This article was originally published on Feb. 14, 2024, in Missouri Lawyers Media (molawyersmedia.com) and has been republished here with permission. Please see Q&A for updated information.
On a recent Friday afternoon, Michael Ketchmark appeared by video in a debate hosted by the trade publication HousingWire, facing off with a real estate professional in Massachusetts who was none too happy with the Kansas City lawyer’s most recent court victory.
“Who is Mike Ketchmark?” Ketchmark’s opponent, Anthony Lamacchia, asked rhetorically. “He didn’t become ordained as the police of the way commissions are paid in real estate transactions when he became a lawyer back in the early 1990s.”
The intense interest and occasional enmity of the mortgage and real estate industry is something that Ketchmark, Missouri Lawyers Media’s Lawyer of the Year, expects these days. After all, Ketchmark and his team seek nothing less than to totally transform how houses are bought and sold in America.
In October, he and his trial team went up against a fleet of defense lawyers for the National Association of Realtors and several real estate companies and won a verdict of nearly $1.8 billion. Their class-action lawsuit attacked a long-standing practice codified in the association’s rules: that home sellers pay a 6 percent commission that is split between their own agent and that of the buyer.
“Name a single industry where you have to pay the other side,” Ketchmark said.
After approximately 100 depositions, 30,000 hours of attorney time. and some $7 million in costs by the time of trial, the case is far from over. Federal antitrust law permits the plaintiffs to recover treble damages, which could lead to a final judgment of about $5.4 billion. While NAR and one other defendant are contesting the verdict and demanding a new trial, three real estate companies that were defendants in the case have settled out for a combined $208 million and have agreed to change the way they charge commissions.
Meanwhile, Ketchmark and his team have filed a separate suit making nearly identical claims on behalf of a nationwide class. Similar actions have been filed across the country and could result in a multidistrict litigation designation, which Ketchmark hopes to lead.
The damages from such a case could be staggering, as would the discovery needed to prove it. But in the end, Ketchmark said, the argument is easy for juries to grasp.
“Most people have never been hit by a truck,” Ketchmark notes. “Thankfully, most people haven’t been harassed at work. Most people have never had a product destroy their life. But a whole bunch of people have bought and sold houses.”
‘A Pit in Your Stomach’
In some ways, Ketchmark’s past successes made him an unusual choice for the real estate suit. While he is adept at relating to juries, his practice has focused almost exclusively on employment and personal injury claims, where a loss at trial could very well leave the plaintiff in dire financial straits. While the suit against the real estate industry potentially affected the finances of thousands of home sellers, none stood to lose their homes if the jury ruled against them.
“It was significantly and profoundly important to change this industry, but I didn’t have a widow sitting next to me who lost their spouse in a tragic accident and lost the breadwinner of their family,” he said.
Ketchmark’s status as one of Missouri’s top plaintiff’s lawyers probably would have surprised his younger self. He attended the University of Iowa with vague plans to become an astronomer until that major’s math requirements prodded him into getting a philosophy degree instead. After graduating in 1987, he enrolled at the University of Iowa College of Law, he said, because “I wasn’t ready to grow up and be an adult, and it pretty much was a continuation of school.”
He earned his degree in 1990 and got a job as an employment defense attorney with Shughart Thomson & Kilroy, a predecessor to today’s Polsinelli. He gained valuable experience, but as a lawyer who’d been inspired by To Kill a Mockingbird, he said, it was “pretty far away from being Atticus Finch.”
Ketchmark opened his own firm in 1995 and spent two penniless years until a fateful case fell into his lap. On the recommendation of a friend, he filed suit just before the statute of limitations had run for a man who’d suffered a work-related brain injury. Despite being inexperienced to the point that the judge had to explain to him what the Missouri Approved Instructions were, he won a $2.1 million verdict in Platte County. It was one of three of the top 10 verdicts of 1997, as tracked by Missouri Lawyers Weekly.
He hasn’t lost a trial since, and his most recent victory isn’t even his first billion-dollar win. In 2002, working with fellow plaintiffs’ lawyer Grant Davis, he achieved a $2.2 billion verdict for a woman whose cancer drugs were diluted by Kansas City pharmacist Robert Courtney. Recent cases include a $74.1 million verdict for the wife of a man crushed to death at Ford’s Claycomo plant. His client refused to settle the case, even during the appellate process, resulting in a rare $10 million payment to the state’s Tort Victims’ Compensation Fund out of the award’s $38 million in punitive damages.
“When the jury goes out, there’s this pit in your stomach,” he said. “And then when they come back and you win, there’s this tremendous feeling of joy and triumph. To know you’re doing it on behalf of somebody is absolutely awesome.”
Strength in Numbers
The real estate lawsuit was filed in the U.S. District Court for the Western District of Missouri in April 2019 by the Kansas City firms of Boulware Law and Williams Dirks Dameron. Attorneys Brandon Boulware, Jeremy Suhr, and Eric Dirks added Ketchmark and his partners Scott McCreight and Benjamin Fadler to the case in 2021 to bolster the trial team.
Ketchmark said he typically tries cases alone and insisted that he take the lead. But in the end, he said, a collaborative approach among the three firms won the case.
“It taught me that the way I used to try it was wrong, that you’re so much better having strength in numbers,” he said.
Still, he said, “If I knew back then what I know now about how much work it would be, how consuming it would be, I would have been a little more hesitant to get involved.”
