HR3213-119

1. Short title This Act may be cited as the Restoring Court Authority Over Litigation Act of 2025.

2. Findings; Sense of Congress Congress finds the following: For many decades, attorneys engaged in the practice of law have been regulated and disciplined primarily by the highest court of the State in which the attorney is licensed or admitted to practice, attorney disciplinary agencies overseen by those courts, and other State and Federal courts of competent jurisdiction pursuant to the applicable statutes, rules of civil procedure, and rules of professional conduct and disciplinary procedure duly adopted in those jurisdictions, and not by Congress, Federal agencies, or private litigants. State supreme courts have promulgated and enforced extensive and effective regulations governing all aspects of the practice of law, including admission requirements, strict attorney rules of professional conduct, disciplinary rules, and litigation procedural rules. In addition, Federal courts have adopted local rules governing the conduct of attorneys appearing before them. As a result, State and Federal courts have extensive authority and tools to address attorney misconduct that occurs during the course of litigation before them, including monetary sanctions, striking offending pleadings or other papers, or referring the matter to disciplinary authorities, which could lead to a reprimand, censure, license suspension, disbarment, or other available disciplinary sanctions. Consistent with the longstanding principle of judicial regulation and oversight of attorneys and the legal profession, numerous Federal agencies have included broad practice of law exclusions in major rules, including the Federal Trade Commission’s Mortgage Assistance Relief Services Rule issued in November 2010 and the Department of Housing and Urban Development’s Secure and Fair Enforcement for Mortgage Licensing Act Rule issued in June 2011. Also consistent with the principle of judicial regulation of attorneys and the legal profession, Congress has generally declined to enact legislation regulating the practice of law, including litigation activities of attorneys. Congress has also incorporated broad practice of law exclusions into certain Federal statutes. For example, section 1027(e) of the Consumer Financial Protection Act of 2010 excludes most attorneys engaged in the practice of law from the Consumer Financial Protection Bureau’s regulatory and enforcement authority, while the Fair Debt Collection Practices Act of 1977 originally contained a complete exemption for attorneys engaged in the practice of law. Although Congress removed the complete attorney exemption from the Fair Debt Collection Practices Act in 1986 based in part on its belief that the revised Act would only apply to attorneys’ non-litigation collection activities and that State courts would continue to regulate attorneys’ litigation activities, the United States Supreme Court held in Heintz v. Jenkins, 514 U.S. 291 (1995), that attorneys could be subject to the Act even when they are engaged in litigation activities. As a result, many attorneys now are routinely sued for litigation activities in State court that are alleged to be technical violations of the Act, even when consumers suffer no harm. In each of its annual reports to Congress on the Fair Debt Collection Practices Act from 1998 through 2006, the Federal Trade Commission formally recommended that Congress reexamine and amend the definition of debt collector in the Act to exempt attorneys who pursue debtors solely through litigation (or similar legal practices). In recent years, the Consumer Financial Protection Bureau has also aggressively sought to regulate attorneys’ collection activities, including their litigation activities, despite the broad practice of law exclusion in section 1027(e) of the Consumer Financial Protection Act. The Bureau’s aggressive actions could also lead to other Federal agencies adopting rules or practices regulating attorneys’ litigation activities in other types of court cases. These developments have undermined State and Federal courts’ primary and inherent authority to regulate and oversee attorneys engaged in the practice of law by creating multiple conflicting sets of rules and standards for attorneys, resulting in unfair lawsuits against attorneys pursuing valid legal claims for clients in court, increased attorney malpractice insurance rates, difficulty in obtaining legal representation, and reduced access to justice. On January 26, 2011, the Conference of Chief Justices adopted Resolution 1 (In Support of Preserving Traditional State Court Regulation of Lawyers and Opposing Expanded Federal Agency Regulation of Lawyers and the Practice of Law), affirming that primary regulation and oversight of attorneys and the legal profession should continue to be vested in the State courts, not Federal agencies or Congress, and that the courts are in the best position to fulfill that important function. The Resolution also expressed support for Congress and Federal agencies’ decisions to include broad practice of law exclusions in certain Federal statutes and agency rules, and opposition to Federal legislation or rules intended to establish or expand the Federal regulatory jurisdiction of attorneys engaged in the practice of law. While the activities constituting the practice of law are determined by the State in which an attorney is licensed or admitted to practice, litigation activities in connection with a legal action in State or Federal court are considered to be part of the practice of law in every State. To protect and restore State and Federal courts’ primary and inherent authority to regulate and oversee attorneys and the legal profession, Federal legislation is needed to clarify that— attorneys engaged in litigation should be regulated and disciplined exclusively by State supreme courts, their attorney disciplinary agencies, and other State and Federal courts of competent jurisdiction; Federal agencies shall have no regulatory authority over litigation activities of attorneys; and no party in a legal action shall have a Federal private right of action against the opposing attorney for the attorney’s litigation activities. On February 5, 2020, the Conference of Chief Justices also adopted a second Resolution 1, entitled In Support of Preserving the Courts’ Authority to Regulate and Oversee Lawyers Engaged in Litigation and Opposing Federal Agency Regulation of Lawyers’ Litigation Activities, which expressed support for Federal legislation that would implement the three proposed reforms described in paragraph (12). On April 12, 2023, the Consumer Financial Protection Bureau published its Statement of Policy Regarding Prohibition on Abusive Acts or Practices that explains its interpretation of those prohibitions contained in the Consumer Financial Protection Act of 2010 and the actions that providers of consumer financial products or services, including attorneys engaged in debt collection, must take or avoid in order to comply with the Act. However, by requiring attorneys representing creditors in debt collection litigation to act in the interests of consumers instead of the interests of their own clients, and by requiring attorneys to take other steps inconsistent with their ethical duties, the Consumer Financial Protection Bureau Statement of Policy directly conflicts with the courts' well-established attorney rules of professional conduct, attorney disciplinary rules, and litigation procedural rules, thus further undermining the courts' primary and inherent authority to regulate and oversee attorneys engaged in the practice of law. It is the sense of Congress that attorneys engaged in litigation activities should be regulated and disciplined exclusively by the courts and other authorities of the State in which the attorney is licensed or admitted to practice, attorney disciplinary agencies overseen by those courts, and other State and Federal courts of competent jurisdiction pursuant to the applicable statutes, rules of civil procedure, and rules of professional conduct and disciplinary procedure duly adopted in those jurisdictions.

