Only Court Regulates Lawyers
The Connecticut Supreme Court has held that a national consumer advocacy law firm may not be regulated by state debt negotiation statutes
The present appeal arises from a petition for a declaratory ruling that the plaintiff, Persels & Associates, LLC, a national consumer advocacy law firm, filed with the commissioner in 2012, seeking a determination that the plaintiff is exempt from the debt negotiation statutes. Before reviewing the procedural history of the case, it will be instructive to consider briefly the relevant statutory scheme, its history, and the mischief to which it is directed…
…the plaintiff contends that, under the facts as alleged, the debt negotiation statutes impermissibly intrude on the judiciary’s exclusive authority to regulate attorney conduct and licensure. For example, the plaintiff argues that subjecting Connecticut licensed debt negotiation attorneys, and those persons whom they supervise pursuant to rules 5.3 and 5.5 of the Rules of Professional Conduct, to the licensing and regulatory requirements imposed by the debt negotiation statutes would, among other things, improperly: (1) give the commissioner the authority to determine which attorneys in this state have the ‘‘character, reputation, integrity and general fitness’’ to provide debt negotiation services in conjunction with their practice of law; General Statutes § 36a-671 (d) (1); (2) require that Connecticut attorneys obtain additional licenses from and pay hefty licensing fees to agencies outside the Judicial Branch in order to offer traditional legal services; and (3)impinge on the Judicial Branch’s exclusive authority to suspend or disbar attorneys who have engaged in professional misconduct. We agree.
The court has sole authority to regulate the practice of law
It is clear, then, that the judiciary wields the sole authority to license and regulate the general practice of law in Connecticut. It is equally clear, however, that the judiciary does not exercise exclusive control over attorney conduct insofar as an attorney is not engaged in the practice of law. Accordingly, the central question presented by this appeal is whether an attorney who provides debt negotiation services as characterized by the plaintiff in this declaratory action is thereby engaged in the practice of law…
…taking the allegations in the complaint as true, as we must, we are compelled to conclude that the debt negotiation services that the plaintiff provides are inextricably bound together with the practice of law by licensed Connecticut attorneys. See, e.g., Kowaleski v. Rabel, Statewide Grievance Committee, Opinion No. 13-0267 (April 17, 2014) (concluding that Pennsylvania attorney who assisted Connecticut resident in debt modification and reworking of mortgage engaged in unauthorized practice of law). Accordingly, their regulation falls under the exclusive authority of the Judicial Branch. In their current form, the debt negotiation statutes therefore offend the separation of powers provision of article second of the state constitution and are unenforceable with respect to Connecticut attorneys engaged in the bona fide practice of law.
And the bar police are watching
we note that the Office of Chief Disciplinary Counsel is well aware of its duty to regulate lawyers when they are acting as debt negotiators, and we trust that it will continue to monitor vigilantly their activities and fees in this area of practice. We expect that that office, if asked to pass upon the fees charged by the plaintiff or other debt negotiation companies, will take the statutory fee cap and the commissioner’s maximum fee schedule into consideration in determining whether the fees charged are reasonable. We likewise trust that Connecticut attorneys, both newly admitted and experienced, will remain mindful of the potential ethical pitfalls they may encounter in this area of practice.
(Mike Frisch)