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    Restoring the Courts’ Authority Over Attorneys Engaged in Litigation

    Overview

    For many decades, attorneys have been regulated and disciplined primarily by the state supreme courts that license them and other state and federal courts, not Congress or federal agencies. Consistent with this principle, Congress has generally declined to enact legislation regulating the practice of law, including litigation activities of attorneys. In addition, Congress and federal agencies have often included broad attorney exemptions in certain key statutes and major rules. Recently, however, some federal agencies have undermined the courts’ proper role by imposing excessive litigation rules, standards, and penalties on certain types of attorneys that conflict with well-established court rules applicable to all litigation attorneys. For example, the Consumer Financial Protection Bureau (CFPB) has imposed special due diligence standards, procedural rules, and penalties solely on creditor litigation attorneys that go beyond—and often conflict with—the court rules governing all other types of litigation attorneys. In addition, the CFPB and consumer attorneys routinely sue creditor attorneys and their law firms for alleged violations of these special litigation rules and for alleged technical violations of the Fair Debt Collection Practices Act (FDCPA).

    To address these problems, the ABA and its allies in the National Creditors Bar Association (NCBA) are urging Congress to pass H.R. ______, the “Restoring Court Authority Over Litigation Act.” The legislation, sponsored by Rep. Alex Mooney (R-WV), would address these problems and help restore the courts’ proper authority over the litigation process by clarifying that (1) attorneys engaged in litigation should be regulated and disciplined exclusively by the courts, (2) federal agencies have no regulatory authority over attorney litigation activities, and (3) parties in legal actions have no federal private right of action against an opposing attorney for alleged misconduct related to the attorney’s litigation activities. The ABA and NCBA also continue to oppose any proposed regulations by the CFPB or other agencies that would impose excessive litigation rules, standards, or penalties on certain types of attorneys that go beyond or conflict with the court rules that apply to all litigation attorneys.

    Status

    Congress and federal agencies have considered several measures in recent years to further clarity whether the courts—or certain federal agencies—shall have the authority to regulate and oversee attorneys engaged in litigation.

    During the 115th Congress, Reps. Alex Mooney (R-WV) and Vicente Gonzales (D-TX) introduced bipartisan legislation known as H.R. 5082, the Practice of Law Technical Clarification Act, which sought to protect the courts’ primary authority to regulate and oversee the practice of law by clarifying that the Fair Debt Collection Practices Act (FDCPA) and the CFPB’s regulatory authority do not apply to creditor attorneys’ litigation activities.  On March 19, 2018, the ABA sent a letter to the House Financial Services Committee expressing support for H.R. 5082, and similar letters of support were submitted by the NCBA and other stakeholders. The House Financial Services Committee approved the bill on March 21, 2018, but the bill did not advance further during the 115th Congress.

    In 2019, the CFPB issued a proposed Debt Collection Practices rule that included a “safe harbor for meaningful attorney involvement” to protect creditor attorneys from liability under Section 807(3) of the FDCPA if they can prove that they followed certain special due diligence steps before filing a lawsuit or motion with the court. But because those special steps are significantly different from the standard due diligence requirements in Federal Rule of Civil Procedure 11(b) that apply to all litigation attorneys appearing in federal court, the safe harbor would have unfairly imposed special litigation rules just on creditor litigation attorneys.

    On September 18, 2019, the ABA submitted written comments urging the CFPB to withdraw its safe harbor proposal for creditor litigation attorneys, reject the flawed “meaningful attorney involvement” concept, and recognize the courts’ primary and inherent authority to regulate, oversee, and sanction all attorneys engaged in litigation, regardless of the attorney’s legal specialty or the types of cases the attorney files with the court. After considering the ABA’s views, similar concerns raised by the NCBA and Rep. Mooney, and different concerns raised by consumer groups and other stakeholders, the CFPB published its final rule in November 2020 without the controversial safe harbor provision.

