Statement of Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform, on the sweeping new expansion of liability that will be created by the Consumer Financial Protection Agency (CFPA) Act currently before Congress:
“While the Chamber has a number of serious concerns about the proposed Consumer Financial Protection Act, not least among them is the probability of increased litigation from some state attorneys general, who, with new federal authority to enforce the CFPA, will be hiring private plaintiffs’ lawyers on contingency fee contracts.
“Congress should adopt legislation that would mirror the current private attorney retention rules applicable to federal agencies by barring state or local government use of contingency fee arrangements to enforce the CFPA.
“At minimum, we believe any financial protection bill must, at the very least, include safeguards that would bring transparency to contingency fee relationships between state attorneys general and the plaintiffs’ bar—a critical step to safeguard against the growing problem of “pay-to-play” abuses when private plaintiffs’ firms who are awarded these lucrative contracts are also contributing to the state officials’ campaigns.
“Without a transparency mechanism, these “pay-to-play” abuses will proliferate under this legislation with more plaintiffs’ lawyers jockeying for a market share of this new litigation field.
“Businesses already struggling to survive and retain jobs in this challenging economic environment should not face a barrage of 50 different new state regulators, all with the ability to hire private plaintiffs’ lawyers to bring litigation. Transparency in the hiring of contingency fee private attorneys will help ensure that, at the least, there are not improper campaign contributions given in exchange for contingency fee lawsuit contracts.”