U.S. Justice Department lawyer Kent Kawakami was once the Consumer Financial Protection Bureau's point man on the ground in Los Angeles.

An assistant U.S. attorney in the Central District of California, Kawakami would vouch for CFPB attorneys looking to jump into the federal courts there. Ever since the bureau's first lawsuit in Los Angeles in 2012—accusing a law firm of scamming struggling homeowners—his name has been a fixture on the roster of attorneys assigned to CFPB enforcement cases in the region.

Until recently.

Between June and July, Kawakami withdrew from each of the four open CFPB enforcement cases in which he was designated as the local counsel. When the bureau recently brought a case to force a law firm to comply with a subpoena, it did so without Kawakami. Instead, an attorney in the CFPB's San Francisco office helped a Washington-based colleague make an appearance.

Kawakami is not the only assistant U.S. attorney who's dropped off a CFPB case recently. In June, Mitzi Dease Paige, a prosecutor with the U.S. Attorney's Office for the Southern District of Mississippi, withdrew from the CFPB's case against All American Check Cashing Inc.

The move away from CFPB cases comes months after the Justice Department, under U.S. Attorney General Jeff Sessions, said it would no longer defend the lawfulness of the CFPB's independent, single-director design. That issue is under review in a Washington appeals court, where Main Justice took a position against the CFPB—an Obama-era agency long assailed by Republican leaders in Congress and attacked by companies in court.

Conflict between the Justice Department and the CFPB threatens long-established cooperation between the agencies and potentially adds procedural headaches to enforcement efforts in federal courts around the country.

“We will continue to pursue these matters, and bring new cases, to carry out our enforcement responsibilities,” CFPB spokesman Sam Gilford said in a statement Tuesday to The National Law Journal. “We appreciate the assistance of other federal and state partners, and will continue to coordinate with outside agencies as appropriate.”

A Justice Department spokesman in Washington declined to comment. A spokesman for the U.S. Attorney's Office in Los Angeles deferred to Main Justice. In Mississippi, Acting U.S. Attorney Harold Brittain declined to comment on his office's withdrawal from the CFPB's case against All American Check Cashing. The company's defense team in that case includes former Solicitor General Theodore Olson, a Gibson, Dunn & Crutcher partner who argued against the CFPB's constitutionality before the D.C. Circuit in May.

Not all U.S. attorney offices have withdrawn from CFPB cases. In January, assistant U.S. attorney Chad Blumenfield helped CFPB attorneys gain admission to a Minnesota federal trial court. In that case, the bureau sued TCF National Bank alleging it tricked consumers into costly overdraft services. Blumenfield filed papers to admit the CFPB attorneys on Jan. 19—a day before President Donald Trump's inauguration. Blumenfield remains on the case, and a spokeswoman for the U.S. Attorney's Office in Minnesota declined to comment.

TCF National Bank—represented by a defense team from BuckleySandler, Williams & Connolly and Dykema Gossett—has argued in court that the CFPB's single-director structure, without greater oversight from the White House, is unlawful.

'More Symbolic Than Substantive'

The CFPB prizes its independent litigating authority and does not need the Justice Department to bring cases. Indeed, the CFPB litigates most without a Justice Department lawyer's assistance as local counsel.

Federal court rules vary by district. Former CFPB attorneys said U.S. attorney offices can provide insights into the judges in a particular district, and assistant U.S. attorneys can help out-of-state government lawyers address local rules for admission procedure and formatting briefs.

Any procedural slipups could irk a judge, or even delay how fast the agency moves on an enforcement action.

“That's what's going to be lost here if they can't get the insights into the local rules—how they're interpreted, what the common practices are. But all of the substantive work is handled by the attorneys at the CFPB, so I think this is more symbolic than substantive in its impact,” said Mayer Brown partner Ori Lev, a former deputy enforcement director at the CFPB.

Lev predicted any conflict between the Justice Department and the CFPB would not become a “substantive” problem. “It's a hassle. It takes time to deal with this,” he said. “It's not going to be the case that the CFPB is going to be unable to bring a lawsuit because of this issue. Congress has said it can bring these lawsuits.” He added: “It's one more thing to deal with when you have a lot else on your plate.”

In at least one case, Kawakami's withdrawal created a procedural pain for the CFPB.

In July, three CFPB attorneys reapplied for admission in the agency's case against D and D Marketing Inc., a company accused in 2015 of exposing millions of consumers to harassment and deceit by selling sensitive personal data to debt collectors and lenders. All three attorneys referenced a brief filed by Leanne Hartmann, a CFPB attorney in San Francisco, who informed the court the U.S. Attorney's Office in Los Angeles would not continue serving as local counsel “due to conflicts.”

U.S. District Judge Philip S. Gutierrez of the Central District of California initially denied their applications, noting that Hartmann does not maintain an office in California's Central District. Gutierrez later admitted the three CFPB attorneys after one of them, Barry Reiferson, submitted a brief explaining the bureau does not have an office in the Los Angeles area “due to budgetary constraints.”

Reiferson noted the bureau has an office in San Francisco that is staffed with several attorneys who are members of the Central District of California bar.

“Given Mr. Kawakami's conflict, and that the bureau is an agency of the federal government with limited resources, the bureau seeks for the court to permit its San Francisco attorneys who are members of this court's bar to serve as local counsel in support of the attorneys in this case, who wish to continue their representation pro hac vice,” Reiferson wrote.

Reiferson said the CFPB hasn't faced similar troubles in the three other cases Kawakami withdrew from: CFPB v. Prime Marketing Holdings, CFPB v. CashCall and CFPB v. Howard. These cases are pending in the Central District of California in front of other judges. Kawakami was not available for comment.

In South Florida, the CFPB sued Ocwen Financial Corp., a leading mortgage servicer, in April without involving the local U.S. Attorney's Office. But the Justice Department may soon participate nonetheless.

A federal judge on Aug. 1 granted Ocwen's request to “invite the views” of the U.S. attorney general, giving the Justice Department a new venue to contest the lawfulness of the CFPB's structure.