A bankruptcy attorney and a firm offering legal support services filed suit against the Consumer Financial Protection Bureau, alleging the agency overstepped its grounds by requesting privileged attorney-client information and stepping outside the purview of its investigative authority.

The case, which was filed by attorney Kimberly Pisinski and legal support services firm Morgan Drexen in the U.S. District Court of Columbia, raises questions about how much power the CFPB has to access certain records and whether the structure of the agency itself is constitutional.

At one point in the lawsuit, the plaintiffs say the CFPB took the position that Morgan Drexen may have violated a Telemarketing Sales Rule "because the CFPB considers attorneys’ hourly rates for bankruptcy services as upfront fees."

Court records also show the CFPB filed a 'civil investigative demand' asking Morgan Drexen for information relevant to its relationship with attorneys during the course of debt settlement practices.

The plaintiffs in the case make a few basic claims against the CFPB – that it lacked oversight, maintained an unconstitutional structure and requested information that violates attorney-client privilege.

The CFPB publicly disagreed with all of those claims.  

"We believe this work is within our authority and consistent with the ordinary course of a government investigation," a CFPB spokesperson told HousingWire Monday.

"Our goal is to determine whether companies are complying with the law and seek appropriate remedies where that's not the case."

The CFPB also highlighted its mission, saying “information requests” are a tool the bureau has to enforce its mission under Title X of the Dodd-Frank Act.

Furthermore, the bureau says all information requests are carefully considered and are relevant to investigations or any potential legal violations.

Randall Miller, a partner with the Venable law firm, filed the suit against the CFPB, saying the lawsuit essentially "asks the court to review the Constitutional structure of the CFPB."

"We say it’s basically unconstitutional because it lacks oversight and internal checks and balances," he explained.

The plaintiffs allege the investigation into Morgan Drexen financially harmed the company, costing it the ability to obtain an affordable financing arrangement since the firm can no longer secure a credit line at an interest rate lower than 22%, according to court records.

Miller says in some of the information requests, the CFPB tried to obtain information that plaintiffs consider privileged. They also accuse the CFPB of attempting to regulate the practice of law – an area that's generally a function of the state.

The plaintiffs asked the court Monday for a preliminary injunction to stop the CFPB from trying to force the release of certain information. 

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