in proving just how much (if any) "sharing" of the material with others took place. Lawyers are of course free to ask the courts for huge awards, but this carries the risk "that, in a defended case with competent opposing expert witnesses, the court will reject the application."
In other words, actually going to court would net very little money. Sending out letters and collecting a few hundred pounds is a much better business, which may explain why Crossley doesn't seem to sue people who refuse to settle. Yes, he promises to do so at some point, and the emails do show that he's considering hiring a litigator, but the campaign has been going over for quite some time now with no court action. (This is a common theme in the complaints against him; Crossley insists he's just trying to help everyone stay out of court.)
If only Crossley lived in America! "What is interesting is that it is the US model I want," he wrote earlier this year after hearing the news that the US Copyright Group was now filing mass Doe lawsuits against alleged movie pirates. "We should get to work on this, I have massive copyright in the US. And in the US there is minimum statutory damages."
Yes, statutory damages—under which copyright holders don't need to prove actual economic harm at all. The idea was that some infringement was simply too hard to quantify, but a system designed for commercial use has now been turned against US college students, leading to $1.92 million judgments in one case and $675,000 in another. (Both were so egregious that the judges involved tossed out the monetary amounts.) This is the system Crossley wants to profit from.
So he contacted Tom Dunlap of the Virginia law firm Dunlap, Grubb, and Weaver (DGW). DGW helped put the "US Copyright Group" together and does all the litigation on its cases, which include films like The Hurt Locker and Far Cry. Crossley wanted some kind of partnership.
"I own and operate the most prolific firm in the UK that identifies and pursues copyright infringements committed through peer to peer networks," he bragged to Dunlap. "I have a growing number of clients, existing and potential, including US based copyright owners and are actively looking to expand our work into the US, especially because of the ability to receive statutory damages for infringement and jury-awarded assessments of damages. I note that you act for Guardaley, a client of the person who introduced the file sharing work previously carried out by Davenport Lyons in the UK to my firm. It is a small world!
"I have substantial amounts of data, which I wish to exploit appropriately in the US and would very much like to speak with you with a view to exploring the possibility of an ongoing working relationship, to our mutual benefit. If this is of interest to you, please let me know."
The lawyers did a call. Later, they met up in Cannes, France at a conference. Crossley later booked a table at Le Baoli, which he described in another email to someone else as "the best club I have ever been in in my life! Le Baoli in Cannes! a million models in one place!" But the club was not serving dinner that night, and in the confusion over rescheduling, Crossley missed the DGW lawyers for dinner. But he did email later to say that "we are mailshotting all major uk film and music companies with the ucg [US Copyright Group] so you should get some calls soon." He seems to have believed a partnership was in the offing.
In a blog post soon after, Crossley announced his return from Cannes and said that "a new joint working relationship with US-based attorneys has opened up the North American region to our clients for identification and pursuit of illegal file sharing of their products." He was going to begin "cooperation with a newly-formed organization, the United Copyright Group."
That reference was scrubbed from the post two days later; Crossley had apparently been a bit too exuberant. Tom Dunlap told Ars that his firm was not working with ACS Law. He also told CNET this week that "the IT company [which the law firm uses to track file sharers] does not do anything for ACS Law."


But is that true?