On August 28, 2009, the Brennan Center, along with the National Association of Consumer Bankruptcy Attorneys, the Connecticut Bar Association, and AARP, filed an amicus brief in the case of Milavetz, Gallop & Milavetz, P.A., et al v. United States of America. The brief was filed in support of the petitioners’ appeal of the case to the Eighth Circuit of the US Court of Appeals. Milavetz is a challenge to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”), a law that contains provisions imposing various restrictions on the speech and activities of the newly created category of “debt relief agencies,” which has been deemed to include attorneys.
- Do the restrictions on “debt relief agencies” contained in the BAPCPA violate the First Amendment?
- Should the Debt Relief Agency Provisions be applied to attorneys?
As American families face increasing economic hardships, their need for uncensored advice from bankruptcy attorneys has grown as well. Worryingly, the Debt Relief Agency Provisions (“Provisions”) of BAPCPA, if applied to attorneys, would profoundly disrupt the attorney-client relationship at this most pressing moment.
The brief asserts that the Provisions, content-based restrictions on protected speech, do not pass a test of strict scrutiny and are therefore unconstitutional. Far from advancing the government’s legitimate interest in ensuring that debtors receive accurate information, the Provisions “increase public confusion, mislead and harm consumers, and impose a substantial undue burden on attorney-client communications.”
According to bankruptcy attorneys, the provisions being challenged require disclosures that leave clients “glassy-eyed” and result in clients choosing to proceed without legal representation at all. One clause of the Provisions forbids attorneys from counseling their clients to incur debt unrelated to their bankruptcy, which can often be the clients’ best lawful option, thus impeding attorneys’ ability to best-represent their clients. Another clause of the Provisions also prohibits attorneys from advising their clients on the options for paying attorneys’ fees that exist when one is filing for bankruptcy, leading clients to make financially costly mistakes and leaving them in even more dire economic straits.
In addition to arguing that the BAPCPA provisions are unconstitutional because they limit protected speech without being narrowly tailored enough to meet any legitimate goals the Government may have in protecting debtors in bankruptcy proceedings, the brief also asserts that the Provisions are unconstitutional in their application to attorneys. As the courts have recognized “advice or legal assistance” as speech that is entitled to full First Amendment protection, the brief argues that the Provisions, which prohibit attorneys from communicating certain information based on its message, violate those protections. The Government, in its petition offers alternate phrasing to save the Provisions’ constitutionality, but the brief argues that the Government’s language is also flawed and would add new, constitutionally unacceptable vagueness to the statute.
The Provisions also compel attorneys to include statements that identify them as “debt relief agencies” in their advertising. The brief asserts that this newly created entity confuses clients and at times leads them to believe the attorneys are agents of the government. Additionally, the disclosure requirement is overbroad in that it could apply not only to attorneys representing debtors, but also to any entity that may need representation indirectly related to a bankruptcy proceeding, or to non-bankruptcy attorneys, including commercial and real estate lawyers.
If the Court does not wish to rule on the merits of the Provisions, the brief asks the Court simply to exclude attorneys from the definition of “debt relief agencies” within the meaning of BAPCPA in order to avoid the First Amendment violations the petitioners believe exist under the law’s current reading.