Report from Governmental Affairs

Still On the Case

  • Print

A U.S. district court ruling earlier this year that the Federal Trade Commission overreached its authority in applying privacy provisions of the Gramm-Leach-Bliley Act to lawyers raised hopes that the long-running dispute over the issue had been resolved in favor of the legal profession.

But the FTC’s decision to ap­peal the April 30 ruling by the U.S. District Court for the District of Columbia has thrown a cloak of uncertainty over the issue once more. (For background on the act, go to For the time being, the FTC has agreed, at the urging of the ABA, not to bring actions to enforce Gramm-Leach-Bliley against lawyers pending a final decision in the courts.

Looking To Congress

Meanwhile, the ABA continues to urge Congress to clarify its original intent that lawyers should not be subject to the privacy provisions in the act, a sweeping financial services law enacted by Cong­ress in 1999.

The ABA has been advocating that position since 2001, when enforcement regulations the FTC issued in 2000 went into effect. The privacy provisions in Title V of the act require financial institutions to inform their customers in writing every year about privacy protection policies and take other steps to protect customer privacy.

In its regulations, the FTC interpreted “financial institution” to encompass businesses that are “significantly engaged in fi­nancial activities,” such as real estate settlement services, debt collection, financial advice and tax planning. Neither the act nor the regulations specifically refer to lawyers, but when the ABA and other groups raised questions, the FTC refused to say that the law would not apply to the profession. The commission also said it lacked authority to specifically exempt lawyers from the act.

In 2002, the ABA and the New York State Bar Associ­ation both filed lawsuits seeking to block FTC enforcement of Gramm-Leach-Bliley against lawyers. In August 2003, the district court denied the FTC’s motion to dismiss the suits. On April 30, District Judge Reggie B. Walton issued a summary judgment for the bar associations.

But an FTC appeal of the decision “presents the pros­pect of a lengthy period of litigation and sustained un­cer­tainty for more than a half-million attorneys and millions of their clients,” said then-ABA President Dennis W. Archer in a July statement to the Senate Committee on Banking, Housing and Urban Affairs as it began oversight hearings in conjunction with the act’s fifth anniversary.

“Attorneys are not financial institutions and should not be treated as such,” wrote Archer of Detroit. He emphasized that applying the privacy provisions of the act to lawyers furthers none of its legislative objectives. In­stead, he wrote, the FTC regulations seek to impose unnecessary burdens on lawyers while raising concerns among clients about the scope of attorney-client confidentiality.

“Clients know that their information is protected by the duty of confidentiality, by professional conduct codes and by court-recognized privileges,” Archer wrote. “Law­yers always have been precluded by state law and ethics regulations from disclosing, much less selling, confidential clients’ information to anyone without client consent.”

In Congress, the ABA is urging enactment of a bill in the House sponsored by Reps. Carolyn B. Maloney, D-N.Y., and Judy Biggert, R-Ill., to exempt lawyers from Gramm-Leach-Bliley’s privacy provisions. Biggert noted that Cong­ress’ intent in the act was not to regulate lawyers. But the FTC, she said, appears to have “unintentionally swept under its umbrella the one group of professionals that already is governed by the strictest possible confidentiality or privacy regulations.”

Rhonda McMillion is editor of Washington Letter, an ABA Governmental Affairs Office publication.

This column is written by the ABA Governmental Affairs Office and discusses advocacy efforts by the ABA relating to issues being addressed by Congress and the executive branch of the federal government.

Give us feedback, share a story tip or update, or report an error.