Non-lawyers may not be able to give legal advice in debt-collection cases

 As the Second Circuit puts it in this case, debt-collection lawsuits "are one of the most common lawsuits in New York," in which credit card and other lenders sue people for not paying their bills. Yet, the vast majority of these cases result in a default judgment for the money-people, as the defendants do not show up in court. All the while, the Court says, many of these cases are actually baseless and the defendants don't owe anyone anything. The plaintiff organization in this case is trying to help debt-defendants fight these cases in court, but with one catch: the plaintiff is not a lawyer and would assist clients as laypeople, not lawyers. Plaintiff thus challenges New York's prohibition against the unauthorized practice of law in this context. While the trial court ruled in plaintiff's favor, that victory is now in jeopardy as a result of this court ruling. The law may in fact be constitutional, and the trial court will have to take on this issue once more.

The case is Upsolve v. James, issued on September 9. If you want to give legal advice in New York, you have to go to law school and pass the bar. The plaintiff-organization in this case is trying to get around that by advising debt-collection defendants on how to fight back against credit card and related lawsuits to recover unpaid debt. Particularly, they want to advise pro se New Yorkers on how to complete the state's check-the-box form for answering debt-collection lawsuits. 

Plaintiffs frame this lawsuit under the First Amendment, claiming their advice to pro se litigants in these cases is free speech. The Court of Appeals denies the plaintiffs' argument and says that while plaintiff is technically engaging in speech, the speech regulation is content-neutral and may be legal under the more government-friendly standard that the trial court must apply to the case on remand.

As I noted, these lawsuits are commonplace and often meritless, but when the defendant fails to show up in court, the debt-collectors win the case and the defendants' credit rating collapses and they suffer wage-garnishment and other consequences. The plaintiff is a "justice advocate" in the Bronx who has seen  his community suffer the consequences these debt-collection lawsuits, as they don't understand their rights and cannot afford to hire a lawyer. While plaintiff is not a lawyer, he has probably mastered this process to ensure that his "clients" are not getting the shaft.

In this preliminary injunction posture, where the plaintiffs have to show they are likely to prevail on the merits and therefore deserve a favorable court order right now, the Second Circuit (Sullivan, Leval and Merriam) agrees that the law is a speech restriction. Legal advice is free speech. Courts have said this over and over. 

But the First Amendment does not advance absolute speech rights. There are limits. Otherwise, George Carlin's "seven dirty words" would be broadcast on network television every night. Even if a statute regulates speech, it is legal unless it regulates speech based on content, i.e., it discriminates on the basis of what someone wants to say. If the law is content-neutral, then the law does not violate the First Amendment unless the government can advance a darn good reason for the speech restriction. 

Since the statute regulating the unauthorized practice of law applies to any individual practicing law, regardless of the type of law he wishes to practice, whether it involves debt-collection or personal injury, this facial-neutrality may be consistent with the First Amendment. But we are not 100% sure of this at the moment, as the case returns to the district court to apply "intermediate scrutiny" (more favorable to the government in these cases) than "strict scrutiny" (almost a sure win for the First Amendment plaintiffs). Since the district court wrongly applied strict scrutiny and not intermediate scrutiny, the district court must apply this new analysis to the case.