THE LEGISLATURE RECENTLY tinkered with New Hampshire's Consumer Protection Act so that today attorneys are, for the first time since the statute was enacted, potentially liable to its provisions.

Although attorneys are now subject to the Act, it is unclear how this amendment will affect lawyers' potential liability in future cases. This legislative amendment, its impact on the profession and attorneys' possible responses, both in terms of risk management and defenses to claims under the Act, will be the subject of a series of articles appearing in Bar News over the next several months.

Prior to the Legislature's amendment of its provisions, the Act exempted "[t]rade or commerce otherwise permitted under laws as administered by any regulatory board or officer acting under statutory authority of this state or of the United States." The amended provision provides that the Act will not apply to a:

Consequently, now highly regulated professionals are subject to the specter of double or treble damages should the court conclude that they have engaged in "unfair business practices," whereas bankers, stock brokers, telecommunications providers and insurance brokers, among others, are subject to sanction only under the terms of whatever authority the named regulators wield over them.

New Hampshire's Supreme Court has deliberated the application of the Act to attorneys in two cases under the old exemption provision. The Court, for a number of reasons, concluded both in 1986 and 2000 that attorneys enjoyed a per se exemption from the Act. It premised this finding on the fact that attorneys' conduct is extensively and closely regulated by the Court's Professional Conduct Committee and the Court itself. This was of paramount significance given the Court's understanding that the Legislature embedded the prior exemption provision in the Act because there was no need to censure conduct under the Act when that conduct was already subject to sanction under other state or federal regulation. Simply put, the Act was designed to deter unfair business practices by its threat of an award of double or treble damages and attorneys' fees. When the same conduct might result in, for instance, an attorney's losing his or her license, that was thought to be of at least equivalent significance justifying and explaining the exemption provision.

Most recently, the Court pointed out that "the rules of professional ethics that attorneys are duty-bound to 'observe most scrupu[l]ously are diametrically opposed to the code by which businessmen must live if they are to survive.'" It also recounted the pervasive and significant impact of the Court and the Bar Association in fostering and ensuring that all attorneys meet, at a minimum, threshold standards of competent, ethical practice. Lest there be any question about the vigor with which it enforces these requirements of competent, ethical practice, the Court noted that in the decade of the 1990s it had suspended 28 lawyers admitted to practice before it, and disbarred 27 others. Likewise, the Court noted its redoubled efforts not only to see that its membership meet the principles of ethical conduct, but also to assure that the public appreciated those high standards. These facts did not carry the day with the Legislature.

Although the Legislature's action is unfortunate - possibly taken as a reaction against attorneys and the Court's decision confirming its interpretation of a per se exemption for attorneys from the terms of the Act - the ultimate impact of this change may not be as significant as it first appears. In particular, interpretations by the Court may limit the impact of the Act, even without the exemption provision. This limited application of the Act to attorneys was suggested by the dissenting opinion in the 1986 decision written by Justice Johnson and concurred with by Justice Batchelder. Were the Court narrowly to define the scope of the Act as suggested by that dissenting opinion, it might avoid directly rebuking the Legislature by, for example, refusing to apply the Act on the grounds of equal protection or separation of powers.

The dissent from the 1986 decision began its analysis with the proposition that the exemption provision did not apply to lawyers' conduct. It argued that the exemption provision applied only to conduct that was already subject to regulation by a board or officer whose authority derived from state or federal statute and, thus, attorneys' conduct did not fall under such regulation. The dissenters observed that attorneys are bound to respond to an independent judiciary only, a responsibility that has nothing to do with either federal or state statutes. In other words, since the judiciary is a separate, co-equal branch of the government, the dissenters asserted that the Legislature had no right to control attorney conduct; hence attorneys were not engaged in a trade or commerce that operated under the regulatory authority ordained by state or federal law.

Although they questioned the application of the exemption provision to attorneys, the dissenters would not have allowed the invocation of the Act in all lawsuits against attorneys for alleged "unfair business practices." Importantly, the dissenting opinion suggests that the Act can be read to apply only to those aspects of legal practice that can be characterized as the "commercial aspects" of the law. Presumably, this means those aspects of legal practice having to do with making a living, such as the assertion of fees, accounting, marketing and advertising.

The dissenters predicated this argument on the fact that the Act applies only to activity by one engaged in a trade or commerce. Lawyering, in its purest sense, is neither a trade nor commerce, but instead is a profession, they argued. Thus, the dissenters suggested a line between the not-so-pure aspects of the profession having to do with lucre and economic advantage, and the professional deliberation and judgment that might result in the lawyer's making a living, but did not constitute conduct that was immediately tainted by a "commercial" aspect. The dissenters reasoned that:

Attorneys must be free to use their professional judgment in advising and counseling clients without fear of the imposition of strict liability from any injury that may result, but the public interest requires that unfair or deceptive commercial activities by attorneys be redressable through the Consumer Protection Act.

Therefore, the dissenters would have allowed for the potential imposition of liability under the Act for an attorney's "commercial conduct" but not for his or her "professional judgment."

While the dissenters suggest a solution to the problem of attorneys' subjugation to the application of the Act, their opinion also highlights some of the problems with the Legislature's amendment. For example, an attorney caught in the Act's cross hairs might contend that the Legislature's recent handiwork encroaches on the Court's supervision of those who practice before it, and thereby offends the principle of separation of powers. This notion garners support from the referenced dissent that rejected the application of the prior exemption provision because regulation of the Bar is the responsibility of the independent judiciary. While the Court previously rejected as insupportable the Bar Association's separation of powers argument offered in its amicus filing in connection with a motion to reconsider the 1986 decision, the argument has greater currency now that the profession is at least putatively subject to the Act. Presumably, were the positions reversed, the Legislature would take offense at the notion of the Court developing a common law tort designed to sanction individual lawmakers for impudent or ill-considered legislation.

As a related matter, since the Act penalizes attorney defendants for "unfair business practices," one might expect an attorney found liable under the Act to claim that he or she stands beyond the reproach of the Professional Conduct Committee and the Court lest he or she be twice held in jeopardy and penalized. That same attorney, once exonerated of a claim of unfair business practice, might claim equal insulation against the Court's supervisory powers based on the concept of collateral estoppel. These arguments, if they prevailed, would likely hobble, and perhaps cripple, the disciplinary authority of the Court as we know it.

Last, the amendment also raises the prospect of the Bar's challenge to the Act on equal protection grounds. Here the argument would be that the Legislature has specifically denied doctors and lawyers protection from liability under the Consumer Protection Act while extending that protection to other similar professionals. Considering that the Act is designed to dissuade unfair business practices, and that any such practices are as firmly discouraged as is possible by the bite of our ethical disciplinary process, the Legislature's action seems not only unequal, but ill conceived. These matters will, in good time, all be addressed.

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