A New York City law designed to prevent collection law firms from engaging in abusive practices does not infringe on the state's authority to regulate the profession, according to a ruling from the Second Circuit Court of Appeals.
Two law firms, Eric M. Berman PC and Lacy Katzen LLP, sued the city several years ago over the collection regulations, specifically arguing that Local Law 15 encroaches on the state's authority to regulate lawyers. Local Law 15, adopted in 2009, added debt buyers and collection law firms to a list of entities regulated by the city.
The law requires regulated firms to provide debtors with call-back numbers and other information and mandates a fine of up to $100 for violations. However, it omitted attorneys and law firms that collect debt on behalf of clients through litigation.
Wednesday's ruling is the second the court has issued affirming Local Law 15. In 2014, two years after a federal judge sided with the law firms, the Second Circuit ruled the law did not appear to regulate attorneys collecting debts. At that time, the Second Circuit asked the New York State Court of Appeals to decide whether the law violated the state's authority to regulate lawyers or New York City's charter, which designated the Department of Consumer Affairs as the go-to agency to license debt collectors. In June, an appeals court ruled the law did not violate the state's authority and complements judiciary laws regulating attorneys. The court, however, declined to determine whether the law violated the city's charter and asked the Second Circuit to once again review the case.
In doing so, the appeals court stated that "the city should not be prevented from taking permissible steps to curb abusive debt collection practices."
The case had been bandied about by various New York federal courts but the Second Circuit's ruling appears to finally close the issue.
