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IBA: Lawyers Exempted from Red Flags Rule

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Following aggressive advocacy by organized bar associations around the country, the end is in sight regarding how the Federal Trade Commission should apply the “Red Flags Rule.”  The U.S. Senate voted last week to clarify the rule so that lawyers are clearly not included.

At issue was whether lawyers would be considered “creditors” under the so-called FTC’s Red Flags Rule, and would thus be required to develop programs identifying, detecting, and responding to the warning signs (“red flags”) of identity theft.

On Aug. 27, 2009, the American Bar Association filed suit against the FTC in the U.S. District Court for the District of Columbia. On Oct. 29, 2009, the ABA’s motion for summary judgment for declaratory and injunctive relief from the Rule’s application to lawyers was granted. On Dec. 1, 2009, Judge Reggie Walton issued his full opinion in support of the ABA’s motion, the principal arguments of which are supported by the state and local bar amici.

The amicus curiae brief stated that adhering to the Rule, if it had gone into effect as applicable to lawyers, would have been particularly detrimental to small firms and solo practitioners, “The burden to create such a plan will fall disproportionately upon small law firms and solo practitioner lawyers in this country who represent the great majority of clients and whose time and resources are already spent serving the needs of their clients.”

The state and local bars also emphasized the historical regulation at the state level of lawyer conduct and the “sacrosanct confidentiality of client financial information.”

At press time action by the U.S. House of Representatives was pending.•

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  1. I expressed my thought in the title, long as it was. I am shocked that there is ever immunity from accountability for ANY Government agency. That appears to violate every principle in the US Constitution, which exists to limit Government power and to ensure Government accountability. I don't know how many cases of legitimate child abuse exist, but in the few cases in which I knew the people involved, in every example an anonymous caller used DCS as their personal weapon to strike at innocent people over trivial disagreements that had no connection with any facts. Given that the system is vulnerable to abuse, and given the extreme harm any action by DCS causes to families, I would assume any degree of failure to comply with the smallest infraction of personal rights would result in mandatory review. Even one day of parent-child separation in the absence of reasonable cause for a felony arrest should result in severe penalties to those involved in the action. It appears to me, that like all bureaucracies, DCS is prone to interpret every case as legitimate. This is not an accusation against DCS. It is a statement about the nature of bureaucracies, and the need for ADDED scrutiny of all bureaucratic actions. Frankly, I question the constitutionality of bureaucracies in general, because their power is delegated, and therefore unaccountable. No Government action can be unaccountable if we want to avoid its eventual degeneration into irrelevance and lawlessness, and the law of the jungle. Our Constitution is the source of all Government power, and it is the contract that legitimizes all Government power. To the extent that its various protections against intrusion are set aside, so is the power afforded by that contract. Eventually overstepping the limits of power eliminates that power, as a law of nature. Even total tyranny eventually crumbles to nothing.

  2. Being dedicated to a genre keeps it alive until the masses catch up to the "trend." Kent and Bill are keepin' it LIVE!! Thank you gentlemen..you know your JAZZ.

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