Most bankruptcy attorneys and marketers for lawyers know the magic phrase:
We are a debt relief agency. We help people file for relief under the Bankruptcy Code.
But some haven't even heard of it. And many don't know this phrase's implications for a law firm's website — including whether and where this federal bankruptcy disclaimer belongs.
So, here you are: my 2 cents on the what, where and why of the federal bankruptcy disclaimer, based on my years of work in law firm website content development and familiarity with attorney advertising rules.
The answer to when the Bankruptcy Code requires the debt relief agency disclaimer at first seems simple. Under Title 11 of the United States Code, a "debt relief agency" must "clearly and conspicuously" include the statement (or a substantially similar one) in "any advertisement of bankruptcy assistance services or of the benefits of bankruptcy directed to the general public (whether in general media, seminars or specific mailings, telephonic or electronic messages, or otherwise)." 11 U.S.C. § 528(a)(3) & (4).
It's pretty clear this applies to websites advertising bankruptcy assistance services. But it begs several questions, first and foremost: is an attorney or law firm that practices bankruptcy law a "debt relief agency" that provides "bankruptcy assistance services"?
And ... the short answer is: yes, bankruptcy attorneys are debt relief agencies to whom 11 U.S.C. § 528 applies. If that doesn't quite sound right to you, you're not alone. The definition of "debt relief agency" was applied to bankruptcy attorneys over much debate, and some attorneys no doubt still believe the definition does not really fit.
A short history for those who like to check their own facts: 11 U.S.C. § 101(12A) defines a "debt relief agency," in pertinent part, as "any person who provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration." Although there are some enumerated exclusions from the general definition, lawyers aren't among them. Further, an "assisted person" is defined to include most consumer bankruptcy law clients — it applies to anyone "whose debts consist primarily of consumer debts and the value of whose nonexempt property is less than $150,000." 11 U.S.C. § 101(3).
Attorneys were thrown in with debt relief agencies, along with the attendant regulations, in the wake of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which amended the Bankruptcy Code in 2005. The BAPCPA's aims included curbing misconduct by non-attorney debt relief agencies, seeking in part to prevent agencies from advertising debt relief services without disclosing that bankruptcy — and its inherent costs — might be involved. Hence the mandatory bankruptcy disclosure.
Debate among commentators and courts ensued concerning whether the broad definition of "debt relief agency" applied to lawyers. Groups like the America Bar Association and Federal Bar Association urged that requiring bankruptcy attorneys — and even perhaps multi-attorney law firms that happen to include a bankruptcy practice among other areas of practice — to identify themselves as "debt relief agencies" made no sense and would simply confuse consumers. (These arguments had been raised during the legislative process in support of proposed House and Senate amendments that would have explicitly excluded attorneys from the definition of "debt relief agency" in the BAPCPA. But the amendments never made it to either body's floor for a full vote.) Further, as a matter of logic, it seemed unnecessary and redundant to require a bankruptcy attorney to display a disclaimer whose purpose was to ensure that consumers understand a given service could involve assistance with filing bankruptcy.
Ultimately, however, those opposed to lumping attorneys in with agencies lost the battle. In Milavetz, Gallop & Milavetz, P.A. v U.S., 130 S.Ct. 1324 (2010), the U.S. Supreme Court concluded that bankruptcy attorneys qualified as "debt relief agencies" under the Bankruptcy Code, relying largely on the plain language of the BAPCPA, which did not include attorneys in its explicit list of exceptions from the term's definition. (Here's a nice brief summary of Milavetz.)
The good news is that the statute itself allows a "substantially similar statement" to "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code." 11 U.S.C. § 528(a)(4). And the Milavetz Court expressly confirmed this means that a law firm practicing bankruptcy law therefore has "flexibility to tailor the disclosures to its individual circumstances." The key information to include is that the attorney or firm qualifies as a "debt relief agency" and "help[s] people file for bankruptcy relief" — this latter phrase giving "meaningful context to the term 'debt relief agency.'" (130 S. Ct. 1341.)
The permitted flexibility gives lawyers some useful leeway to avoid possible consumer confusion from labeling a law firm a "debt relief agency." Some possible variations on the standard bankruptcy disclaimer might include, for example:
Our firm practices bankruptcy law and is considered a debt relief agency by federal law. We help people file for bankruptcy relief under the Bankruptcy Code.
We are a debt relief agency and have practiced bankruptcy law for over 20 years. Our services include helping individuals and couples file for bankruptcy relief under the Bankruptcy Code.
This law firm's practice includes serving as a debt relief agency: the firm helps people file for bankruptcy relief under the Bankruptcy Code.
Or, try this one from the Law Offices of Curtis K. Walker:
The Law Offices of Curtis K. Walker, designated a debt relief agency by an Act of Congress and the President of the United States, has proudly assisted consumers seeking relief under the U.S. Bankruptcy Code for over 36 years.
One final question you may have is what exactly it means to display the bankruptcy disclaimer "clearly and conspicuously." This is particularly an issue for a general practice firm that does not want to prominently (and potentially misleadingly, at least for non-bankruptcy clients) brand itself as a debt relief agency, say, smack in the middle of its home page.
The Federal Trade Commission offers guidance on how to display necessary advertising disclosures "clearly and conspicuously" in order to prevent the ad from being considered deceptive. The FTC refers to The 4Ps: Prominence, Presentation, Placement, and Proximity. For websites advertising services, it suggests this boils down to:
These Ps generally make sense, although I take some issue with the suggestion that — these days, and on an attorney's website — the footer of a page is necessarily too out of sight. Indeed, for The Modern Firm attorney websites, I would argue that our disclaimer-type information is easily found precisely because it is generally separated out clearly in the footer of all pages on a website.
So, as a general rule, our attorney-clients who practice bankruptcy law most often include their bankruptcy disclaimers in one of two places:
Some firms that primarily practice bankruptcy law also include the disclaimer at the close of the home page body text, like this bankruptcy law firm in Cincinnati. It's certainly fine to do so. But I would argue that it's not necessary, particularly in light of the apparent purpose of the disclaimer in the first place: if the disclaimer is meant to ensure that consumers are aware an organization's services might involve assistance with filing for bankruptcy, the statement arguably adds little of critical value to home page text centered on describing this very service!
Curious about the disclaimer on the website for Milavetz, Gallop & Milavetz, P.A., the firm from the Milavetz Supreme Court case? Consistent with recommendation 2. above, this firm — which practices in several areas of law — includes the (standard) bankruptcy disclaimer at the close of the body text of their bankruptcy practice area pages.
So, there you have it! Thanks to Burr Ridge, Illinois bankruptcy attorney Saul Modestas for raising this common question recently. The Modern Firm has created many successful website designs for attorneys who practice bankruptcy law throughout the years. If your firm needs assistance with a new website — or you have an existing website in need of rescue — drop us a line!