A FEDERAL JUDGE ruled this month that lawyers are not required to send government mandated "privacy notices" to their clients, finding in favor of the New York State Bar Association, which sued the Federal Trade Commission (FTC) to stop enforcement of the Gramm-Leach-Bliley Act as it applies to the legal profession. US District Judge for the District of Columbia Reggie B. Walton agreed with NYSBA’s assertion that Congress never intended the privacy provisions to apply to lawyers.

"Judge Walton’s decision has reaffirmed what lawyers’ groups have contended since the inception of GLBA: that there is no evidence that Congress ever intended the Act to apply to lawyers," said NYSBA President A. Thomas Levin. "Lawyers are already bound by strict codes of professional responsibility that govern their daily ethical and business behavior and provide far greater protection of a client’s personal information than this Act requires of financial institutions."

In its lawsuit filed in April 2001, NYSBA asserted that the FTC acted arbitrarily and capriciously in refusing to exempt lawyers from the regulation. It also said that GLBA, as it applies to lawyers, is unconstitutional under the 10th amendment, which governs states’ rights. NYSBA argued that without clear evidence of Congressional intent, the court should not even address the question of whether the federal government has the authority to regulate this area.

Also known as the Financial Services Modernization Act of 1999, GLBA requires financial institutions to provide "a clear disclosure to all their clients concerning their privacy policies" and to explain how they individually share information with affiliates and third parties. The FTC argued that lawyers engaged in such practice areas as tax planning and transactions, estate planning, real estate closings and personal bankruptcy should be subject to GLBA.

Last June, the FTC and the U.S. Department of Justice agreed not to take action against lawyers who failed to take steps to notify clients of their privacy and information sharing policies by July 1 as mandated under GLBA. In August 2003, the court rejected the government’s request to dismiss the case. The ruling grants a final judgment to NYSBA.

"The public interest prevailed when the United States District Court for the District of Columbia agreed with the ABA that Congress did not intend for the [Gramm-Leach-Bliley Act’s] privacy provisions to apply to attorneys "who provide financially-related legal services," said ABA President Dennis Archer. The ruling came as the result of a lawsuit filed by the ABA against the FTC, which was decided with the NYSBA suit.

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