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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 just wanted to point out that Congressman Jim Sensenbrenner, Senator Feinstein, former Senate majority leader Bill Frist, and former attorney general John Ashcroft are responsible for this rubbish. We need to keep a eye on these corrupt, arrogant, and incompetent fools.

  2. Well I guess our politicians have decided to give these idiot federal prosecutors unlimited power. Now if I guy bounces a fifty-dollar check, the U.S. attorney can intentionally wait for twenty-five years or so and have the check swabbed for DNA and file charges. These power hungry federal prosecutors now have unlimited power to mess with people. we can thank Wisconsin's Jim Sensenbrenner and Diane Feinstein, John Achcroft and Bill Frist for this one. Way to go, idiots.

  3. I wonder if the USSR had electronic voting machines that changed the ballot after it was cast? Oh well, at least we have a free media serving as vicious watchdog and exposing all of the rot in the system! (Insert rimshot)

  4. Jose, you are assuming those in power do not wish to be totalitarian. My experience has convinced me otherwise. Constitutionalists are nearly as rare as hens teeth among the powerbrokers "managing" us for The Glorious State. Oh, and your point is dead on, el correcta mundo. Keep the Founders’ (1791 & 1851) vision alive, my friend, even if most all others, and especially the ruling junta, chase only power and money (i.e. mammon)

  5. Hypocrisy in high places, absolute immunity handed out like Halloween treats (it is the stuff of which tyranny is made) and the belief that government agents are above the constitutions and cannot be held responsible for mere citizen is killing, perhaps has killed, The Republic. And yet those same power drunk statists just reel on down the hallway toward bureaucratic fascism.

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