from www.forbes.com –

“It should be clear by now that this court’s focus has shifted from protecting intellectual property rights to attorney misconduct.” — US District Judge Otis Wright

John Steele, the lawyer who told me he’d made “millions” going after people who illegally download pornographic movies, is experiencing some legal trouble of his own. A judge in Los Angeles has questions about the way in which Steele and his colleagues have conducted their litigation. Ars Technica and Popehat have been providing detailed (and often gleeful) coverage of a series of hearings that may lead to the unraveling of hundreds of lawsuits filed by Steele and his colleagues at law firm Prenda Law against alleged XXX-movie lovers whose IP addresses were caught downloading the films online.

Steele and his colleagues have been pursuing “John Does” who download XXX films without paying for them for copyright violations. When I interviewed him last year, he told me he had filed over 350 of these suits, and that he was at that time suing approximately 20,000 people.

The tactic is similar to the one employed by the recording industry years ago, but where RIAA wanted to scare people out of illegal downloads by getting massive, scary judgments in highly publicized cases against individual Napster users, Steele and the lawyers like him are content to get relatively small settlements — deal letters often ask for $3000 or so — from individuals who pay up quietly to avoid being named in public court filings for allegedly watching a film such as “Illegal Ass 2.”

A Steele and his firm are starting to run into serious problems. A few judges across the country have expressed concern about these types of lawsuits, and Internet service providers Comcast, Verizon and AT&T have resisted turning over subscriber information in these lawsuits to varying degrees, seeing it as a form of extortion for their customers.

Bloggers who have raised questions about the firm’s tactics — FightCopyrightTrolls and DieTrollDie — were recently sued by Prenda Law for defamation; they are being represented by attorneys at EFF, who say the lawsuits are “a blatant attempt to abuse the legal process to punish critics.”

Judge Otis Wright of L.A. has gotten especially upset about the suits, particularly after finding out that a man who had been listed on court documents appears to have been unaware his name was being used for the porn pirate litigation.

Wright has raised questions as to whether money being gained from these lawsuits is going into the lawyers’ coffers, rather than to actual porn company clients, meaning that the lawyers are, in effect, their own clients. Not only have they allegedly not disclosed that in filings, it appears they may have gone to some lengths to hide it. “[I]t appears that these persons, and their related entities, may have defrauded the Court through their acts and representations in these cases,” says an order from Judge Wright.

Steele and his colleagues showed up for a hearing before the judge on Tuesday but pled the Fifth when he tried to ask questions about their tactics. Via Ars Technica:

Wright sputtered, amazed and again angered that he was faced with lawyers who wouldn’t answer the most basic questions about who was profiting from their scheme to sue over porn copyrights. He wanted to know who was in control of the litigation, who was making the money, why the relationships among Prenda entities weren’t disclosed, and why the proper procedures weren’t followed.

Ken White, a legal blogger at Popehat, called the hearing “an extinction-level event” for Prenda Law.

“Their invocation of their Fifth Amendment rights in the face of that order is utterly unprecedented in my experience as a lawyer,” writes White. “In effect, the responsible lawyers for a law firm conducting litigation before a court have refused to explain that litigation to the court on the grounds that doing so could expose them to criminal prosecution.”

The legal drama will continue. But if you’re one of the thousands of people who have received a letter from the firm asking for payment for watching a dirty movie illegally, you might want to hold off on paying up.