|
The United States Congress has passed a law recently which could create real problems for lawyers. I'm concerned that many lawyers are unaware of this law and may inadvertently find themselves in
violation.
I'm referring to Title V of the Gramm-Leach-Bliley Act. This is a banking law that requires financial institutions to send notices to customers informing them of the institution's privacy policy.
Essentially it was passed to prevent credit card companies from selling customer lists without informing the customers. You probably have received a few of these from your bank or credit card
company. The problem is that the FTC has determined that lawyers and law firms in many instances may be "financial institutions" within the meaning of the Act and are, therefore required to
send their clients these privacy policy notices.
Activities which are deemed financial in nature and may require lawyers to comply with Gramm-Leach-Bliley are tax planning, tax return preparation, debt collection, financial investment and economic
advisory services, and real estate settlement services. If you or your firm do any of these things, read on.
The American Bar Association requested that the FTC use its authority under the Act to exempt attorneys engaged in the practice of law from the requirements of Title V. On April 8, 2002, the FTC
formally responded, declining to exempt lawyers. The FTC bases its ruling on its belief that it lacks express statutory authority to make such an exemption.
There are obvious problems with requiring lawyers to comply with the Act. Lawyers have ethical standards of confidentiality that go far beyond the requirements of Gramm-Leach-Bliley. If a client
received a notice required by Gramm-Leach-Bliley that the lawyer or firm intended to comply with the requirements of the Act, and the client inferred that the lawyer did not feel bound by rules of
confidentially that clients expect, there is likely to be not only confusion, but actual panic. Further, if a lawyer is now violating Gramm-Leach-Bliley by selling lists of clients without their
consent, that lawyer is in real trouble with the bar of any state, whether Gramm-Leach-Bliley exists or not.
In addition, there may be ethical problems in complying with Title V. In some cases, even the fact that a client has retained the lawyer is confidential information which cannot be disclosed, even to
a spouse. In these cases, sending the notice to the joint home address of a client and spouse may be an ethical violation.
Lastly, there is the expense and problem of sending the notices, which are at best redundant and useless and at worst confusing and harmful.
Congresswoman Carolyn Maloney (D-NY) is working on legislation to fix this problem. Her Bill has not, at the time of this writing, been numbered or filed. I have asked Rep.'s Cannon, Hansen and
Matheson to sign on as co-sponsors. I would appreciate it if you would contact any of these Congressmen and encourage them to co-sponsor Rep. Maloney's legislation. Representative Cannon serves on
the Judiciary Committee where this bill will likely be heard initially, and his support is especially important. When the Bill gets to the Senate, the support of both Utah Senators will be important.
The Bill may be assigned to the Judiciary Committee where Senator Hatch has immense influence, or, it may be assigned to the Banking Committee, where Senator Bennett is very influential. Contacting
these Representatives and Senators would go a long way in getting this problem fixed.
In the meantime, if you or your firm engage in any of the practices considered to be "financial" I suggest you make sure you are not violating the law by failing to send disclosure notices.
NOTE: Much of the information in this President's Message came from Ellen McBarnette, Legislative Counsel for the ABA Governmental Affairs Office. Further information can be obtained from the ABA
website. Go to www.abanet.org, then search under "Gramm-Leach-Bliley."
|
