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A lawyer is not a financial institution. That may seem obvious, but it took the U.S. Circuit Court for the District of Columbia to make it clear to the Federal Trade Commission (FTC), which had asserted new federal authority to regulate the legal profession under the 1999 Gramm-Leach-Bliley Act. The decision last week means the legal profession is not subject to the federal privacy provisions of the act requiring financial institutions to send annual privacy disclosure notices to clients, said David L. Roll of Steptoe & Johnson in Washington. He represented the American Bar Association, which asked the courts to clarify the FTC interpretation, as did the New York State Bar Association in ABA v. FTC, No. 04-5257. The ruling could go beyond lawyers and serve as an aid to other state-regulated professions that don’t want to submit to the FTC oversight-in particular accountants, according to Roll. “Probably it is a message to Congress that if it intends to regulate a profession governed by state law it has to do it very explicitly and directly,” Roll said. Lawyers traditionally have been regulated by the states in which they practice. The 1999 law, known as the Financial Modernization Act, requires financial institutions to notify clients annually that they won’t market or sell private data about them to other companies. D.C. Circuit Judge David Sentelle wrote, “We find it difficult to believe that Congress . . . intended to undertake the regulation of the profession of law-a profession never before regulated by ‘federal functional regulators’-and never mentioned in the statute.” Sentelle and Judge Douglas H. Ginsburg rejected the FTC assertion that its interpretation was entitled to court deference. “To find this interpretation deference-worthy, we would have to conclude that Congress not only had hidden a rather large elephant in a rather obscure mouse hole, but had buried the ambiguity in which the pachyderm lurks beneath an incredibly deep mound of specificity, none of which bears the footprints of the beast or any indication that Congress even suspected its presence,” wrote Sentelle. The FTC found its authority in Section 6805 of the law, which gives it the power to enforce the statute with respect to “financial institutions and other persons subject to [the commission's] jurisdiction.” Incorporating lawyers in language aimed at financial institutions “makes an exceptionally poor fit,” said Sentelle. U.S. Department of Justice spokeswoman Cynthia Magnuson said that the FTC is reviewing the opinion, and she declined to comment further. The ABA and the New York bar sought declaratory judgment after the FTC rulemaking interpreted the statute as giving the commission authority to regulate attorney privacy disclosures. The district court sided with the ABA and the appeals court agreed.

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