“Sometimes it’s easier to just jump out of the airplane and worry about pulling the parachute later,” he said.
The complaint focused on a 1996 rule by the National Association of Realtors that, it alleged, “requires all seller’s brokers to make a blanket, unilateral, and effectively non-negotiable offer of buyer broker compensation.” According to the suit, compliance with the Realtors association’s rule is mandatory for properties to appear on the Multiple Listing Service databases through which nearly all homes are sold. That, the suit argued, constituted a restraint on competition, violating state and federal antitrust laws as well as Missouri’s Merchandising Practices Act.
In the run up to the trial, the team of attorneys rented a spacious apartment a few blocks from the federal courthouse, moving in copiers, computers, and enough binders of discovery material to fill seven long folding tables. The trial began Oct. 16. Two weeks later, on Halloween, the jury found that the defendants had engaged in a conspiracy that “had the purpose or effect of raising, inflating, or stabilizing broker commission rates paid by home sellers,” causing the plaintiff class “to pay more for real estate brokerage services when selling their homes than they would have paid absent the conspiracy.”
The jury returned the full $1,785,310,872 the plaintiffs sought. An economist calculated that massive figure based on sales data for 265,000 home sales during a seven-year period. Ketchmark said the nationwide damages potentially could be more than $100 billion.
Fight Continues
In addition to NAR, the suit also named several major real estate companies—HomeServices of America, Keller Williams Realty, Anywhere Real Estate (formerly known as Realogy), and RE/MAX—alleging that they required their franchisees to adopt and enforce NAR’s rules and influenced local real estate associations to do the same.
Though the defendants all denied the claims, prior to trial Anywhere agreed to settle for $83.5 million, and RE/MAX soon followed in settling for $55 million. Keller Williams agreed to a post-trial $70 million settlement. All three companies also agreed to make compensation
arrangements more transparent to buyers and sellers and to make clear that commissions are not set by law and are fully negotiable.
The Realtors association and one other defendant, HomeServices, continue to contest the verdict. In post-trial motions that remained pending as of press time, they asked the court to grant a new trial or to reduce the award, arguing that their commissions are specifically permitted by Missouri law and that it was individual Realtors, rather than the association, who actually charged those fees. No one is forced to hire a Realtor, they argue, and any fees are subject to negotiation.
“The result of the trial in this case defies precedent, logic, and the evidence,” NAR wrote.
The defendants also continue to deny the claims to the wider public. In a video statement posted on NAR’s website on Jan. 31, the association’s interim CEO, Nykia Wright, said the industry has been “vilified by certain plaintiffs’ lawyers.”
“The notion that the National Association of Realtors controls what real estate professionals get paid is wholly untrue,” Wright said, adding that the association “does not set commissions—it never has and it never will. Period. End of story.”
Ketchmark insists that the litigation will make it easier, not harder, to buy and sell a home, putting thousands of dollars back into the pockets of home sellers and allowing market forces and the internet to determine how buyers’ agents are compensated.
“The day of accountability will come for them,” Ketchmark said of the industry. “It may be a couple of years off, but it will happen.”
Q&A with Michael Ketchmark (90JD)
Iowa Law spoke with Ketchmark in April 2024 about his landmark case, career path, and education.
Q: You recently won a major real estate case. Can you share any updates?
MK: After our federal jury verdict, the defendants dropped their appeals and settled. We now have more than $1 billion in settlements. We also spearheaded massive changes to the way homes are sold. The days of fixed six percent commissions are gone. Home sellers no longer have to pay the buyer’s agent. Economists predict this will save homeowners between $30 billion and $50 billion in yearly commissions. Eric Dirks, another Iowa Law grad (03JD), was part of our winning trial team. A team of three Iowa law grads won the largest antitrust jury verdict in our country’s history. This will change people’s lives, which is precisely why we all went to Iowa Law.
Q: Did your education prepare you to hit the ground running as an attorney?
MK: I was a lot more confident when I graduated. I realized that I had more practical experience upon graduation than lawyers at 150-person law firms, even after they’d been working for
several years; some of them had never been in front of a judge and jury. Iowa Law gave me the confidence to start my own firm in 1995 and make a go for it. In fact, I partnered with another Iowa Law grad and longtime best friend, Scott McCreight (90JD), to establish our firm Ketchmark and McCreight.
Q: Do you have any favorite memories from law school?
MK: I remember my first class, with Professor Sheldon Kurtz. It was on property, and it was everything I thought it would be. I remember thinking, man, this is very different from undergrad, and it’s kind of like drinking out of a firehose, but in hindsight it did a wonderful job of preparing me to practice law. Another experience that helped me was the school’s legal clinic, which I took as a 3L. I worked in the Johnson County prosecutor’s office and got to do a jury trial. I went in front of a judge, called witnesses, argued motions, all while still in law school. The clinic was very supportive, and the prosecutor spent a tremendous amount of time training me. And nobody had to do that, but these were people who really cared. That’s what stands out as unique about the school: the people. There is a real, genuine sense of caring, which I think makes the practice of law that much better.
Q: Why did you choose Iowa Law?
MK: I am from Des Moines and went to the University of Iowa for my undergrad. Iowa Law was the only law school I ever wanted to go to and the only place I applied to. I was super happy to get in. It was an awesome experience.