THE A'ITORNEYGENERAL 

OF TEXAS 

April 4, 1961 

Honorable Dan Brazil Opinion No. WW-1033 

County Attorney 

Angelina County Re: Whether an attorney, In filLufkin, Texas ing suit in the Small Claims 

Court, in behalf of businesses, corporations and other 

people who are able to pay 

attorney's fees, etc., would 

be considered a collection 

agent under Section 2 of 

Article 246Ca of Vernon's 

Dear Mr. Brazil: Civil Statutes. 

We are in receipt of your letter dated February 19, 

1961, requesting an opinion as to whether an attorney, in 

filing suit in the Small Claims Court, in behalf of businesses, corporations and other people who are able to pay 

attorney's fees, etc., would be considered a collection 

agent under Section 2 of Article 246Ca of Vernon's Civil 

Statutes. 

With reference to this question, Section 2 of Article 

246Ca of Vernon's Civil Statutes reads as follows: 

"The Small Claims Court shall have and 

exercise concurrent jurisdiction with the 

Justice of the Peace Court in all actions for 

the recovery of money only where the amount 

involved, exclusive of costs, does not exceed 

the sum of Fifty Dollars ($50), except that 

when the claim is for wages or salary earned, 

or for work or labor performed under any contract of employment, the jurisdictional amount, 

exclusive of costs, shall not exceed One Hundred 

Dollars ($100). Provided, however, that no 

action may be brought in the Small Claims Court 

by any assignee of such action or upon any 

assigned claim or by any person, firm, partnership > association or corporation engaged, either 
- . 

Honorable Dan Brazil, Page 2 (WW-1033) 

primarily or secondarily, in the business of 

lending money at interest, nor by any collection agency or collection agent. Provided 

further, however, that nothing in this Act 

shall prevent the bringing of any action by a 

legal heir or heirs on any account or claim 

otherwise within the jurisdiction of these 

Courts." 

A "collection agency" is defined in Volume 7A of Words 

and Phrases as follows: 

"A 'collection agency,' which is defined as a concern which collects all kinds of 

claims for others and to whom it renders 

accounts, guarantees to use its best endeavors 

to collect the claims and to select a competent 

and reliable attorney when suit is necessary, 

for whose negligence, dishonesty, or unauthorized acts it will save the creditor harmless. 

McCarthy v. Hughes, 88 A. 984, 985, 36 R.I. 66, 

Ann. Cas. 1915 D, 26." 

Under Section 2, Article 246oa, Vernon's Civil Statutes, 

an attorney is not prohibited from representing businesses, 

corporations and other people in the Small Claims Court unless the businesses, corporations or other people are engaged 

in lending money at interest,and unless the action is upon 

any assigned claim or by any collection agency or collection 

agent. 

If the collection of claims for businesses, corporations, 

or other people is a mere incident of the practice of law, an 

attorney, in filing suit in the Small Claims Court in behalf 

of his client would not be considered a collection agent and 

would have every right to represent the businesses or corporations in the Small Claims Court, if such claims are not excluded under Section 2. If, on the other hand, a licensed attorney 

or attorneys operate a collection agency as an independent 

business rather than as a necessary incident to the practice of 

law, then, we must hold that the attorneys would be considered 

collection agents or owners of a collection agency. 

There is a clear distinction between the profession of 

law and the business of conducting a collection agency. In 
. - 

Honorable Dan Brazil, Page 3 (WW-1033) 

the case of State Bar of California v. Superior Court in 

and for Los Angeles County, 278 Pac. ,432, at page 437, the 

Court in its opinion stated: 

11 t the practice of the law is the'doing or ~perharming services in a court of justice, in any 

manner depending therein, throughout its various 

stages, and in conformity to the adopted rules 

of procedure. But in a larger sense it includes 

legal advice and counsel, and the preparation of 

legal instruments and contracts by which legal 

rights ?re secured, although such matter may 01~; 

may not be depending in a court.' . . ." 

And in the case of Kendrick v. State, 120 So. 142, by the 

Supreme Court of Alabama, the practice of law is clearly 

distinguished from the operation of a collection agency. 

The following is quoted from the opinion of the Court: 

II 

. . . To practice law is to exercise the calling 

or profession of the law, usually for the purpose 

of gaining a livelihood, or at least for gain. To 

engage in the business of collecting claims by zmand or negotiation out of court is not to practice 

law. There is no more necessary relation between 

the two than there is between the practice of law 

and scores of other things which lawyers, in common 

with other folks, must do in order to be able to 

follow their different vocations. The act under 

consideration, section (d), involves a radical 

change of meaning in the collocation of words, 

'practice law'. To collect claims out of court, 

that is, without recourse to legal remedies, and to 

practice law connote very different things to the 

lay mind, and we have stated the steps necessary to 

the making of a licensed lawyer, in order to show 

how broad is the technical difference between the 

two. The opinion in Ex parte Cowert, supra, presents a close analogy. The language of that case 

. we think may be fairly paraphrased as follows: 

rjo'man . . . declaring that regularly licensed 

attorneys alone have authority to practice law, 

would for a moment conceive the proposition to 

involve an inhibition against the collection of 

claims by demand or negotiation out of,,court by 

anyone but a licensed attorney. . . . (Emphasis 

added) 
Honorable Dan Brazil, Page 4 (WW-1033) 

You are, therefore, advised that attorneys representing 

businesses, corporations and other people In the Small Claims 

Court in actions not excluded under Section 2, Article 246Oa, 

are not considered collection agents so long as the collections 

are incidents of the practice of law as opposed to an independent business for the collection of claims. 

SUMMARY 

An Attorney who files suit in the Small 

Claims Court in behalf of businesses, 

corporations and other persons, who are 

able to pay attorney's fees is not by 

reason of these facts a collection agent 

under Article 2460a, Vernon's Civil 

Statutes. 

Yours very truly, 

WILL WILSON 

Attorney General of Texas 

,A~%~& Iola Barron Wilcox 

1BW:mm 

APPROVED: 

OPINION COMMITTEE 

W. V. Geppert, Chairman 

W. Ray Scruggs 

Grundy Williams 

Joe Allen Osborn 

Lawrence Hargrove 

REVIEWED FOR THE ATTORNEY GENERAL 

BY: Leonard Passmore 

Assistant