Practice Management

Kudos to the ABA for standing up to the FTC who want to add another layer of regulation on lawyers. The  FTC wants to include lawyers in their "Red Flag" financial rule, but a D.C. Court ruled earlier this year that the FTC has no authority to regulate lawyers. So the FTC decided to appeal. Leading that charge is the ABA. According to the National Law Journal,

[t]he Federal Trade Commission has no authority to lump lawyers in with creditors in the enforcement of regulations that govern the prevention of identity theft, attorneys for the American Bar Association said in court papers filed in a federal appeals court in Washington.

The ABA brief, filed Friday in the U.S. Court of Appeals for the D.C. Circuit, responds to FTC papers that argue that lawyers should be held to comply with so-called "red flag" rules that require financial institutions and creditors to develop identity theft prevention programs.

The FTC maintains that lawyers act as creditors when they provide legal services without immediately taking payment. The ABA sued the FTC in August 2009 in federal district court in Washington, winning a favorable ruling. The FTC is challenging the ruling on appeal.

"Here, the Commission is attempting again to foist a regulatory scheme on lawyers without the slightest indication that Congress intended or desired such a result," the ABA's brief, signed by Proskauer Rose partner Mark Harris, said. Harris, based in New York, co-heads the firm's appellate group. Click here for the ABA brief.

The ABA brief said the FTC's position is "unsustainable" in the D.C. Circuit, which previously ruled, in an unrelated case, that the FTC cannot regulate the practice of law unless Congress provides the commission with an "unmistakably clear" grant of authority. (NLJ 8-24-10)

The outcome will effect all lawyers in the U.S. regardless of ABA membership. Thank you to the ABA and thank you to all dues-paying ABA members (of which I am one) for funding this litigation that will help all lawyers.