Involvement Of An Attorney In The Management Of A Collection Agency - Q2 1999By the Division of Banks
There is no conflict between Mass. Gen. Laws chapter 93, section 24 and 209 CMR 18.04(3) relative to the involvement of an attorney in the management of a collection agency. Said section 24 prohibits attorneys who are not authorized to practice law in Massachusetts from, among other things, directly or indirectly conducting a collection agency, or engaging in the Commonwealth in the business of collecting or receiving payment for others of any account, bill or other indebtedness, or from soliciting the right to collect or receive payment from another of any account, bill or other indebtedness without first obtaining from the Division a license to carry on said business. Additionally, the Division has promulgated regulations, set forth at 209 CMR 18.00 et seq., pertaining to the conduct of the business of collection agencies and defining unfair and deceptive acts or practices for the collection of debts from persons within Massachusetts. The Division's regulations contain several references to the involvement of attorneys in collection agency activities. These provisions include 209 CMR 18.04(3), which states that "No attorney, actively engaged in the practice of law, constable, ... or any other law enforcement officer shall participate in the active management or activities of a collection agency." Additionally, 209 CMR 18.07 states "No agency shall operate under a name or in a manner which implies that such agency is an attorney..." Moreover, the Division's regulation at 209 CMR 18.15(1)(m) contains certain restrictions on a licensed collection agency's contact with debtors. These restrictions provide that "No collection agency shall 1. Furnish legal advice or otherwise engage in the practice of law or represent that it is competent to do so, or institute judicial proceedings on behalf of others; 2. Communicate with debtors in the name of a lawyer or upon stationery of a lawyer, or prepare any forms or instruments which only lawyers are authorized to prepare; 3. Exercise authority on behalf of a creditor to employ the services of lawyers, unless the creditor has specifically authorized the agency in writing to do so and the agency's course of conduct is at all times consistent with a true relationship of attorney and client between the lawyer and the creditor; 4. Demand or obtain in any manner a share of the compensation for services performed by a lawyer in collection of a claim." The firm nor its lawyers will not be "actively engaged in the practice of law" in the Commonwealth but will be engaged in collection activities as a licensed agency. The prohibition set forth in 209 CMR 18.04(3) would not be applicable to the firm since the firm would be a licensed collection agency and not engaged in nor authorized to practice law in the Commonwealth. The restrictions cited above in 209 CMR 18.07 and 18.15(1)(m), however, would be applicable to the firm as a licensed collection agency.