New Yorkers sued by debt collectors can now get legal advice from non-lawyers

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New Yorkers facing debt collection lawsuits are set to get a little extra help following a federal court ruling — and some observers say it could mean a victory for consumers across the country who have basic legal questions but cannot afford a lawyer.

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

The guidance would include advice on how to complete a one-page response form so self-represented borrowers can avoid default judgments, a result of not responding to a lawsuit. Default judgments can lead to wage garnishment, nasty credit reports and potentially bankruptcy. The volunteers would offer advice after the training, according to court documents.

Those cases can make up a quarter of New York’s caseload, and many are being answered, Upsolve said in court documents.

But given New York State’s rules against the unauthorized practice of law — and, in particular, the ban on non-lawyers providing legal advice — Upsolve filed a lawsuit to stop the state to enforce them against the organization and any trained volunteers. A Bronx reverend who wanted to provide debt collection advice to members of the community also filed a lawsuit.

New York Southern District Judge Paul Crotty on Tuesday granted a preliminary injunction that stops the New York Attorney General’s office from enforcing the rules, for now, on the unauthorized practice of law against the plaintiffs or its volunteers with respect to legal advice in the debt-collection context.

The plaintiffs had a protected right of free speech to give advice, and the state’s rules on the unauthorized practice of law were not narrow enough, Crotty said. In addition, the judge added, the program “would help mitigate an avalanche of unanswered debt collection cases, while mitigating the risk of consumer or ethical harm.”

Crotty stressed that his protections did not apply if the volunteers went beyond the limits of their training. The attorney general’s office has not announced any plans to continue the program, Crotty noted. The office did not immediately respond to a request for comment.

Although people have the right to a defense attorney in criminal cases, regardless of the size of their wallet, there is no such guarantee for civil suits, including those related to debt collection – and attorney fees can be prohibitive.

“If you’re poor and can’t afford a lawyer, you’re living 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 he declined to comment on any broader application.

Concerns about “unintended consequences”

Between the lawsuit filing in January and the ruling this week, the case has drawn attention and amicus briefs from law professors, advocacy groups and legal service providers. Many supported Upsolve’s offer, but some opposed it.

“We are disappointed with the decision, and we remain concerned about the unintended consequences of relegating low-income New Yorkers and New Yorkers of color to a below-average model of legal counsel without external oversight or accountability.” , said attorney Matthew Brinckerhoff. , which represents organizations such as Legal Services NYC.

“A better solution would be to crack down once and for all on predatory debt collection practices, such as sewer servicethat turn our courts into debt collection factories,” he said.

Groups backing Upsolve’s bid said cash-strapped litigants needed help and state rules related to professional licensing stood in the way, just as they have in other States.

Robert McNamara, senior counsel at the Institute for Justice, a public interest nonprofit libertarian law firm, said the decision bolstered arguments about pending cases he has in other courts challenging licensing of dieticians, counselors and veterinarians.

“The government fails to silence people just because they fear in the abstract that something bad will happen if people listen to them,” he said.

Of course, a faulty lawyer, faulty legal documents and unscrupulous representation can seriously harm people.

But McNamara said the ruling didn’t allow anything like that and legal licenses weren’t in jeopardy. The profession involves drafting legal documents, legal arguments and other tasks beyond offering advice, he noted.

Also, McNamara added, people without a legal license serve their legal two cents all the time. “It’s only given to the wealthy, and the person giving the advice is a business leader or a financial consultant,” he said.

Another organization supporting Upsolve’s motion was Fordham Law School’s National Center for Access to Justice.

“The Upsolve case makes it clear that in virtually every state across the country, the judiciary and bar should quickly consider recalling old laws that still make it a crime – to this day – for people to talk to each other about the law. ,” David Udell, the organization’s executive director, told MarketWatch.

“Just as we are all free in this country to give each other basic medical advice on choosing between Advil and Tylenol, the Upsolve decision states that we are also free to give each other basic legal advice – for example, to say the landlord to return a security deposit, ask an employer to pay overtime, or show up in court on a given day,” Udell added.

Granted, some New York-based legal services organizations had doubts about Upsolve’s efforts. Surely the legal system could use more services for low-income people, but there was not necessarily a “shortage” of services, they said in court documents. Organizations rarely, if ever, fired people who needed help responding to debt collection lawsuits, they added.

People without a law 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 instances in which non-lawyers could help someone in a legal bind, Upsolve’s attorneys said.

The big difference, the opposing organizations said, was that “the model proposed by Upsolve stands in stark contrast to these lawyerless regimes, all of which are subject to oversight and regulation to ensure standards and protect the public.”

Pavuluri doesn’t see it that way. “There is no way to achieve equal rights under the law unless you broaden the supply” of people who can help, he said.

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