A legal-support firm under investigation by the Consumer Financial Protection Bureau is accusing the CFPB of overstepping its bounds in demanding personal information about the firm's clients.
Morgan Drexel also challenges the agency's right to regulate the practice of law, which is overseen by state bars, according to the suit filed Monday in a United States District Court in Florida.
As part of its investigation into Morgan Drexel, the CFPB has demanded that the firm turn over "a vast collection of personal and sensitive financial data"about the clients of attorneys supported by the firm, the suit says. It claims that these demands are unconstitutional, and that complying would be a violation of attorney-client privilege.
The CFPB "lacks political accountability and internal checks and balances that are constitutionally required,"the suit says, adding that the agency "is so independent' that it is not sufficiently accountable to the political actors to survive constitutional scrutiny."
The lawsuit comes less than a week after the Government Accountability Office agreed to a request from Congressional Republicans that it investigate the regulator's data-gathering practices. The CFPB has paid outside firms more than $20 million to collect financial data on 10 million Americans, according to reports.
The Connecticut attorney Kimberly Pisinski, a Morgan Drexel client who is the firm's co-plaintiff in the suit, says that the CFPB's efforts "look like data mining."
"They're demanding lots of lawyers' confidential information through the companies they work with,"says Pisinski.
Morgan Drexel alleges that the CFPB's 18-month investigation of its business has hurt the company's reputation and increased its cost of financing. The suit seeks a court order temporarily enjoining the CFPB from regulating, in the name of public privacy.
The law firm Venable is the plaintiffs' counsel for the case.