In Eric M. Berman, P.C. v. City of New York, 25 NY3d 684, 692, 16 NYS3d 25, 37 NE3d 82 , the New York State Court of Appeals was confronted with the issue of whether a New York City local law which regulated certain practices for debt collection agencies was preempted by the state's statutory authority to regulate the conduct of attorneys.
In that case, the local law in question provided a limited exemption for attorneys or law firms that were "collecting a debt in such capacity on behalf of and in the name of a client solely through activities that may only be performed by a licensed attorney" (Administrative Code of City of NY § 20-489 [a] ).
However, such exemption did not cover "any attorney-at-law or law firm or part thereof who regularly engages in activities traditionally performed by debt collectors, including, but not limited to, contacting a debtor through the mail or via telephone with the purpose of collecting a debt or other activities as determined by rule of the commissioner" (id.).
The Court of Appeals reasoned that there was "a significant and meaningful distinction between such conduct constituting the practice of law, i.e., making phone calls or sending letters on behalf of a client in an attempt to recover specific amounts due to that client and conduct that is typical of a debt collecting agency--making high volume collection calls at off-hours and sending boilerplate 'dunning' letters demanding payment without details of the source of the debt or the actual amount due" (Eric M. Berman, P.C. at 691).
The Court of Appeals further determined that "where attorneys or law firms seek to recover debt on behalf of passive debt buyers, without exercising any professional judgment as to the validity of the debt or the amount owed, it falls outside the practice of law" (id. at 692).
Accordingly, the Court of Appeals found that the local law at issue was not preempted by the state's legislativee authority in regulating attorney conduct (id.).