Lawyers Exempt From New FTC Foreclosure Regulations

​To paraphrase the old joke about communism: all professions are equal, but some are more equal than others. Once again, lawyers have carved themselves an exemption from Federal regulations. In response to the growing trend of predatory mortgage relief services, the Federal Trade Commission created a rule to protect homeowners facing foreclosure by preventing debt relief companies from collecting fees upfront and from making false or misleading claims about their services. Most lawyers are exempt from these new requirements.
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Having successfully lobbied to gain the exemption, ABA President Stephen Zack applauded the FTC's decision, saying that "[b]y exempting most practicing lawyers who help consumer clients to renegotiate their mortgages or avoid foreclosure, the final FTC rule...will allow lawyers to continue to provide the critical legal services and expertise homeowners in crisis need." This statement raises more questions than it answers. Are lawyers unable to provide legal services without charging fees upfront or making false or misleading statements to their clients? Of course not. Why then should lawyers be exempt from rules intended to protect the public?

Lawyers claim that they need not be subject to such regulations because they are held accountable by various state Bar rules governing attorney conduct. While there are rules of professional conduct that, for example, prohibit lawyers from making false or misleading statements or control how lawyers may charge fees, such rules are often far less stringent than similar state or federal consumer protection laws. Worse, according to the ABA's own statistics, less than 5% of all disciplinary complaints made against lawyers nationwide result in any formal charges. Even when charges are filed, disciplinary proceedings are often conducted privately and in the rare instances when lawyers were subjected to formal sanction, nearly half received only private reprimands.

Under the current system, the hallmarks of lawyer regulation are leniency and secrecy. Lawyers should be regulated like any other profession. If charging fees upfront to homeowners facing foreclosure is a bad thing for mortgage relief services to do, it is equally a bad thing for lawyers to do. Lawyers have the same capacity for misconduct as any other professionals and can hardly claim to have the best interests of consumers in mind if they repeatedly seek to be exempt from rules and laws designed to protect them.