Constitutional Law

Suit claims consumer bureau is improperly trying to regulate lawyers

A Connecticut solo practitioner has filed a suit claiming the Consumer Financial Protection Bureau is exceeding its authority by attempting to regulate law practice when it involves debt relief services.

Lawyer Kimberly Pisinski filed the suit along with Morgan Drexen Inc., a company she hired to provide support staffers for her practice, report the National Law Journal (reg. req.) and the Hill’s RegWatch blog.

The suit alleges that the CFPB demanded information from Morgan Drexen in 2012 about its lawyer customers who provide debt settlement services, including privileged financial records of the lawyers’ clients. According to the suit, the CFPB takes the position that hourly rates charged by bankruptcy lawyers are illegal upfront fees if the work involves debt-settlement services.

The suit, filed Monday in federal court in Washington, D.C., also alleges the structure of the CFPB is unconstitutional because it operates without sufficient oversight.

A CFPB spokesperson gave a statement to defending its authority to RegWatch. “We believe this work is within our authority and consistent with the ordinary course of a government investigation,” a the statement said. “Our goal is to determine whether companies are complying with the law and seek appropriate remedies where that’s not the case.”

Prior coverage of the CFPB: “New federal agency sues 2 law firms over debt-relief fees; one attorney is also criminally charged” “Debt Collection Lawyers Among Those Who Will Be Scrutinized by Consumer Financial Agency”

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