Attorney General Brian Schwalb has begun investigating a company that helps big landlords set rent prices for potential violations of antitrust law, according to a source familiar with the probe, and he could soon hire a private law firm to help build a case. 

Schwalb’s office sent a proposed contract with the firm Cohen Milstein Sellers & Toll PLLC to the D.C. Council for approval late last month, specifying in a memo to lawmakers that it hoped to work with the attorneys on the “investigation of and potential litigation against identified targets in the housing industry for violations of antitrust laws.” The name of those potential targets is redacted in versions of the contract shared publicly ahead of the Council’s planned vote on the deal Tuesday.

However, the source familiar with the investigation tells Loose Lips that Schwalb is scrutinizing RealPage, a Texas-based company that works with major commercial property managers across the country. The firm primarily sells access to its “YieldStar” software, which recommends rent prices for apartments by using a proprietary algorithm to calculate what the market will bear. That algorithm is based on pricing data from its own clients, prompting some experts to speculate that the company effectively provides a way for big landlords to collude and fix prices.

RealPage is currently facing more than a dozen lawsuits from renters accusing it of antitrust violations alongside many of its clients. The Department of Justice has also opened an antitrust investigation into the firm. State attorneys general have yet to challenge the company in court, meaning Schwalb could be among the first to do so. (The proposed contract with Cohen Milstein also suggests the possibility that a future lawsuit could involve multiple states teaming up against the company—a common practice in such consumer protection and antitrust cases.)

A spokesperson for Schwalb declined to comment on the matter, while spokespeople for Cohen Milstein and RealPage did not immediately respond to requests for comment. RealPage, however, has repeatedly denied any allegations of price fixing or antitrust violations in previous statements and legal filings.

“RealPage’s revenue management solutions prioritize a property’s own internal supply/demand dynamics over external factors such as competitors’ rents,” the company wrote in a statement to ProPublica in 2022, “and therefore help eliminate the risk of collusion that could occur with manual pricing.”

But that same ProPublica investigation found that a RealPage executive once told an industry conference that “as a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually.” Other RealPage executives argued that the company’s software had a huge role to play in driving rents up across the country, and many property managers to work with RealPage have echoed those same claims.

Some of the largest property management firms in the country use RealPage’s services, and that includes several active in D.C. Greystar Real Estate Partners, Brookfield Property, Lincoln Property Company, and Avenue 5 Residential all work with RealPage, and all have substantial holdings in the D.C. area. (Those firms are also all named in a class action lawsuit against RealPage, and they denied wrongdoing. It’s unclear whether Schwalb’s investigation involves RealPage’s clients or just the company itself.)

Locally based firms such as WashREIT (recently renamed as Elme Communities) and AvalonBay Communities also work with RealPage, according to the companies’ investor documents. AvalonBay was at one point named in the class action suit, as well, but a judge later dismissed the firm from the case. 

A variety of prominent law firms have gotten involved in representing renters in cases targeting RealPage, but Cohen Milstein does not yet appear to be among them. The firm has extensive antitrust experience, and has represented clients in major cases against companies such as Wells Fargo and Chipotle.

Schwalb’s office has its own antitrust division that took on a variety of cases against large national companies under his predecessor, Karl Racine. (Perhaps most notably, Racine became one of the first state attorneys general to challenge Amazon on antitrust grounds.) But it’s not unusual for the AG to work with private firms on such complex cases.

The proposed deal with Cohen Milstein would allow the firm to earn up to $90 million over the next five years, should any future lawsuit result in a settlement or monetary judgment of some kind.

Under this arrangement, known as a “contingency contract,” the firm can collect up to 18 percent of any payouts so long as the total amount doesn’t exceed the $90 million ceiling. The exact percentage the firm can earn changes depending on when the case is resolved.