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August 28, 2009 12:38 PM

Are Lawyers Creditors?

Posted by Zach Lowe

The American Bar Association is done waiting to see if the Federal Trade Commission will exempt lawyers from a new law requiring creditors to take certain internal measures against identity theft. The ABA filed a federal suit Thursday against the FTC, claiming the agency has wrongly classified lawyers as creditors and asking a federal judge to block the law from applying to attorneys when it goes into effect--if it ever does actually go into effect, according to the The National Law Journal, an Am Law Daily sibling publication. 

The law requires organizations that act as creditors to establish internal policies and programs designed to fight identity theft. The FTC, which will govern enforcement of the law, has initially classified lawyers as creditors because firms provide services before they bill for those services--something akin to the extension of credit, according to the FTC and our colleagues at the NLJ. 

The ABA says that classification is wrong, and raised the specter in its lawsuit of increasing legal costs should the FTC apply the legislation to law firms. The ABA turned to Proskauer Rose for representation in the case, the NLJ says.

The law is scheduled to go into effect Nov. 1, though the FTC has pushed back the start date three times already, according to the NLJ.

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