President Trump campaigned on reversing many Obama-era policies, and he is making good on his promises. The uncertainty of which major regulatory changes are in the pipeline is certainly keeping the legal community on its toes. To date, the President has signed 51 Executive Orders and three congressional resolutions into law. Below are three policy changes that will impact the practice of law.

Class Action Litigation

Recently, Donald Trump signed a Congressional resolution eliminating the Consumer Financial Protection Bureau’s (CFPB) arbitration rule, which was to take effect in March of 2018. This CFPB rule was created to reverse the 2011 AT&T Mobility v. Concepcion[1] Supreme Court decision that held that the Federal Arbitration Act of 1925 preempts state laws that prohibit contracts from disallowing class-wide arbitration. As a result of Concepcion, businesses can, and have been, including arbitration agreements with class action waivers in their contracts that require consumers to bring claims only in individual arbitrations, rather than in court as part of a class action.

In March of 2015 the CFPB released the results of a major study[2] assessing the effects of the Concepcion decision on the average consumer. The CFPB concluded that while class actions are not perfect, they do provide some form of financial restitution for all those wronged. On the flip side, the CFPB determined that individual arbitrations make it nearly impossible to receive any form of restitution, as evidenced by customers who were caught up in last year’s Wells Fargo phony accounts scandal. Without the ability to band together to bring a class action suit, customers had difficulty suing the bank because they were bound by mandatory arbitration clauses in contracts they signed for legitimate accounts. 

Trump’s signature on this resolution (which had a tied vote in the senate, until Vice President Pence cast the winning vote) upholds Conception and maintains the status quo, probably until an administration change. 

Trump has promised deregulation, and this is the first of what may be many resolutions to scale back the CFPB’s reach. With Richard Cordray, the chief of the CPFB appointed by Obama, resigning, President Trump can now appoint his own people and completely overhaul the agency. In addition to shake-ups at the CFPB, this resolution may make it easier for the Trump administration to protect companies’ ability to block class actions in a variety of non-financial services. Currently Education Secretary Betsy DeVos is trying to keep these arbitration clauses in higher education contracts.

White Collar & Dodd-Frank

Dodd-Frank was enacted shortly after the 2008 financial crises to implement comprehensive safeguards to monitor and regulate financial institutions and mitigate the risk that the failures of those institutions pose to the entire economy and the American consumer. Among other things, Dodd-Frank created the Financial Stability Oversight Council (FSOC), the CFPB (discussed above) and the “Volcker Rule” which prohibits banks from making certain types of speculative investments with their own money. 

The law also provides a structure for regulating the derivative market, and creates a whistleblower provision that pays awards to eligible whistleblowers who voluntarily provide the SEC with original information that lead to a successful enforcement action yielding monetary sanctions of over $1 million.The Dodd-Frank Act also expressly prohibits retaliation by employers against whistleblowers and provides them with a private cause of action in the event that they are discharged or discriminated against by their employers in violation of the Act.

President Trump has vowed to do a “big number” on the Dodd-Frank “disaster." He took his first steps by signing an Executive Order on February 3, 2017, ordering a review of the bill. While the executive order will not immediately change the law, the directive instructs the treasury secretary to meet with the agencies that oversee the law to identify necessary changes. Although Dodd-Frank’s effects cannot be completely eliminated because hundreds of its rules became part of international banking agreements, it can be significantly rolled back. This leaves much uncertainty in the financial sector, with lawyers unsure if they should draft provisions and negotiate contracts quickly before the act is repealed or to wait to see if the new bill works better in their clients’ favor.

U.S. Cybersecurity Policy

On May 11, 2017 President Trump signed an executive order that focuses on the modernization of the federal information technology network and national cybersecurity risk management. The executive order requires that all federal agencies adopt the Framework for Improving Critical Infrastructure Cybersecurity, developed by the National Institute of Standards and Technology (NIST). The executive order does not fundamentally change U.S. cybersecurity policy, but it does lay the groundwork for changes to future policy initiatives.

The order mandates that federal IT be moved to the cloud and holds the heads of each individual agency responsible for the cybersecurity of his or her agency. The agency heads have 90 days to recommend how best to protect U.S. national security systems and make recommendations for enhancing infrastructure. 

While the order does not specifically address private-sector business procedures, companies will likely be forced to adjust operations in response to cybersecurity risks. The executive order states that the secretaries of commerce and homeland security will have 120 days to provide options available to incentivize the private sector to adopt better cybersecurity practices.

Privacy and data security lawyers have remarked that the executive order makes no mention of topics such as data breach, internet of things (IoT) cybersecurity, vulnerability disclosure, or unfilled critical appointments (such as a national CTO), but are hopeful to see further consideration of these topics in the future. It is also yet to be seen what, if anything, will be expected of any third parties hosting government data.

To conclude, Trump has not been shy about his desire to deregulate.

It is imperative for attorneys to keep abreast of the latest developments from the White House in order to if and when it is advisable to bring suit, what contractual provisions to add or delete and whether any “big league” regulations are in the offing.

[1] 563 U.S. 333 (2011)

[2] http://files.consumerfinance.gov/f/201503_cfpb_arbitration-study-report-to-congress-2015.pdf