In this litigation, a law firm and its partner challenge the constitutionality of the so-called "limited attorney exemption" of the Debt Adjustment and Credit Counseling Act ("DACCA"), N.J.S.A. 17:16G-1 to -9. The present case was initiated when the Office of Attorney Ethics ("OAE") launched an investigation of plaintiffs who, among other things, represent debtors in bankruptcy and collections cases. Such debt adjustment work may violate DACCA, which prohibits debt adjusters from operating for-profit in New Jersey unless exempted by the statute.
DACCA initially exempted "any attorney-at-law of this State." In 1986, however, the Legislature amended DACCA to narrow the exception to the current "limited attorney exemption," which exempts only those attorneys who are "not principally engaged as debt adjuster[s]." N.J.S.A. 17:16G-1(c) (emphasis added). While rarely prosecuted, attorneys "principally engaged" in debt adjustment work may be subject to heavy civil and criminal sanctions under DACCA and the Criminal Code.
This court invalidates the limited attorney exemption within DACCA because it (1) violates principles of separation of powers, and (2) is void for vagueness.
First, this court holds that DACCA's limited attorney exemption is an unconstitutional violation of separation-of-powers principles. As applied to attorneys who principally conduct their legal practice for clients seeking an adjustment of their debts, N.J.S.A.17:16G-1(c)(2)(a) represents an undue encroachment upon the Court's exclusive authority to regulate attorneys set forth in Article VI, Section 2, paragraph 3 of the New Jersey Constitution.
Second, this court further holds that the limited attorney exemption is unconstitutional for its vagueness. The ambiguity of the limited attorney exemption denies attorneys due process because of the statute's failure to provide them with fair notice of what constitutes "principal engagement."
This court therefore reverses the trial court's grant of summary judgment to defendants and remands the matter for further consideration of plaintiffs' civil rights and other claims. In doing so, this court invalidates the limited attorney exemption in N.J.S.A. 17:16G-1(c)(2)(a) and its cross-reference to N.J.S.A. 2C:21-19(f). The rest of the statute remains intact.