When the Fair Debt Collection Practices Act (“FDCPA”) was initially written many believed that lawyers were exempt from its requirements. However, the US Supreme Court ruled shortly thereafter that the FDCPA also applied to attorneys who were debt collectors. Whether an attorney was a debt collector essentially amounted to whether or not a regular portion of the attorney’s business was from debt collection. (See, 15 U.S.C. § 1692a(6)).
There is now a bill known as the Practice of Law Technical Clarification Act of 2017 before Congress to exempt attorneys from the FDCPA under most circumstances. Specifically, Section 803(6) of the Fair Debt Collection Practices Act (15 U.S.C. 1692a(6)) would be amended to provide that an exemption for “any law firm or licensed attorney, to the extent that such firm or attorney is—
- “serving, filing, or conveying formal legal pleadings, discovery requests, or other documents pursuant to the applicable rules of civil procedure; or
- communicating in connection with a legal action to collect a debt on behalf of a client in, or at the direction of, a court of law (including in depositions or settlement conferences) or in the enforcement of a judgment…”
For obvious reasons, the National Consumer Law Center has concerns with eliminating liability from what it calls debt collection “mills.” The bill supporters take the position that this is a common sense bill that clarifies that attorneys involved in litigation should not be subject to interference by federal agencies, since there is already a judge present to provide adequate protection.
The bill was proposed by Representative David Trott from Michigan who is a Republican. Because Representative Trott is a Republican, and the House, Senate and Presidency are all currently controlled by Republicans, there is a chance that the bill will become law.
Should the bill become law, the practical effect on associations would likely be that attorneys would no longer need to double check the math and assessments on all new files, but could rely entirely on the ledgers of the various treasurers and property managers. This could reduce attorney fees, but might also result in some less than accurate collection actions. Since unit owners certainly have the opportunity to contest the debt, the burden would fall on them to raise as a defense any inconsistencies in the amount due versus what is allowed under the documents.
Best Practice. Regardless of whether or not the bill becomes law, it is in everyone’s best interest for an attorney or law firm to confirm the debt ledger of their clients, so that at least the basic evidence that would be needed in court exists before any suit is filed. Being accurate may take some time, but being inaccurate results in a lack of trust and accusations that tend to be hard to overcome.