## THE A'ITORNEYGENERAL OF TEXAS

April 4, 1961

Honorable Dan Brazil Opinion No. WW-1033 CountyAttorney Angelina County Re: Whether an attorney, In filLufkin, Texas ing suit in the Small Claims Court, in behalf of businesses, corporationsand other people who are able to pay attorney's fees, etc.,would be considereda 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, corporationsand otherpeople who are able to pay attorney's fees, etc., would be considereda collection agent under Section 2 of Article 246Ca ofVernon's Civil Statutes. With reference to this question, Section 2 of Article 246Ca of Vernon's Civil Statutesreads as follows:

"TheSmall Claims Court shallhave and exercise concurrent jurisdictionwith 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 laborperformed under any contract of employment, the jurisdictionalamount, exclusive of costs, shallnot 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 corporationengaged, either- .

Honorable Dan Brazil, Page 2 

### (WW-1033)

primarily or secondarily,in the business of lendingmoney at interest,nor by any collection agency or collectionagent. Provided further,however, that nothing in this Act shallprevent the bringing of any action by a legal heir or heirs on any account or claim otherwisewithin the jurisdictionof these Courts."
A "collectionagency" is defined in Volume 

### 7A of Words and Phrases as follows:

"A 'collectionagency,'which is defined as a concernwhich 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 selecta competent and reliable attorneywhen suit is necessary, for whose negligence, dishonesty, or unauthorized acts it will save the creditorharmless. McCarthyv. Hughes, 

### 88A. 

### 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 representingbusinesses, corporationsand otherpeople in the Small Claims Courtunless the businesses, corporationsor otherpeople are engaged in lendingmoney at interest,andunless the action is upon any assigned claim or by any collectionagency 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 clientwould not be considereda collectionagent 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 licensedattorney or attorneys operate a collectionagency as an independent business rather than as a necessary incident to the practice of law, then, we must hold that the attorneyswould be considered collectionagents or owners of a collectionagency. There is a clear distinctionbetween the profession of law and the business of conductinga collectionagency. In. -

Honorable Dan Brazil, Page 3 (WW-1033)

the case of StateBar of Californiav. 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 lawisthe'doing or~perharming services in a court of justice, in any manner depending therein, throughout its various stages,and in conformityto the adopted rules of procedure. But in a larger sense it includes legal advice and counsel, and the preparation of legal instrumentsand contractsby which legal rights ?re secured,although suchmatter may 01~; may not be depending in a court.'
. . ." And in the case of Kendrickv. State, 120 So. 142, by the Supreme Court of Alabama, the practice of law is clearly distinguished from the operation of a collectionagency. 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 claimsby zmand or negotiation out of court is not to practice law. There is no more necessary relationbetween 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 differentvocations. The act under consideration, section (d), involves a radical change of meaning in the collocationof words, 'practicelaw'. To collect claims out of court, that is, without recourse to legal remedies, and to practice law connotevery 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 differencebetween the two. The opinion in Ex parte Cowert, supra,presents a close analogy. The language of that case

.we think may be fairlyparaphrased 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 inhibitionagainst the collectionof claimsby demand or negotiation out of,,court by anyone but a licensedattorney.
. . . (Emphasis added)Honorable Dan Brazil, Page 4 (WW-1033)

You are, therefore, advised that attorneys representing businesses, corporationsand other people In the Small Claims Court in actions not excludedunder Section 2, Article 246Oa, are not considered collectionagents so long as the collections are incidents of the practice of law as opposed to an independent business for the collectionof claims.
SUMMARY
An Attorneywho files suit in the Small Claims Court in behalf of businesses, corporationsand otherpersons, who are able to pay attorney's fees is not by reason of these facts a collectionagent 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 GrundyWilliams Joe Allen Osborn Lawrence Hargrove
REVIEWED FOR THE ATTORNEY GENERAL
BY: Leonard Passmore Assistant