Consumer Financial Protection Bureau building in Washington, D.C.
Consumer Financial Protection Bureau building in Washington, D.C. (Photo: Diego M. Radzinschi/ALM)

Last October, Maria Earley left the law firm Sidley Austin for Reed Smith with the hope of building a practice around defending clients against the Consumer Financial Protection Bureau.

For Earley, a former consumer bureau lawyer, the timing seemed ideal. The CFPB was aggressive as ever, bringing multimillion-dollar enforcement actions and rolling out rules to restrict payday lending and to ban arbitration agreements that prevent class actions. Hillary Clinton was poised to take the White House in an election that would have emboldened an Obama-era agency that one lawyer, in court, recently called the “800-pound gorilla in the regulatory room.”

Earley’s optimism has turned to unease as a confluence of events, including Donald Trump’s surprise victory, has shaken not only the CFPB and its cadre of lawyers but also the law firm practice groups that built up around enforcement actions and investigations tied to the agency.

As the CFPB grew into a tough new regulator, collecting billions of dollars in penalties from mortgage lenders and big banks, law firms moved quickly to hire and promote lawyers pulled from the agency’s ranks. Now, the CFPB faces an uncertain future: its constitutionality challenged in court and its continued potency under threat from Republicans in Congress and a White House that has vowed to “dismantle” the Dodd-Frank Act that gave birth to the bureau.

Law firm interest in CFPB lawyers is expected to wane in the Trump administration and practice groups rooted in the agency could be forced to pivot, focusing more time on other federal and state regulators, according to more than a dozen interviews with law firm partners and recruiters.

“No firm is coming to me saying we need these CFPB people, whereas six months ago they were,” said Steve Nelson, a headhunter at The McCormick Group, a law and government affairs firm based in Arlington, Virginia. “I think right now, the general prevailing attitude is going to be wait-and-see. I don’t think that over the next few months you’ll see a lot of folks going after these people, because no one knows what’s going to happen.”

Trump’s ascendancy, combined with the Republican-controlled Congress, has created “substantial uncertainty,” said Jones Day partner C. Hunter Wiggins, a former principal deputy enforcement director at the CFPB. “I think that with the election, the general reaction has been sort of a, ‘Let’s wait and see what happens.’ Any given week, a wide range of possible outcomes for the bureau is on the table. And nobody really knows what that’s going to look like yet.”

Staying aggressive—for now

The CFPB has not backed down in the aftermath of Trump’s win. The agency has brought more than 20 enforcement actions—Navient Corp., the country’s largest student loan company, was sued last month—since early November. Richard Cordray, the CFPB director, has no plans to resign before his five-year term expires in July 2018, an agency spokeswoman has said.

Maria Earley of Reed Smith.

Still, Earley and others said they expect CFPB work to eventually drop off. Earley anticipates spending more time representing clients before other federal regulators and Democratic state attorneys general who have pushed to defend the consumer bureau and who have promised a strong resistance to Trump-driven initiatives.

“Everyone’s waiting with bated breath to see who’s going to lead [the CFPB], what’s going to change,” said Earley, who worked at the agency from 2011 to 2014. “There’s lots of uncertainty.”

Trump hasn’t said much about the CFPB. But Congress—and the courts—haven’t been as quiet. Republican leaders in the House have pushed legislation to abolish the agency or turn it into a bipartisan commission. And a pending civil case in Washington could give the White House greater control over the tenure of the CFPB director, who now can only be removed for cause.

A week after Earley joined Reed Smith, a divided panel of the U.S. Court of Appeals for the D.C. Circuit delivered a gut check against the single-director power structure of the independent agency. The appeals court decision, which the full D.C. Circuit will now review, “gave people a bit of a pause with regard to the agency’s structure, but I don’t think really impacted people’s overall view of the agency,” said Wiggins, who worked at the CFPB for five years starting in 2011.

Financial practice group leaders said in interviews that CFPB attorneys are often so invested in the agency’s “mission” that they are not bent on spinning through Washington’s revolving door.

Cordray and other CFPB leaders, including enforcement chief Anthony Alexis—together, they oversee 117 enforcement lawyers—have been trying to keep spirits up. After the D.C. Circuit ruling, Cordray told agency staff in a weekly memo: “Keep yourselves on track just as before, and continue to focus, as always, on doing our work as best we can to deliver value in protecting and supporting consumers.”

The road ahead for firms

Ballard Spahr partner Alan Kaplinsky, who leads the firm’s consumer financial services group, said any downturn in CFPB work won’t automatically make the firm disinterested in hiring a lawyer from the agency.

“If someone’s at the CFPB and have the right background we’re looking for, the fact that they have experience at the CFPB is a plus,” he said. “But it’s not determinative.”

At BuckleySandler, a firm that boasts about its CFPB practice, managing partner Andrew Sandler said his firm is “always open” to considering lawyers out of the CFPB.

Andrew Sandler.

”I have several resumes on my desk right now from CFPB lawyers,” Sandler said. “So we look hard, and we hire based on talent. But it’s certainly a positive if a really talented lawyer has CFPB experience.”

Mayer Brown partner Larry Platt said the uncertainty around the CFPB would cool off hiring by firms that have not already established credentials in the consumer financial services sector.

“The big difference is the number of law firms that were trying to jump into the area. They didn’t have any bona fides in consumer credit law, so they were trying to hire it with CFPB people,” he said. “Those people are less likely to aggressively jump into the area because they may see fewer opportunities.”

Sandler has a rosy forecast for his firm’s CFPB workload. Any slowdown in agency enforcement, he said, might sift out firms less devoted to dealing with the agency, leaving more work for firms that built up consumer-finance teams.

“The nature of the work will be different, and with respect to the CFPB, perhaps there will be less work. But my experience is that when the overall amount of work at a particular agency goes down, the firms that do it best and have the most experience doing it, their market shares go up and they actually have as much if not more work with that agency,” Sandler said. “When an agency becomes less active, it eliminates the dabblers.”

Earley, based in Reed Smith’s Washington office, said she remains focused on defending clients in CFPB enforcement matters. “So far, the CFPB is still going,” she said. “But nobody knows what it’s going to look like in six months.”

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