This might be one of those rare instances where the industry and the Attorney General of New York are on the same side. The Court of Appeals for the Second Circuit has overturned a lower court’s preliminary injunction that prevented the Attorney General from enforcing the state’s unauthorized practice of law statute against a company that claimed it violated the First Amendment because it wanted to use non-lawyers to represent consumers in debt collection lawsuits.
The background: Debt collection lawsuits are among the most common filings in New York, accounting for nearly a quarter of all civil suits. Yet, according to court filings, between 70% and 90% of defendants fail to appear, often resulting in default judgments that can lead to wage garnishments, repossessions, or bank account seizures. In some cases, consumers do not actually owe the debts being claimed, but courts never have the chance to test those claims because the defendants do not respond.
- To close this gap, a nonprofit called Upsolve developed a “Justice Advocate” program to train non-lawyers, individuals like pastors and community organizers, to provide free guidance to consumers on how to fill out New York’s one-page, check-the-box form for answering debt collection suits.
- The nonprofit argued that New York’s unauthorized practice of law (UPL) statutes, which make it illegal for non-lawyers to provide individualized legal advice, violated its First Amendment rights.
- In 2022, a district court judge agreed, granting a preliminary injunction that allowed the program to proceed while the case continued.
The ruling: On appeal, the Second Circuit vacated that injunction, holding that while the UPL statutes do regulate speech, they are content neutral and therefore subject only to “intermediate scrutiny,” not the higher standard of “strict scrutiny” applied by the lower court.
- Writing for the panel, Judge Richard Sullivan noted, “The UPL statutes apply equally to individuals who provide legal advice only to creditors and to those who advise only debtors.” In other words, the rules do not discriminate based on viewpoint, but rather apply to all individualized legal advice.
- Because the district court applied the wrong legal standard, the Second Circuit sent the case back for further proceedings.
- The court emphasized that while Upsolve’s volunteers want to provide advice limited to filling out debt collection forms, their activities fall within New York’s longstanding definition of practicing law.
- Upsolve has said it plans to seek review by the Supreme Court. In the meantime, the ruling reaffirms the state’s authority to regulate who can and cannot provide legal advice.
