As the United States Senate began debate on the proposed Consumer Financial Protection Act (“CFPA”), the Indianapolis Bar Association issued a letter to oppose provisions within the CFPA which would grant the proposed Bureau of Consumer Financial Protection broad new powers to regulate lawyers. Signed by IBA President Chris Hickey, the letter notes several concerns.
“These provisions will allow the Bureau to regulate and interfere with core aspects of the confidential attorney-client relationship, including the legal advice and other important legal services that lawyers routinely provide to their consumer clients,” wrote the IBA.
The letter added, “These provisions will also undermine traditional state court regulation of lawyers and will result in new federal rules that are inconsistent with the state courts’ longstanding ethical rules and standards governing lawyers.”
It also asserted that “allowing the Bureau to fully regulate lawyers just as if they were non-bank financial institutions will discourage many lawyers from providing the legal services that consumer clients need to save their homes from foreclosure, resolve their debt problems, or avoid bankruptcy.”
To avoid these problems, the IBA urged support of the “Exclusion for the Practice of Law” proposed by the American Bar Association, which is almost identical to the amendment previously crafted by leaders of the House Judiciary and Financial Services Committees and incorporated into the House-passed financial overhaul bill, H.R. 4173.
The IBA noted, “Unlike the narrow ‘Exclusion for Attorneys’ provision currently contained in Section 1027(e) of the Senate bill, the proposed amendment would protect consumers while preserving the confidential attorney-client relationship, traditional state court regulation and supervision of lawyers, and the continued availability of quality legal services that consumer clients need.”
The letter was sent to Indiana’s U.S. Senators Richard Lugar and Evan Bayh, as well as U.S. Senate Committee on Banking, Housing & Urban Affairs Chairman Senator Chris Dodd and Ranking Member Senator Richard Shelby.•