10 Things To Know About Consumer Financial Regulatory Practice
The relative newness of many consumer finance regulations makes for an interesting practice area.
Ed. note: Welcome to the latest installment of Better Know A Practice Area, a series introducing readers to different practice areas. Each post is written by an editor at Practical Law who previously practiced in that area and currently writes about it. Prior columns have covered capital markets and corporate governance, securities litigation and enforcement, patent litigation, executive compensation, commercial transactions, labor and employment, real estate, startup law, bankruptcy, antitrust, being an in-house generalist, employee benefits law, entertainment law, tax, and working overseas.
Today’s topic: consumer financial regulatory practice.
1. What do you do in a typical day?
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A typical day in the life of a consumer financial regulatory attorney might involve:
• Advising a client on the best way to roll out a new financial product or service.
• Preparing a client for an upcoming examination by the Consumer Financial Protection Bureau (CFPB) – and maybe even conducting a “mock” examination for practice.
• Drafting a brief in support of a motion to dismiss a fair lending class action complaint against a client.
• Developing a defense strategy in a government agency investigation into potential redlining or predatory lending.
• Listening to recordings of telemarketing calls and reviewing telemarketing scripts to minimize risk of deceptive marketing practices.
2. Who do you work with?
Junior associates mostly work with senior associates and sometimes partners. These junior associates may be asked to research and identify the applicability of certain federal consumer financial laws to the client’s activities, and perhaps write a memo that a senior associate or partner may rely upon in crafting the final product for the client. As associates grow more senior, they are given more responsibilities, greater involvement in overall case strategy, and increased direct contact with clients and the opposite side. In a financial regulatory practice, clients may include banks, credit unions, mortgage lenders and credit card companies. Opponents may include plaintiffs’ lawyers, enforcement counsel of regulators, such as the CFPB, and often prosecutors from the DOJ.
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3. What does a common career path look like?
It is common for financial regulatory attorneys to spend some time in private practice and then gain experience working for a government agency – or vice versa. Lawyers that gain “inside knowledge” at government agencies such as the CFPB, FTC, FDIC or OCC may then decide to return to private practice, often as counsel or partner, and use their expertise to market to and ultimately better represent their clients. Others may choose to make a career in the government. The most common government positions in the financial regulatory field are enforcement counsel at the bank regulatory agencies, though sometimes attorneys will end up in supervisory or rulemaking divisions.
Beside government, lawyers in this practice area often move to the financial institutions’ in-house regulatory, compliance or litigation teams. Financial regulatory lawyers are mostly based in Washington, D.C., as well as in major financial centers such as New York, Chicago or San Francisco.
4. If variety is the spice of life, how spicy is this practice area?
The spiciness of this practice area is like a mild-to-medium poblano. Consumer regulatory matters can concern different topics, from compliance with technical disclosure rules to questions about consumer outreach and growth of the business. Sometimes this practice area will reach jalapeño or even ghost pepper-level spiciness if the lawyer is lucky enough to handle an investigation or lawsuit by the DOJ or multiple state attorneys general, or a class action litigation that ends up in the newspaper. These investigations or lawsuits may involve claims of lending discrimination, predatory lending, deceptive or abusive marketing or pricing practices, or widespread kickback schemes. To gather information that may help the lawyer in its defense of the client, the consumer financial regulatory lawyer may need to interview employees of the client and learn about the client’s computer systems and overall business. Sometimes the consumer financial regulatory lawyer will use this information to prepare a defense that may be presented in person or in writing to the opposing government agency in hopes of favorably resolving the investigation or litigation.
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5. How much wear and tear?
The pace of the work may vary greatly. While regulatory matters may be less time-sensitive, government investigations and litigation often are faster-paced, with higher stakes such as large fines or settlements. Not surprisingly, these matters often will require more billable hours and sometimes an all-nighter. Because these matters move quickly, partners may not always be able to devote enough time to learning all of the facts and instead will rely on associates to supply the details. Because numerous financial consumer laws may apply to a particular matter, the associate must have a good understanding of the key provisions of these statutes and regulations. Occasionally, a senior associate, counsel or partner may be considered the “expert” on a particular law or statutory provision, and others may rely on this lawyer for help with interpreting the statute or putting it into the correct context.
6. Of the people in this practice group who hate it, what exactly do they hate about it?
Lawyers practicing in the consumer regulatory finance area generally enjoy the work and the practice overall. One thing that may get a little tiresome about this practice is being on the receiving end of client complaints regarding the extent of overregulation in this area and the burdens associated with compliance. However, to the extent that this is a “negative” about the practice, it is due mostly to the relative newness of many consumer finance regulations, and thus is likely to wane over time. Furthermore, this client frustration is usually much improved once you have been able to assist the client with their matter.
7. Of the people in this practice group who love it, what exactly do they love about it?
Most consumer financial regulatory lawyers enjoy being involved in cases with high stakes, often accompanied by media coverage and publicity, or in matters that present new, complex legal challenges or creative applications of the law. Some of the most exciting parts of the practice are conducting internal investigations to uncover potential wrongdoing, and working with a team of legal experts and statisticians to gather and analyze trends in the client’s lending and other business lines.
Another plus about being a consumer financial regulatory lawyer is that, whether working with colleagues or across the table from opposing counsel, you likely will be surrounded by smart attorneys that have acquired much institutional knowledge, including the ins-and-outs of their client’s business, the lingo commonly used among the financial industry, and the details of numerous types of financial products and services.
8. Are there common avenues out of this practice area?
Consumer financial regulatory lawyers who don’t want to continue private practice in this area often make a move to in-house counsel at a bank, mortgage lender or other financial institution. These lawyers may work in either litigation or compliance divisions at these companies.
9. What are some market trends that impact this practice area?
The housing crash and resulting credit crisis of 2008 led to a significant increase in federal regulations, as well as industry uncertainty regarding the CFPB’s broad supervisory authority. In general, the more regulatory activity and oversight, the more work for financial regulatory lawyers.
Recently, however, the markets have stabilized significantly. This, coupled with the change in the administration, may cause some legal matters to wind down. However, many practitioners think the next wave of work in the financial regulatory space may revolve around the numerous recent developments in financial technology (“fintech”).
10. If you had to recommend one candidate from a room crowded with recent bar exam graduates, what specific qualities would he or she have that would ensure success in this practice area?
Apart from a demonstrated interest in the work, a good candidate would be a quick learner with respect to the inner workings of the consumer financial industry, the multitude of products and services offered to consumers, and the various federal laws that may apply. In addition, the candidate should be detail-oriented and able to express herself effectively and clearly both orally and in writing. Strong statistics or math skills would be a plus, given that consumer financial regulatory matters sometimes require lawyers to collaborate with statisticians and interpret their findings.
Melissa Malpass (© Matt Greenslade/photo-nyc.com)
Melissa Malpass is a Senior Legal Editor on Practical Law’s Finance team. She focuses on consumer regulatory issues. She began her legal career as an associate at K&L Gates. Prior to joining Practical Law, she served as counsel at WilmerHale.
