CFPB Focus on Attorneys and Law Firms

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Mar 17 2017
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Last year, vis-a-vis the relationship between attorneys and the Bureau, the chant that arose was . . . "THE BUREAU'S IN CHARGE OF OUR FIRM? NO WAY" 

Lots of folks are saying "Yes Way." After the Hanna case and the way vendor cases are heating up, many firms feel the CFPB is trying to control the practice of law. Of seven Consent Orders issued last year, five deal with vendor relations and two were issued against law firms in New Jersey and New York. And 2015 featured, of course, the CFPB actions involving Hanna, Pressler, et al.

What’s going on here? When a paralegal works on a case, the attorney is responsible for that person’s work. And the ABA defines your legal assistants/paralegals as: A legal assistant or paralegal is a person, qualified by education, training or work experience who is employed or retained by a lawyer, law office, corporation, governmental agency or other
entity and who performs specifically delegated substantive legal work for which a lawyer is responsible.

What do Attorneys Think About the Hanna Case?
One key work here “over-reaching?” There were legal teams employed by Hanna working these cases with a lead attorney responsible for each case (so says the GA State Bar). Is a team working on a case doing no meaningful work? Is the work under the direction of an attorney, or maybe the firm? Can it be claimed that the firm, not the attorney, is doing the legal work on a case? Who gets the credit for these numerous tasks – apparently not the lead attorney.

What’s going on here?                                                                                                                                                                                                                             When a paralegal works on a case, the attorney is responsible for that person’s work. Here, it seems that the way the debt-buyer business works is a good reason to punish law firms who accept a default account and end up filing an action against the debtor. Does the CFPB claim that checking all attributes and staging a case to be appropriately and legally filed is not a legal task? This Order seems to be telling us that doing such legal work, in addition to using technology in a way that’s not properly framed is actually deceiving the consumer. Is this the end of the paralegal profession? And notice the PRA and Encore
Orders; any attorney working for these firms (directly or indirectly), having actual notice of the Order, are prohibited from violating the law in collecting a debt. Do absurd (or vague) results call for absurd tactics? What about using technology? If a court can highlight computer logs as a basis for lack of meaningful involvement, should you configure your case management software to (1) log every action on a debtor account to create a total time logged report showing all “legal” activity on the account? Activity that the ABA has defined as specifically delegated substantive legal work, performed by a member of the law firm who has been qualified by education, training, working a particular debtor account, then delivering it to the lead attorney to review, sign and file. Only an officer of the court can file documents; or (2) let’s make available a time logger, tied to an account, that will create the audit trail of meaningful involvement by all members of the legal team. If you already have audit-trail tracking, consider using it to show
meaningful involvement by your legal teams.


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