    In recent years, the Conference of Chief Justices—which includes the chief justices of all 50 state supreme courts, the District of Columbia, and the U.S. territories—has expressed growing concerns over federal legislation and regulations that undermine the courts’ inherent authority to regulate and oversee attorneys engaged in the practice of law. In January 2011, the Conference adopted a resolution affirming that primary regulation and oversight of attorneys and the legal profession should continue to be vested in the state courts, not federal agencies or Congress. The resolution also expressed opposition to federal legislation or rules intended to establish or expand federal regulatory jurisdiction over attorneys engaged in the practice of law.

    The Conference subsequently adopted a second resolution in February 2020 expressing support for legislation like the Restoring Court Authority Over Litigation Act that would clarify that (1) attorneys engaged in litigation should be regulated and disciplined exclusively by state supreme courts, their attorney disciplinary agencies, and other state and federal courts of competent jurisdiction; (2) federal agencies shall have no regulatory authority over litigation activities of attorneys or law firms; and (3) no party in a legal action shall have a federal private right of action against the opposing attorney for the attorney’s litigation activities.

    Key Points

    The ABA supports legislation that would protect the courts’ exclusive authority to regulate, oversee, and discipline attorneys engaged in litigation and prevent federal agencies from undermining the court’s proper role because:

    • Courts—not federal agencies or opposing parties—are best able to regulate and discipline attorneys engaged in the practice of law. Attorneys practicing law have long been regulated and disciplined primarily by the state supreme courts that license them and other state and federal courts, not federal agencies or Congress. Over time, the courts have developed an extensive and effective attorney regulation system—including admission requirements, strict rules of professional conduct, and disciplinary rules—that governs virtually every aspect of an attorney’s professional life. Attorneys are subject to these rules and appropriate disciplinary action for any misconduct, including monetary sanctions, suspension, and disbarment. Therefore, further regulation by federal agencies or Congress is unnecessary and likely to conflict with existing regulation and oversight by the courts. 
    • The legislation would ensure that all litigation attorneys—regardless of their legal specialties—are held to the same high legal and ethical standards when pursuing legal claims for their clients in court. The CFPB is unfairly imposing a higher due diligence requirement (known as “meaningful attorney involvement”) solely on creditor litigation attorneys that goes beyond the well-established state and federal court rules governing all licensed attorneys. The FDCPA also imposes special litigation requirements and liability solely on creditor attorneys that do not apply to any other type of litigation attorney and often conflict with standard court rules. The legislation would eliminate this unfair “double standard” while restoring the courts’ authority to regulate conduct before them and sanction all litigation attorneys in a consistent, evenhanded manner regardless of the type of case.
    • The scope of the legislation is narrowly tailored and would only prohibit federal agencies from regulating attorneys’ litigation activities, not their other non-litigation activities. The legislation would also clarify that while the FDCPA does not cover attorneys’ litigation activities already subject to judicial oversight, the Act still applies to attorneys’ non-litigation collection activities, such as demand letters and phone calls to consumers.
    •  The Conference of Chief Justices—which is comprised of the chief justices of all 50 states, the District of Columbia, and five US territories—supports these reforms and adopted a resolution endorsing the legislation.

    ABA Policy

    The ABA believes that primary regulation and oversight of the legal profession should continue to be vested in the court of highest appellate authority of the state in which the attorney is licensed, not federal agencies or Congress, and that the courts are in the best position to fulfill that important function. Therefore, the ABA supports federal legislation that would protect the courts’ exclusive authority to regulate and discipline attorneys engaged in litigation and prevent federal agencies from undermining the courts’ proper role. The ABA also opposes any proposed regulations or other measures that would impose excessive litigation rules, standards, or penalties on certain types of attorneys that go beyond or conflict with the court rules that apply to all litigation attorneys.

    ABA Resources

    Additional Resources and Articles

    Links

    Contact

    Larson Frisby
    Associate Director
    Governmental Affairs Office
    American Bar Association
    1050 Connecticut Avenue, NW, Suite 400
    Washington, DC 20005
    Direct: (202) 662-1098
    FAX: (202) 662-1762
    [email protected]