JUSTICE DEPARTMENT AND FTC URGE RHODE ISLAND LEGISLATURE TO CONTINUE ALLOWING NONLAWYERS TO CLOSE REAL ESTATE DEALS

WASHINGTON, D.C. -- The Department of Justice and the Federal Trade Commission (FTC) issued a letter Friday, March 28, 2003, urging the Rhode Island House of Representatives to reject two proposed bills that would prevent nonlawyers from competing with lawyers to perform real estate closings. The agencies expressed concern that the bills 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.

Currently, nonlawyers compete with lawyers to close real estate deals in Rhode Island; the bills would end that history of competition. Under the bills, 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, Acting 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, and, traditionally, lawyers charge more than lay providers. Second, without competition from nonlawyers, lawyers' fees are likely to increase."

"This bill would likely deprive Rhode Islanders of the significant benefits of competition, such as lower prices, more convenient services, and the option to use inexpensive Internet-based loan services," said Timothy J. Muris, Chairman of the FTC.

A similar bill was introduced last year but did not become law. The DOJ and the FTC had urged the Rhode Island legislature to reject that bill.

The two bills being considered are H. 5639 and H. 5936, both entitled, "An Act Relating To Criminal Offenses - Law Practice," which were referred to the Rhode Island House Judiciary Committee. The bills cover virtually all real estate transactions, including residential and commercial deals and purchases, refinancings, second mortgages and other transactions.

Copies of the documents mentioned in this release are available from the Department of Justice and the Federal Trade Commission. The Department of Justice's website is http://www.usdoj.gov/atr; the Federal Trade Commission's website is http://www.ftc.gov. For more information on the letter at the Department of Justice, contact Renata B. Hesse, Chief of the Networks and Technology Section, at 202/307-6200. For more information on the letter at the Federal Trade Commission, contact Jerry Ellig, Acting Director of the FTC Office of Policy Planning, at 202/326-3528. Paper copies of the documents are also available from the Justice Department's Antitrust Documents Group and the Federal Trade Commission's Consumer Response Center. The Justice Department's Antitrust Documents Group can be contacted by phone: 202/514-2481, fax: 202/514-3763, or e-mail: atrdocs.grp@usdoj.gov. The Federal Trade Commission's Consumer Response Center can be contacted at Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. Call toll-free: 1-877-FTC-HELP.

###

03-203