For centuries, the regulation of the practice of law has been delegated to the judicial branch of government. As the Supreme Court explained, “since the founding the Republic, the licensing and regulation of lawyers has been left exclusively to the states and the District of Columbia . . . (t)he states prescribe the qualifications for admission to practice and the standards of professional conduct. They are also responsible for the discipline of lawyers.” Leis v. Flynt, 439 U.S. 438, 442 (1979).
On July 14, 2014, the Consumer Financial Protection Bureau (“CFPB”), a Federal regulatory body created by the Dodd Frank Act of 2010 mounted a frontal attack on this bedrock of separation of powers principle by filing suit in the United States District Court against a prominent consumer collection law firm, Frederick J. Hanna and Associates, P.C. of Atlanta Georgia. This suit, which also names three law firm partners, asks that the Hanna firm pay penalties based on unverified allegations that the lawyers employed by the law office failed to exercise their independent legal judgment in determining whether to file collection suits. The suit also claims that the Hanna firm did not determine whether underlying contract documents supporting affidavits signed by their clients validated the accuracy of the debts subject to the state court collection actions.
The CFPB alleges that this conduct violates the Fair Debt Collection Practices Act’s provisions outlawing false, deceptive or misleading statements and unfair conduct in the collection of the debts. Although no lawyer has ever been required to obtain a license to practice law from the CFPB, this agency nonetheless claims they have the right to seek a court order restraining the law firm from filing suits on behalf of its creditor clients.
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