The Federal Trade Commission cannot force practicing lawyers to comply with new regulations aimed at curbing identity theft, a federal judge ruled yesterday at the U.S. District Court for the District of Columbia. The decision offers a reprieve to law firms, which faced a deadline this weekend to put in place programs to meet so-called “Red Flags Rule” requirements. The rules would have forced firms to verify the identities of potential clients.
The American Bar Association, represented by a Proskauer Rose team led by New York partner Steven C. Krane, argued that the rules would impose a serious burden on law firms, and sought an injunction and declaratory judgment finding that lawyers were not covered by the rule. The FTC contended that lawyers should be covered, because many of their billing practices, such as charging clients on a monthly basis rather than up front, made them “creditors.”
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