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Lawyers do not have to follow a federal rule forcing them to send out privacy disclosure notices to clients, a federal appeals court ruled last week. In a stiff reprimand to the Federal Trade Commission, D.C. Circuit Judge David Sentelle told the agency that Congress did not intend the FTC to regulate lawyers under 1999′s Gramm-Leach-Bliley Act, which requires financial institutions to alert customers about possible disclosure of their personal information. In a decision joined by Chief Judge Douglas Ginsburg, Sentelle noted that lawyers were not mentioned in the legislation and called the FTC’s attempt to regulate attorneys indefensible “turf expansion.” Justice Department lawyer Stephanie Marcus had argued in court that the law gave the agency broad authority to regulate activity “financial in nature,” which the FTC said includes some legal advice. (Her office did not respond to requests for comment on whether the government will ask the Supreme Court to take up the case.) The privacy disclosures would have been onerous to law firms and confusing to clients who believe confidentiality is already assured through the attorney-client privilege, argued the American Bar Association and the New York State Bar Association, which filed suit in 2001. An underlying issue in the case was federal regulation of lawyers, who already have to follow existing state laws governing confidentiality. “We thought that this was a terrible idea. The legal profession has always been regulated by the states,” says New York State Bar Association President A. Vincent Buzard, a partner with Harris Beach in Rochester. “This is a huge intrusion into states’ rights to regulate the profession. It made no sense.” Steptoe & Johnson partner David Roll argued for the ABA, and Steven Krane, a Proskauer Rose partner from New York, represented the New York Bar on a pro bono basis. Chief Justice John Roberts Jr. heard arguments in the case in May as a D.C. Circuit judge but recused himself in August when he was being evaluated by the ABA for a Supreme Court seat.
Lily Henning can be contacted at [email protected].

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