ARM Attorneys Win Case Challenging New York City Debt Collection Law

A federal judge Wednesday sided with a collection attorney and other plaintiffs in ruling that the New York City Department of Consumer Affairs has no authority to regulate lawyers’ conduct. The suit was filed after the city passed a law in 2009 that would have required ARM and creditor’s rights attorneys to be registered as “collection agencies” and follow new regulations under the law.

The law, passed in March 2009, required debt buyers and collection attorneys to obtain licenses as collection agencies and adhere to new rules also laid out in the legislation. At the time, the debt buying sector was thought to be the ARM group that would be most impacted.

But Eric Berman, a collection attorney and then-director of the National Association of Retail Collection Attorneys (NARCA) waved a red flag for the legal ARM community and vowed to fight the law. Berman told insideARM at the time that the law was an “unneeded, unnecessary and unconstitutional regulation,” noting that any attorney in New York City is already subject to New York state Judiciary Law.

The dual regulation was the basis for Berman’s suit against the city.

U.S. District Judge Eric Vitaliano agreed Wednesday, granting the plaintiffs’ – Berman, law firm Lacy Katzen, and debt buyer DBA Asset Holdings — request for summary judgment on the claim that giving the NYC Department of Consumer Affairs  (DCA) authority to regulate an attorney’s conduct constitutes dual regulation.

“It is simply not within the DCA’s power to license attorneys or regulate their professional conduct,” Vitaliano wrote in the opinion.