It’s almost impossible to imagine a world without credit. Major
purchases like a home, car, college education, and vacations would be
difficult even for the wealthy and virtually impossible for everyone
else. So many things that make our life comfortable can be attributed
to our ability to obtain credit. Consumer spending makes up over 70
percent of the U.S. economy and is driven by the availability of credit.
The availability of affordable credit is based on an important
concept: credit is a promise to repay. In a perfect world, the credit
“ecosystem” would only consist of creditors and consumers who repay
their obligations. Perfect balance. However, when credit is not
repaid, due to unforeseen hardships or other reasons, it results in
higher credit costs for everyone, including those who paid their bills.
This is an imbalance that is corrected, in part, by bringing attorneys
into the ecosystem.
Attorneys enter the system when people who
are owed money need to collect it through the court system. The court
system is a level playing field where everyone gets a chance to “have
their say” and the outcome is decided by an impartial judge. Sometimes
the judge decides for the creditor, and other times for the consumer,
but in every case all parties are accountable, including attorneys.
have to be licensed by their state bar, receive continuing legal
education, obey the rules of professional conduct and follow federal,
state and local laws and rules. At the same time, attorneys have an
important duty toward their clients. “As advocate, a lawyer zealously
asserts the client's position under the rules of the adversary system” -
preamble, Model Rules of Professional Conduct. The balance of the
ecosystem is upset when attorneys lose their ability to effectively
represent their clients.The Dodd-Frank Act of 2010 altered the framework of ecosystem. New
rules, supervision and compliance directives have created a ripple
effect from Wall Street to Main Street that is putting small law firms
out of business. In contrast to “too big to fail,” these firms are “too
small to succeed.” Attorneys, traditionally regulated by the judiciary,
are now subject to regulators’ demands to turn over their clients’
privileged information. Legal strategies and advice are no longer
sacrosanct. Meanwhile, courts struggle with the issue of how the
federal laws apply to attorney conduct in the courtroom, and the result
has been a patchwork of conflicting outcomes. Again, the ecosystem is
in need of correction.
Restoring balance may come soon
in the form of legislation. NARCA applauds Representatives Perlmutter
(D-Colo.) and Bachus (R-Ala.), both senior members of the House
Financial Services Committee, for their recent introduction of H.R.
2892, the Fair Debt Collection Practices Technical Clarification Act of
2013. This bipartisan legislation simply excludes attorneys from the
Fair Debt Collection Practices Act (FDCPA) when they are engaged in
litigation activities that fall under supervision of the court. It is
not an outright “carte blanche” exemption for attorneys. The FDCPA
still applies when attorneys engage in traditional collection
activities, like calling or writing to consumers. This approach is
consistent with the intent behind the FDCPA:
"The Fair Debt
Collection Practices Act regulates debt collection, not the practice of
law. Congress repealed the attorney exemption to the act, not because of
attorneys’ conduct in the courtroom, but because of their conduct in
the backroom. . . Only collection activities, not legal activities, are
covered by the act. . . Actions which can only be taken by those
possessing a license to practice law are outside the scope of the act,"
stated Rep. Frank Annunzio (D-Ill.), Congressional Record, 1986.
is significant that all attorneys, regardless of their area of
practice, must maintain bar licensure through the judiciary, receive
continuing legal education, adhere to the rules of professional conduct
and state and local rules of procedure and conduct themselves in a
manner consistent with their responsibilities as officers of the court.
The regulation of attorneys engaged in the practice of law properly
rests with the judiciary rather than the legislature.
is president of the National Association of Retail Collection
Attorneys, a nationwide trade association comprised of over 700 debt
collection law firms whose members are committed to maintaining the
highest standards of ethical conduct to ensure that consumers are
treated fairly and respectfully.