The Florida Foreclosure Fraud Weblog

Ever since word got out about Florida’s new foreclosure rescue fraud law, I’ve gotten feedback from lawyers all over the state. Many agree with me that the new law is a serious problem for homeowners and their attorneys. Others are not so sure.

Here are some of the responses I’ve gotten from the “I’m not worried” crowd, along with my replies.

This new bill doesn’t apply to lawyers because we’re officers of the court / exempt from Chapter 501 / not the intended targets of the bill.

This is the way it should be, but it’s not. I contacted some members of the state legislature to discuss my concerns about the bill. In turn, they contacted the state Attorney General’s office. Asked whether lawyers were exempt from the bill, AG staff responded:

There is no Florida case law on point regarding the issue of whether Section 501.212, Florida Statutes, would exempt an attorney engaging in the practice of law. However, an attorney general opinion and other related cases suggest that the practice of law is not entirely exempt from the definition of “trade or commerce” in the state unfair and deceptive and antitrust acts.

In other words, the law applies to lawyers, at least sometimes.

The legislature cannot regulate the lawyer-client relationship because only the Florida Bar (the judicial branch) can do that.

Tell that to the lawyers who used to represent workers’ compensation claimants in Florida. They raised the same argument when state capped their fees a few years back. The cap is still in place, and most of those lawyers have moved on to personal injury practice. Workers’ compensation claimants now have a much harder time finding lawyers - just like homeowners soon will unless the law changes.

The state can’t regulate attorneys practicing in federal areas like bankruptcy, Truth In Lending Act, and RESPA.

I think this is a strong argument, and I hope it prevails. But until then, the new state law, on its face, applies to us. The federal preemption argument, endorsed by many respected attorneys and even discussed in this context by some federal judges, at this time serves only as a hypothetical defense if someone happens to get sued under the law.

The Attorney General isn’t going to come after lawyers who represent their clients in court.

Again, a strong argument, and I hope it’s true. But the way this new law is written, even a single disgruntled client - perhaps acting pro se - could decide to come after his former lawyer. Even though the lawyer is likely to successfully defend such a case, that takes time and money away from the lawyer’s practice that could be spent helping people.

Let them come after me. I’ve got some great argument why this law doesn’t apply.

I hope your malpractice premiums are paid up. That lawsuit will cost you more than you ever collected from that client.

Many lawyers, with whom I agree, believe that it is wrong for this new law to apply to them. But even so, every indication I have says that the law poses a real danger to any lawyer who represents a foreclosure homeowner. That danger will not be dispelled until we get clear guidance from the legislature or from the courts.

ADDENDUM: Rob Arnold adds a Realtor’s perspective.