|
VIRGINIA
UPL OPINION 150
Lay
Employees of Collection Agency Preparing Warrants
in Debt;
Referring Claims to Agencyís Counsel; Unilaterally
Arranging
Payment Plans, Collecting and Disbursing Monies
Initiating
Decisions and Actions to Continue Cases
Inquiry:
A Virginia State Bar member wishes to know if
it would constitute the unauthorized practice of
law for collection agency [“Agency”] non-lawyer
personnel to prepare Warrants in Debt and conduct
other activities for the purpose of initiating suits
in General District Court for the collection of
creditor-clients’ outstanding medical accounts.
The VSB member also requested that the Committee
opine as to whether the attorney’s actions,
when claims are referred to him, constitute his
encouragement of the unauthorized practice of law
in Virginia.
In
one circumstance, warrants, which show creditors’
address and telephone number as that of Agency,
are then submitted to an attorney [“Attorney”]
for review, signature and forwarding to the Court
for filing along with Agencyís check for filing
fees. Subsequently, Agency arranges payment plans;
collects and disburses all monies, including Attorneyís
fees; agrees to continue cases if it believes that
to be in the best interest of the creditor; and
provides an Agency employee to be present along
with a creditorís employee on the warrant return
date to answer questions regarding payment plans
and receipt of funds. Attorney also writes to creditor
advising that Attorney’s loyalty is to creditor
only.
In
a second circumstance, warrants, which show actual
address of creditor but telephone number of Agency,
are then submitted to creditor for review and signature.
The Agency advises Attorney of the return date and
Attorney states that he has no involvement with
the process but simply appears “pro bono”
for the creditor. Representatives of both the creditor
and the Agency appear on the return date, along
with Attorney.
Opinion:
The Committee also directs the inquirer’s
attention to Va.Sup.Ct.R. 7B:7 which precludes any
judgment for a plaintiff except on request made
in person in court by the plaintiff, plaintiff’s
attorney, or plaintiff’s regular and bona fide
employee. See also Va. Code §16.1-88.03
and Va. Code §55-246.1.
The Committee
has previously opined that it was not the unauthorized
practice of law for a collection agency to draft,
on behalf of its customers, statements of account,
affidavits and memoranda for civil warrants.
UPL Op. 51 [emphasis added]. Similarly, the committee
has opined that it does not constitute the unauthorized
practice of law for a regular and
bona fide employee, of either
an individual or a corporation...to have warrants
issued.... UPL Op. 53 [emphasis added]. Subsequently,
UPL Op. 97 found that a non-lawyer employee of a
creditor or of a collection agency cannot represent
(other than in the presentation of facts, figures
or factual conclusions, as opposed to the presentation
of legal conclusions) the interests of the creditor
in general district court. Finally, with regard
to the provisions of UPR 3-102, the Committee opined
that it was not the unauthorized practice of law
for a collection agency to retain counsel on its
behalf, to assist in the collection of a debt, only
if the creditor had assigned the claim to the agency
and retained no interest in the claim. UPL Op. 120.
The Committee
is of the opinion that the agency’s activities
as described in both circumstances would constitute
the following violations of the Unauthorized Practice
Rules for the reasons stated:
(1)
Referral of Claims
The
agency's routine referral of claims to its own counsel
on behalf of a creditor without either offering
the creditor the opportunity to select a lawyer
of his own choosing or providing the creditor with
a list of lawyers from which the creditor may make
his selection is violative of the plain language
of UPR 3-102(A).
The
Committee believes that the agency’s activities
following the referral of the claim to the attorney
[including unilaterally arranging payment plans,
unilaterally collecting and disbursing monies, including
Attorney’s fees, and initiating decisions and
actions to continue cases] imply that the agency
has a right to control the actions of the lawyer
in the handling of the creditor’s claim. The
Committee is of the opinion that such activities
are in violation of UPR 3-102(B). However, the agency
may suggest payment plans and collect and disburse
monies, including attorney fees, upon attorney’s
prior approval.
