Do City Debt Regulations apply to Lawyers? Issue Heats up in New York

Debt collection attorneys push forward in their attempt to exclude attorneys from the reach of Local Law 15, a New York City regulation that governs debt collection activities (i.e. debt validation, licensure and calling). The city law is touted as the strongest anti-harassment protection law in the country.[1]

Private debt-collection attorneys argue that the local law infringes on the state's power to regulate the practice of law. Essentially, we have a preemption battle between state and local law. New York's highest court is called upon to answer the ambiguity.

Last year, federal Judge, Eric Vitaliano, invalidated the local law's application to attorney practice because it conflicted with, and was preempted by, New York state law,[2] which regulates the "core aspects of the practice of law." See that blog here. The end result was a law that exempts attorneys who strictly practice law while still covering attorneys who perform non-legal debt-collection activities such as mailing or calling debtors.

The legal tension between the sections resulted in an appeal that now directs two certified questions to the Court of Appeals:

  1. Does Local Law 15 unlawfully encroach on the state's authority to regulate attorneys[3]?
  2. Does Local Law 15 violate the New York City Charter (§ 2203c)[4]?

Really, the issue boils down to whether the regulation of "nonlegal" debt-collection activities by lawyers amounts to the regulation of the practice of law.

I provide the link to the code at issue. Stay tuned. This dispute obviously impacts my law firm's mission, which is to provide cutting-edge representation using all laws at our disposal.



[1] The NYC Dept. of Consumer Affairs declares in its published Debt Collection Guide that "[t]he New York City Consumer Protection Law provides the strongest anti-harassment protection in the Country."

[2] Judiciary § 90.

[3] Does Local Law 15 conflict with NY Judic. Law §§ 53 (Court of Appeals power to regulate attorneys) and 90 (New York Courts' power to regulate attorneys)?

[4] The charter gives the city's Dept. of Consumer Affairs power over all licenses and permits except in cases regarding powers conferred on other persons or agencies.

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