Case tests court's power over lawyers (Fred Hanna)
on: February 17, 2010
Fulton County Daily Report
Case tests court's power over lawyers
High court argument over investigation of collections firm questions if consumer affairs office can investigate attorneys By Alyson M. Palmer, Staff Reporter
The Supreme Court of Georgia on Tuesday wrestled with a case that tests the boundaries of its own control over lawyers.
The argument came in an appeal by the head of the Governor's Office of Consumer Affairs, which wanted to investigate complaints about the debt collection practices of Frederick J. Hanna & Associates in Marietta.
Last September, Cobb County Superior Court Judge S. Lark Ingram ruled the investigation violated separation of powers principles in the Georgia Constitution.
Ingram agreed with Hanna's lawyers that the firm didn't have to comply with a request for documents and information made by the consumer affairs office because authority over attorney discipline resides solely with the judicial branch—i.e., the State Bar of Georgia and its governing body, the Supreme Court of Georgia. Ingram's decision was based on the firm's day-to-day operation directly involving the practice of law. She noted the firm doesn't buy debt, so all of its activity is on behalf of creditor clients.
Hanna's firm employs about 450 people, of which only 10 are attorneys, according to the state's brief in the case. According to the state, non-attorney employees first try to collect debts through mail and telephone contacts. But many of the matters end up in court—Hanna files about 10,000 lawsuits and garnishments each month in Georgia alone. The state has said it has received more than 200 complaints about the firm's debt collection tactics.
Senior Assistant Attorney General Sidney R. Barrett Jr. on Tuesday appeared for the head of the state consumers affairs office. Presiding Justice George H. Carley promptly threw down a challenge: the court already had decided the matter with regard to the medical profession, he said.
Carley was referring to the court's 2005 decision in Henderson v. Gandy, 280 Ga. 95, which rejected a suit brought by a patient's estate against a doctor under Georgia's Fair Business Practices Act. The high court held that the act doesn't cover complaints over medical malpractice.
But Barrett noted that the court had held that the statute applied to the “entrepreneurial” aspects of professional services. The vast majority of what an attorney does is a private transaction not covered by the statute, Barrett said, but activities such as debt collection and advertising are different because they affect the public at large, not just the client.
“It doesn't matter if it's a law firm or not,” he continued. Anyone who engages in abusive debt collection practices such as use of obscene language or calling at strange hours falls under the ambit of consumer protection law, he added.
Carley noted that some states have held that attorneys are not regulated by consumer protection laws.
Barrett responded that those decisions were not in the debt-collection area but involved client complaints and attorney exemptions in state statutes. “The client cases are all over the board,” he said.
Barrett also argued that Ingram erred when she entertained Hanna's constitutional arguments at this point in the investigation. The general rule is that as long as the subject matter of the investigation is within the agency's jurisdiction, he said, a court is supposed to enforce the agency's subpoena.
Justice David E. Nahmias broke in to suggest that a subpoena could be challenged on the basis that compliance would be too burdensome or interfere with the attorney-client privilege.
Right, said Barrett. “That's always before the court.”
Barrett assured the justices that no one disputed that the Supreme Court had sole authority to regulate the legal profession. But he said Hanna was trying to stretch that authority to say it pre-empts anything that affects the practice of law.
The State Bar has no authority over any of the Hanna firm's 440 non-attorney employees, Barrett noted. The remedies provided by consumer protection law complement the bar's enforcement powers, he said.
Balch & Bingham partner Michael J. Bowers argued for Hanna. The former attorney general said that in 37 years of practice, the consumer affairs office's action against Hanna was the most significant intrusion by another branch into the Supreme Court's control of the bar that he's seen.
Nahmias repeatedly challenged the arguments by Bowers, who, according to the State Ethics Commission, chairs Nahmias' campaign committee.
Nahmias noted that the court regularly disbars lawyers who have been convicted of a crime. “If they're locked up, that's a pretty major intrusion into the practice of law,” said Nahmias. “How do you get around that?”
Bowers insisted that issuance of subpoenas and other activities by district attorneys didn't constitute regulation. When Justice Harold D. Melton posed a similar question—whether law enforcement could investigate a law firm that's using blackmail to collect debts—Bowers said that was different because, in Hanna's case, the investigation deals with how he practices law.
Carley stepped in to give Bowers some relief: If the court were to reverse Ingram, what impact would that have on law firms not engaged in debt collection?
“I'm glad you asked that,” responded Bowers. “This is a slippery slope.”
But Nahmias, a longtime federal prosecutor before joining the court, again challenged Bowers to square his argument with criminal investigations of lawyers: What about when a district attorney investigates a lawyer who misappropriates client funds, subpoenaing client files?
District attorneys are part of the judicial branch, Bowers responded, “So that's a huge difference.”
Melton, who worked for Bowers at the Georgia Law Department and later headed the Consumer Interests Division, quizzed Bowers about the extent to which the State Bar could use consumer protection law in going after lawyers who violate it.
Bowers insisted the bar could rely on consumer protection law, although he said certain remedies provided by the law could be obtained only by private actions.
“Do not allow intrusion into the relationship and the control this court has on my profession,” Bowers concluded.
When it came time for Barrett's rebuttal, Justice P. Harris Hines challenged the state's lawyer to address the idea that the judiciary's regulatory power over the practice of law is “plenary,” or complete.
“Debt collection is not the exclusive province of lawyers,” Barrett responded. “Anyone can do it.”
He again emphasized the number of non-lawyer employees of the Hanna firm, saying he found it troubling that Ingram had found lawyers' supervision of those employees was both “direct and indirect.”
“That is one of the things my client would like to look at,” said Barrett.
The case is Doyle v. Frederick J. Hanna & Associates, Nos. S10A0395 and S10A0397.
Staff Reporter Alyson M. Palmer can be reached at
[email protected]
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