3. Court authority over attorneys engaged in litigation activities Chapter 99 of title 28, United States Code, is amended by inserting after section 1631 the following: In this section: The term Federal agency means an agency as defined in section 551(1) of title 5. The term litigation activities means any actions by a licensed attorney or a law firm in connection with a legal action in a court of law on behalf of a client, including— serving, filing, or conveying formal legal pleadings, discovery requests, or other documents pursuant to the applicable statute or rules of civil procedure; communicating in, or at the direction of, a court of law (including in depositions or settlement conferences) or in the enforcement of a judgment; and any other activities engaged in as part of the practice of law, under the laws of a State in which the attorney is licensed or admitted to practice, that relate to the legal action. The term State means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, and the United States Virgin Islands. Notwithstanding any other provision of law, a Federal agency does not have any supervisory, enforcement, or regulatory authority over litigation activities of attorneys or law firms. Notwithstanding any other provision of law, a person may not bring a civil action in a court of the United States seeking relief for harm arising out of alleged misconduct related to the litigation activities of an opposing attorney or law firm. The table of sections for chapter 99 of title 28, United States Code, is amended by inserting after the item related to section 1631 the following: 1632.Preservation of State and Federal courts’ primary and inherent authority to regulate and oversee attorneys engaged in litigation activities (a)DefinitionsIn this section: (1)Federal agencyThe term Federal agency means an agency as defined in section 551(1) of title 5. (2)Litigation activitiesThe term litigation activities means any actions by a licensed attorney or a law firm in connection with a legal action in a court of law on behalf of a client, including— (A)serving, filing, or conveying formal legal pleadings, discovery requests, or other documents pursuant to the applicable statute or rules of civil procedure; (B)communicating in, or at the direction of, a court of law (including in depositions or settlement conferences) or in the enforcement of a judgment; and (C)any other activities engaged in as part of the practice of law, under the laws of a State in which the attorney is licensed or admitted to practice, that relate to the legal action. (3)StateThe term State means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, and the United States Virgin Islands. (b)Limitation on Federal agency authorityNotwithstanding any other provision of law, a Federal agency does not have any supervisory, enforcement, or regulatory authority over litigation activities of attorneys or law firms. (c)No private right of actionNotwithstanding any other provision of law, a person may not bring a civil action in a court of the United States seeking relief for harm arising out of alleged misconduct related to the litigation activities of an opposing attorney or law firm.. 1632. Preservation of State and Federal courts’ primary and inherent authority to regulate and oversee attorneys engaged in litigation activities..

1632. Preservation of State and Federal courts’ primary and inherent authority to regulate and oversee attorneys engaged in litigation activities In this section: The term Federal agency means an agency as defined in section 551(1) of title 5. The term litigation activities means any actions by a licensed attorney or a law firm in connection with a legal action in a court of law on behalf of a client, including— serving, filing, or conveying formal legal pleadings, discovery requests, or other documents pursuant to the applicable statute or rules of civil procedure; communicating in, or at the direction of, a court of law (including in depositions or settlement conferences) or in the enforcement of a judgment; and any other activities engaged in as part of the practice of law, under the laws of a State in which the attorney is licensed or admitted to practice, that relate to the legal action. The term State means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, and the United States Virgin Islands. Notwithstanding any other provision of law, a Federal agency does not have any supervisory, enforcement, or regulatory authority over litigation activities of attorneys or law firms. Notwithstanding any other provision of law, a person may not bring a civil action in a court of the United States seeking relief for harm arising out of alleged misconduct related to the litigation activities of an opposing attorney or law firm.

4. Conforming amendments Section 803(6) of the Fair Debt Collection Practices Act (15 U.S.C. 1692a(6)) is amended— by redesignating subparagraph (F) as subparagraph (G); and by inserting after subparagraph (E) the following: any licensed attorney or any law firm, to the extent that such attorney or firm is engaged in litigation activities (as such term is defined in section 1632 of title 28, United States Code) to collect a debt on behalf of a client; and Section 1027(e) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5517(e)) is amended— by redesignating paragraph (3) as paragraph (4); and by inserting after paragraph (2) the following: Paragraph (2) shall not apply to a licensed attorney engaging in litigation activities to collect a debt on behalf of a client if the attorney is excluded from the term debt collector under section 803 of the Fair Debt Collection Practices Act by reason of section 803(6)(F) of such Act. (F)any licensed attorney or any law firm, to the extent that such attorney or firm is engaged in litigation activities (as such term is defined in section 1632 of title 28, United States Code) to collect a debt on behalf of a client; and . (3)Rule of construction limitation with respect to debt collectionParagraph (2) shall not apply to a licensed attorney engaging in litigation activities to collect a debt on behalf of a client if the attorney is excluded from the term debt collector under section 803 of the Fair Debt Collection Practices Act by reason of section 803(6)(F) of such Act..