New Yorkers sued by collection agencies can now get legal advice from non-lawyers

New Yorkers facing debt collection lawsuits are poised to get a little extra help following a federal court ruling — and some observers say it could result in a win for consumers across the country who have basic legal issues but themselves no can afford lawyer.

Upsolve, a nonprofit that allows people to file for bankruptcy for free, wanted to create a program that would allow non-lawyers to provide basic advice to New Yorkers facing debt collection efforts from lenders and third-party buyers.

The advice would include tips on how to fill out a one-page response form so that self-representing borrowers could avoid default judgments arising from failure to respond to a complaint. Default judgments can result in garnished wages, nasty credit reports, and possibly bankruptcy. According to court records, volunteers would provide the post-training counseling.

These cases can account for a quarter of New York’s cases, and many are answered, Upsolve said in court filings.

But Upsolve considered New York State’s rules against the unauthorized exercise of law — and specifically the ban on providing legal advice to non-lawyers — and sued to prevent the state from enforcing them against the organization and any trained volunteers. A Bronx reverend who wanted to advise parishioners on debt collection lawsuits also complained.

New York Southern District Judge Paul Crotty on Tuesday issued an injunction temporarily preventing the New York Attorney General’s office from enforcing the unauthorized practice law rules against the plaintiffs or their volunteers when seeking legal advice in the fault went. collection context.

Plaintiffs have a protected right to free speech to offer advice, and state regulations on unauthorized exercise of rights are not restrictive enough, Crotty said. Additionally, the judge added, the program would “help alleviate an avalanche of unanswered debt collection cases while mitigating the risk of consumer or ethical harm.”

Crotty stressed that his protection did not apply when the volunteers pushed the limits of their training. The attorney general’s office hasn’t announced any plans to sue over the program, Crotty noted. The office did not immediately respond to a request for comment.

Although people are guaranteed the right to a defense attorney in criminal cases, regardless of the size of their wallets, there are no such guarantees in civil actions, including those related to debt collection — and attorneys’ fees can be prohibitively expensive.

“If you’re poor and can’t afford a lawyer, you live in a different legal system than everyone else,” Upsolve CEO Rohan Pavuluri told MarketWatch. The ruling was “a big step” for the concept of equal justice, Pavuluri said, but declined to comment on its wider application.

“Unintended Consequences” Concerns

Between the filing of the lawsuit in January and the decision this week, the case drew attention and amicus briefs from law professors, advocacy groups and legal service providers. Many supported Upsolve’s offer, but some turned it down.

“We are disappointed with the decision and remain concerned about the unintended consequences of relegating low-income New Yorkers and New Yorkers of color to a subpar legal service model with no external oversight or accountability,” said attorney Matthew Brinckerhoff, who represents organizations such as Legal Services NYC .

“A better solution would be to end predatory collection practices once and for all, such as sewerageturning our courts into collection mills,” he said.

Groups supporting Upsolve’s offer said defaulters needed help and state regulations related to professional licenses stood in the way, just like in other states.

Robert McNamara, senior counsel at the Institute for Justice, a libertarian non-profit public interest law firm, said the ruling supports arguments about pending cases he has in other courts challenging the licenses of dietitians, consultants and veterinarians.

“The government doesn’t silence people just because they fear in the abstract that something bad will happen if people listen to them,” he said.

Of course, flawed attorneys, flawed legal documents, and unscrupulous representation can seriously harm people.

But McNamara said the ruling did not authorize such a thing and that law licenses are not in jeopardy. The profession includes drafting legal documents, court arguments and other duties that go beyond consulting, he noted.

Also, McNamara added, people without a legal license are constantly sacrificing their legal two cents. “It’s only given to rich people, and the person giving the advice is a business manager or a financial advisor,” he said.

Another organization that supported Upsolve’s application was Fordham Law School’s National Center for Access to Justice.

“The Upsolve case makes it clear that the judiciary and bar association in virtually every state in the country should immediately consider repealing the old laws that still make it a crime—to this day—for people to discuss the law with one another. ” David Udell, the organization’s chief executive, told MarketWatch.

“Just as we are all free in this country to give each other basic medical advice on whether to choose between Advil and Tylenol, so after the Upsolve decision we are also free to give each other basic legal advice — to the landlord, for example.” saying to return bail, asking an employer to pay overtime or appearing in court on a specific day,” Udell added.

Certainly, some New York-based legal advisory organizations had concerns about Upsolve’s efforts. The legal system could certainly use more services for people on low incomes, but there is not necessarily a “shortage” of services, court filings said. The organizations have rarely, if ever, turned people away who needed help answering debt collection procedures, they added.

People without a legal license help with the work, including paralegals and law students who are trained and supervised, they said.

Other states, like Arizona and Utahallowed very limited cases where non-lawyers could assist a person in a legal bind, Upsolve’s attorneys said.

The big difference, according to the opposing organizations, was that Upsolve’s proposed model “stands in stark contrast to these non-lawyer regulations, all of which are subject to oversight and regulation designed to ensure standards and protect the public.” “.

Pavuluri doesn’t see it that way. “There’s no way we’re going to achieve equal rights under the law by expanding the pool of people who can help,” he said. New Yorkers sued by collection agencies can now get legal advice from non-lawyers

Brian Lowry

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