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LAWYERS RULED EXEMPT UNDER PRIVACY LAW

NEW YORK — Attorneys are not subject to federal privacy laws that govern financial institutions, a federal judge in Washington, D.C., ruled Monday.

The ruling marks another victory for attorneys, led by the New York State Bar Association, against the Federal Trade Commission, which had refused to exempt attorneys from the 1999 law, known as the Gramm-Leach-Bliley Act.

Under the act, financial institutions like banks and credit card companies must annually notify customers of their privacy policies. The notices also must explain that customers have a right to opt out of having their information shared with third parties.

Attorneys have argued that they should not be subject to the law because attorney-client privilege and ethics rules already govern the relationship between lawyers and their clients.

The FTC, however, notified attorneys two years ago that it did not have the power to declare them exempt from the regulations.

Monday’s ruling, from Judge Reggie Walton of U.S. District Court for the District of Columbia, found that the FTC’s decision was “arbitrary and capricious.” The ruling granted summary judgment to the State Bar Association.

The possibility that attorneys would have to send clients annual privacy notices particularly rankled lawyers who handle real estate settlements, tax-planning, tax preparation and other financial matters.

Among the concerns raised by the bar association were that the notices would confuse clients, who might think that some sort of opt-in clause was being attached to the attorney-client privilege. The notices also are costly to produce and send, and the bar association argued that the cost fell heavily on small firms and solo practitioners.

New York Law Journal

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