[Congressional Record Volume 148, Number 123 (Wednesday, September 25, 2002)]
[House]
[Pages H6685-H6686]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           JUDICIAL CODE OF CONDUCT PRIVACY CLARIFICATION ACT

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Illinois (Mrs. Biggert) is recognized for 5 minutes.


                             General Leave

  Mrs. BIGGERT. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
and include extraneous material on the subject of my special order 
today.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from Illinois?
  There was no objection.
  Mrs. BIGGERT. Mr. Speaker, I rise today to join my colleague the 
gentlewoman from New York (Mrs. Maloney) in introducing the Judicial 
Code of Conduct Privacy Clarification Act. As the title suggests, this 
bill would clarify a provision in title V of the Gramm-Leach-Bliley Act 
that deals with privacy protections for consumers.
  Gramm-Leach-Bliley was landmark legislation that for the first time 
permitted companies to engage in banking, insurance and securities 
transactions simultaneously. While considering these new freedoms for 
businesses to operate across lines, Congress also wanted to ensure that 
consumer privacy would not be placed at risk.
  Title V sought to address this issue by giving regulators latitude to 
enforce privacy provisions among financial institutions. Unfortunately 
in interpreting the language of the law, some confusion has arisen over 
what specifically those financial institutions might be. In seeking to 
clarify the confusion, the Federal Trade Commission concluded that 
financial institutions include any business that, and I quote, 
significantly engages in financial activities. What is the definition 
of ``significantly''? Well, it could be as little as once a year. And 
what is a financial activity? There are four: debt collecting, 
financial advisory activities, tax planning preparation and advising, 
and leasing real or personal property.
  Okay, that is fair enough. But in writing its regulations in this 
way, the Federal Trade Commission appears to have unintentionally swept 
under its umbrella the one group of professionals that already is 
governed by the strictest possible confidentiality or privacy

[[Page H6686]]

regulations. What group is this? Attorneys.
  Attorneys already are bound by a duty of confidentiality enforceable 
under the laws of all 50 States that prevents misuse of client 
information and provides a higher degree of privacy than Gramm-Leach-
Bliley. For example, lawyers in my home State of Illinois are 
prohibited from releasing confidential information. Our code reads, 
``Except in certain specified circumstances, a lawyer shall not, during 
or after termination of the professional relationship with the client, 
use or reveal a confidence or secret of the client known to the lawyer 
unless the client consents after disclosure.''
  And Illinois is no exception. All 50 States have equally restrictive 
language. In all 50 States, lawyers who violate these laws face 
disbarment and/or other penalties that are much more onerous than those 
for a violation of title V under Gramm-Leach-Bliley.
  Do attorneys significantly engage in financial activities as defined 
by the FTC? Yes. Some attorneys do give tax planning advice. Others may 
handle debt collection cases. Still others may take up cases relating 
to the other two named financial activities, providing financial advice 
or leasing real or personal property. Yet in order to comply with the 
privacy provisions under Gramm-Leach-Bliley, these attorneys now run 
the risk of violating the client confidentiality restrictions placed on 
their profession.
  Every attorney who engages in any of the four defined financial 
activities for a noncorporate client must mail to that client a privacy 
notice, every year for as long as he or she is in business. And what 
does that privacy notice convey? It informs clients that they may 
direct their attorney not to share their personal information with 
other entities, the so-called opt-out provision of Gramm-Leach-Bliley. 
Yet the attorney-client confidentiality relationship is by nature an 
opt-in protection. In short, for attorneys, the very act of disclosing 
a privacy policy can create a confidentiality violation.
  It was not the intent of Congress to regulate attorney-client 
relations. Our intent was to regulate the growing use and sale of 
consumers' personal information for marketing, profiling and other 
commercial purposes by bona fide financial institutions. At the end of 
the day, our bill will make the intention of the Gramm-Leach-Bliley Act 
crystal clear. The scope of the law was not intended to include law 
firms and sole practicing lawyers.
  I urge my colleagues to support this legislation.
  Mrs. MALONEY of New York. Mr. Speaker, I rise today in support of 
legislation that I am introducing with my colleague Judy Biggert of 
Illinois, the Judicial Code of Conduct Privacy Clarification Act. This 
legislation resolves the continuing controversy as to whether attorneys 
at law, who are subject to strict codes of professional conduct, should 
be subject to the privacy section of the Gramm-Leach-Bliley Act. The 
Biggert-Maloney legislation recognizes that the practice of law and the 
business of financial services are wholly different and that Gramm-
Leach-Bliley should be clarified to recognize this distinction.
  Protecting personal privacy should be one of the highest priorities 
of Congress. Whether online, over the phone or in person, I believe 
that individuals should be allowed the maximum control over information 
they supply to financial services and other companies.
  With passage of Gramm-Leach-Bliley in 1999, Congress took a small 
first step in ensuring that consumer privacy is protected as financial 
institutions continue to merge and as the economy grows increasingly 
digital. As a member of the then-Banking Committee, I was proud to play 
a role in requiring that financial services companies supply their 
customers with privacy policies and allow customers the right to opt-
out of information sharing with third-parties. These were 
groundbreaking provisions that future Congresses should work to expand.
  Unfortunately, since enactment, Gramm-Leach-Bliley has caused 
significant confusion for the legal community. On February 11, 2002, I 
joined 12 of my bipartisan colleagues on the Financial Services 
Committee in writing to the Federal Trade Commission (FTC) to ask that 
it grant attorneys an exemption to the Gramm-Leach-Bliley privacy 
provisions. As we wrote at the time, ``Attorneys are already bound by a 
duty of confidentiality, enforceable under the laws of all 50 states, 
that prevents misuse of client information and provides a higher degree 
of privacy protection than Gramm-Leach-Bliley.'' After a thorough 
review, the FTC determined that it does not presently have the 
authority to grant the exemption we requested.
  The privacy protections in Title V of Gramm-Leach-Bliley were a 
response to specific cases where consumers' private, personal financial 
information was mined without their consent in an effort to market them 
products. Where Title V is an appropriate response to such egregious 
cases, it is inappropriate to apply it to most lawyers whose clients 
already expect that all their disclosures are confidential, covered by 
State codes of ethics and attorney-client privilege.
  For example, the Legal Aid Society of New York City had to translate 
its privacy notice into many different languages to serve its 
ethnically diverse clientele. It also had to devote an inordinate 
amount of time to dealing with confused clients who couldn't understand 
why they were getting privacy notices from their lawyers when 
everything they tell their lawyers is presumed to be confidential. I 
fear this could have a chilling effect on the willingness of these 
individuals to share critical information with their attorneys. The 
confusion these privacy notices are causing in New York is unnecessary 
given that there is express language forbidding the sharing of client 
information in the New York State Ethics Code for lawyers.
  I join Representative Biggert in introducing this legislation today 
because it is my intention to target this limited area where the 
interpretation of Gramm-Leach-Bliley can be improved by a legislative 
fix. The FTC's standing interpretation of Title V of the Act is causing 
confusion that is determined to the attorney-client relationship. It is 
appropriate for Congress to intervene. I have met with numerous 
constituents from New York City on this issue and am convinced that 
attorneys should not fall under the existing language. I do understand 
that it is late in the congressional session and I invite interested 
parties to work with me to improve the legislation in the coming year.
  I look forward to continuing to work to safeguard the privacy of my 
constituents in the coming Congress. I emphatically do not support any 
rollback of the progress that has been made on privacy. This 
legislation is limited and strictly targeted. As for the larger privacy 
issues--the American public deserves more privacy protections, not 
fewer.

                          ____________________