| FOR IMMEDIATE RELEASE
TUESDAY, JULY 1, 2003
TDD (202) 514-1888
WASHINGTON, D.C. The Department of Justice's Antitrust Division issued a letter urging the Rhode Island Senate to reject a proposed bill that would prevent nonlawyers from competing with lawyers to perform real estate closings. In the letter sent yesterday, June 30, the Department expressed concern that the bill would likely cause Rhode Island consumers and businesses to pay more for real estate closings and prevent them from benefitting from competition from out-of-state and Internet lenders that could provide more convenient closing services.
The bill was passed by the Rhode Island House of Representatives on June 25. If the bill is passed by the Senate and signed into law, it will end the long history of competition between Rhode Island lawyers and lay people to close real estate deals. Instead, consumers would be required to hire lawyers to represent them through the closing process.
"The bill will likely raise prices for Rhode Islanders in two ways," said R. Hewitt Pate, Assistant Attorney General in charge of the Justice Department's Antitrust Division. "Consumers who would not pay for a lawyer would have to do so; traditionally, lawyers charge more than lay providers. Second, without competition from nonlawyers, lawyers' fees are likely to increase."
The bill being considered by the Senate is House Bill No. 5936, entitled, "An Act Relating To Criminal Offenses - Law Practice." After being passed by the Rhode Island House of Representatives, the bill was referred to the Senate Commerce, Housing, and Municipal Government Committee on June 26, 2003. The bill covers virtually all real estate transactions, including residential and commercial deals and purchases, refinancings, second mortgages and other transactions.
A similar bill was introduced last year but did not become law. The Department and the Federal Trade Commission had urged the Rhode Island legislature to reject that bill.
For more information on the letter, contact Renata B. Hesse, Chief of the Networks and Technology Section, at 202/307-6200. Copies of the documents mentioned in this release are available from the Department of Justice. The Department's website is http://www.usdoj.gov/atr. Paper copies of the documents are also available from the Justice Department's Antitrust Documents Group, which can be contacted by phone: 202/514-2481, fax: 202/514-3763, or e-mail: email@example.com.
The Honorable William V. Irons
The Honorable Joseph A. Montalbano
The Honorable Dennis L. Algiere
Members of the Senate Commerce, Housing,
Members of the Senate Judiciary Committtee
Dear Mr. President and Members of the Senate:
We understand that the Rhode Island House of Representatives recently passed a bill that would amend the definition of "practice of law" to require lawyers to represent buyers in virtually all aspects of the real estate closing process. House Bill No. 5936, entitled, "An Act Relating To Criminal Offenses - Law Practice," was referred to the Senate Commerce, Housing, and Municipal Government Committee June 26, 2003. It is presently scheduled to be heard on Tuesday, July 1, 2003.
This bill is very similar to House Bill No. 7462, considered by the House of
Representatives last year. The Department of Justice and the Federal Trade Commission urged
the House to reject that bill because it would have restrained competition between lawyers and
nonlawyers for real estate closing business, likely resulting in increased costs for Rhode Island
consumers. The current bill raises many of the same concerns as House Bill No. 7462 did.
Accordingly, we urge the General Assembly to reject the current legislation for the reasons stated
in our March 29, 2002 letter.(1) A copy of our 2002 letter is attached.
1. The bill primarily differs from the old bill in one respect. The new bill will allow realtors to answer questions about purchase and sale agreements and other issues that the old bill would have forbidden. This change does not diminish our concerns about the potential anticompetitive impact of the bill and we urge its rejection.