(3)
Disruption of the Attorney/Client Relationship
The
Committee is of the further opinion that the activities
described constitute the collection agency’s
interposing itself between the creditor/client and
the attorney, in an attempt to act as the only conduit
of information between the two, thus preventing
the attorneyís direct personal responsibility for
his client’s matter, in violation of UPR 3-101(C).
(4)
Preparation of Warrants in Debt
The
Committee believes that the agency's preparation
of warrants in debt listing the creditors’
addresses as in care of the collection agency,
and subsequent submission of those documents to
Attorney or creditor for review, signature and
filing with the general district court constitutes
a violation of UPR 3-103(C), since the agency
is preparing pleadings for creditors, i.e., documents
which require legal training and the application
of legal principles to factual situations. The
Committee views a warrant in debt as a pleading,
a document which initiates a civil action in a
general district court and begins the legal process
by which a claim is adjudicated or resolved. See
Potts v. Mathieson Alkali Works, 165 Va.
196, 207 (1935); Va. Code §16.1-86. Therefore,
the Committee is of the opinion that such pleadings
may only be prepared (a) by the creditor directly;
(b) by an attorney licensed to practice law in
Virginia; or (c) by a licensed attorney’s
full‑time or otherwise regular and bona
fide employees under his direct supervision. The
committee believes it is bound by the definition
of “pleading” as set forth by the Virginia
Supreme Court, and that only an amendment to the
statutes regulating the filing of civil warrants
in General District Courts would authorize preparation
and filing of such civil warrants by individuals
not enumerated above.
Prior
UPL Opinion 51 does not address the form pleading
now promulgated by the Supreme Court of Virginia,
i.e., a form Warrant in Debt which combines the
earlier-referenced memorandum and the Warrant.
Therefore, the Committee is of the opinion that
a non-lawyer’s completion of such form pleadings
does constitute the unauthorized practice of law.
In addition, by issuance of this Opinion 151,
the committee hereby restates and reaffirms its
conclusions as stated in prior UPL Opinions cited
herein, i.e., Opinions 53 [December 1, 1982],
97 [November 13, 1986], and 120 [August 10, 1988].
In
response to the inquiry regarding whether the attorney’s
actions, when claims are referred to him, constitute
his encouragement of the unauthorized practice of
law in Virginia, the Committee believes that such
question falls within the purview of the Standing
Committee on Legal Ethics and thus outside the scope
of this Committee’s authority. As a general
premise, however, the Committee believes that where
an activity is determined to constitute per
se unauthorized practice of law, the involvement
of a Virginia State Bar member would appear to raise
questions as to compliance with Disciplinary Rule
3-101(A) which prohibits a lawyer from aiding a
non-lawyer in the unauthorized practice of law.
This
opinion is based only on the facts provided and
the questions posed and is subject to review by
Bar Council at its next regularly scheduled meeting
in accordance with Part Six: Section I: ¶10(c)(iv)
of the Rules of the Virginia Supreme Court. Should
Council approve the Opinion, it will then be reviewed
by the Supreme Court pursuant to Part Six: Section
I: ¶10(f)(iii).
Summary:
Activities undertaken by a collection agency
[“Agency”] or its non-lawyer employees
as to:
(l)
routine referral of claims to the Agency’s
own counsel without offering the creditor the
opportunity to choose an attorney;
(2)
unilaterally collecting and disbursing monies,
including attorney’s fees, and initiating
decisions and actions to continue cases;
(3)
interposing Agency between the creditor and the
attorney, in an attempt to act as the only conduit
of information between the two; and
(4)
preparing warrants in debt constitute violations
of Unauthorized Practice Rules 3-102(A), 3-102(B),
3-101(C), and 3-103(C). Any determination as to
whether the Attorney’s involvement in the process
constitutes an impropriety under the Code of Professional
Responsibility is outside the scope of the authority
of the Standing Committee on Unauthorized Practice
of Law.
Committee
Opinion
Issued November 1, 1991
Remanded
to Committee by Council
February 22, 1992
Reconsideration
Issued
September 14, 1992
Approved
by Council
October 30, 1992
Approved
by the Supreme Court of Virginia
February 26, 1993, Effective May 1, 1993
|
|
