Federal Oversight of the Legal Profession: 2002 Legislative Developments

TEXAS LAWYERS' INSURANCE EXCHANGE

FEDERAL OVERSIGHT OF THE LEGAL PROFESSION: 2002 LEGISLATIVE DEVELOPMENTS

1. Bankruptcy Abuse Prevention and Consumer Protection Act of 2002: H.R. 333 (pending), House Conference Report issued July 25, 2002. Watch for action on: Sec. 102, requiring attorneys to certify after inquiry as to the accuracy of Debtor's schedules; Sec. 203, attorney certification after inquiry of the Debtor's ability to pay reaffirmed debts; and Sec. 226, 227 defining attorneys who assist in consumer bankruptcies with under $150,000 in exempt assets as "debt relief agencies," and subjecting such attorneys to regulations and restrictions. Certain enforcement provisions throughout H.R.333 allow Trustees to seek costs and attorney's fees and or civil monetary sanctions against attorneys.

See http://www.abanet.org/poladv/letters/107th/bankruptcy042202.html and ftp://ftp.loc.gov/pub/thomas/cp107/hr617.txt.

2. FTC Privacy Disclosure Issues (Gramm-Leach-Bliley Act): P. L. 106-102, Title V, Sec. 509, Nov. 12, 1999, 15 U.S.C. Subchapter I, Sec. 6801 - 6810, et seq. The compliance deadline was 7/1/01 for implementing procedures regarding customer and consumer privacy policy disclosure notices. The FTC considers attorneys subject to its regulations as "financial institutions." See 16 C.F.R. 313, Vol. 65, pp. 33646 - 33689 (May 2000). Suits contesting the FTC's position were filed by the New York State Bar Association (4/29/02) and the American Bar Association (9/25/02); Reps. Biggert, R-Ill., and Maloney, D-N.Y., introduced legislation 9/25/02 to exempt lawyers from GLBA disclosure requirements.

See http://www.abanet.org/poladv/priorities/glb.html.

3. Corporate Fraud Accountability Act of 2002 (Sarbanes-Oxley Act of 2002): P.L. 107-204, eff. 7/30/02 (H.R. 3763 (companion to S. 2673)). Created a Public Company Accounting Oversight Board, increased corporate responsibility and enhanced SEC resources and enforcement, including oversight of the legal profession. See Section 602 in particular, which:

1) Gives SEC censure authority of attorneys re: appearance and practice before the SEC;

2) States rules of professional responsibility for attorneys representing public companies before the SEC, including requiring attorneys to report:

(a) evidence of a material violation of securities law or breach of fiduciary duty to the chief legal counsel or the chief executive officer of the company; and then
(b) if corporate executives do not respond appropriately, to the audit committee of the board of directors.

See http://thomas.loc.gov/cgi-bin/bdquery/z?d107:HR-3763:@@@L&summ2=m&.