American Bar Association
Law Exempting Lawyers from ‘Red Flags Rule’ Makes ABA Suit Moot, DC Circuit Says
Posted Mar 4, 2011 10:52 AM CST
By Debra Cassens Weiss
An ABA suit challenging application of identity theft regulations to lawyers is moot as a result of an exemption granted by Congress last December, a federal appeals court has ruled. The ABA had lobbied hard for the congressional action.
The U.S. Court of Appeals for the D.C. Circuit ruled (PDF) today.
The ABA had filed suit in 2009 after the Federal Trade Commission said lawyers should be considered creditors under the Fair and Accurate Credit Transactions Act and were subject to so-called “red flags” rules to protect consumers from identity theft. The FTC reasoned that lawyers were creditors because they extended credit by billing for legal work after it is done.
According to the D.C. Circuit, the legislative history of the new law “confirms Congress’ intention to bar the regulation of lawyers based solely on deferred billing practices.” The decision notes “hypothetical possibilities” raised in supplemental briefs that the FTC may still try to regulate lawyers under the amended law. But such speculation doesn’t give rise to a live dispute, the appeals court said. It remanded the case to the district court with instructions to dismiss it as moot.
Related Coverage: Effort Pays Off: New Law Confirms ‘Red Flags Rule’ Exemption