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New CFPB Rule Makes Personal Injury Attorneys the Real Winners

Personal injury lawyers stand to be the real winners of the Consumer Financial Protection Bureau’s (CFPB) new rule that prohibits companies from using mandatory arbitration clauses in their contracts. While the CFPB claims this anti-arbitration rule was set to protect consumers, the reality is the rule will benefit personal injury attorneys hell-bent on making a buck through class action lawsuits. Darren McKinney, director of communications for the American Tort Reform Association, discussed this very fact in a letter to the editor published in The Wall Street Journal, responding to Senator Sherrod Brown’s letter to the editor supporting the rule.

While this rule could have rippling repercussions for businesses, specifically those in consumer financial services, the U.S. House of Representatives passed a resolution of disapproval last month to quash the rule. This power granted by the Congressional Review Act allows Congress to overturn regulatory rules posed by federal agencies through the enactment of a joint resolution of disapproval within 60 days of the rule’s announcement in the Federal Register. However, the Senate has yet to pass such a resolution.

There’s no question that rules and court rulings giving personal injury attorneys the ability to exploit businesses are harmful to both our competitive business and legal climates. From workers’ compensation reform to nuisance lawsuits to asbestos bankruptcy trusts, North Carolina knows well the lengths personal injury attorneys will go to challenge businesses in order to pad their wallets. Understanding North Carolina business has a target on its back, the NC Chamber formed the NC Chamber Legal Institute to fight for business in the courts. The Carolina Journal recently profiled the NC Chamber Legal Institute, where I discussed its formation, key issues of focus and the institute’s future. As personal injury attorneys turn to the courts to wage their battles, the NC Chamber Legal Institute is committed to protecting business’ interests in the courts, focusing on issues like civil liability, tort reform and improved corporate governance. We fully anticipate to see several issues affecting our business community come before the courts and the NC Chamber Legal Institute is in prime position to push back.

The CFPB’s new rule, should it go into effect, is just one way personal injury attorneys will attempt to go after our business community. As I noted in the Carolina Journal piece, there are many issues the General Assembly will not overturn, leaving the courts as personal injury attorneys’ next line of defense in North Carolina. While we had no way to defend against those attacks before, we are now well prepared for those fights. We will continue to keep close watch on the CFPB’s rule and its impact on North Carolina, while also keeping you apprised of the NC Chamber Legal Institute’s efforts.

Gary J. Salamido
Vice President, Government Affairs
North Carolina Chamber