Opinion ID: 1646975
Heading Depth: 1
Heading Rank: 3

Heading: Does the collection agency engage in the unauthorized practice of law when it acts as the agent of the creditor in hiring a lawyer.

Text: Appellants take the position that there is neither impropriety nor unauthorized practice of law when they act as the agent of the creditor to hire an attorney to handle a lawsuit. They assert that under those circumstances a relationship of lawyer-client is established between the creditor and the attorney hired by the collection agency. The trial court did not disagree with that general proposition, stating: The Court finds nothing inherently wrong in the creditor engaging an agent for the purpose of selecting an attorney for him. Various rules have been propounded from time to time to control this arrangement and it is not here intended to adopt any such set of rules, beyond the conclusion that an agent, to lawfully engage an attorney for a principal, must be acting with the specific authority of his principal, and in the process of engaging such an attorney must be certain that he sets up a true attorney-client relationship between the attorney selected and the creditor. It would also preclude the collector from the management of the litigation and decisions necessary thereto. Respondent also concedes that there is a difference between assigned claims upon which suit is brought by the defendants' attorneys and claims which are forwarded by the agency to an attorney with the consent and direction of the creditor. We conclude that a transaction which results in a true lawyer-client relationship between an attorney and the creditor following the selection of the lawyer obviates the unauthorized-practice problem. However, the rationale set forth in the discussion of assigned claims above is equally pertinent here. Thus, it must be clear to the lawyer that his client is the creditor, not the agency that appointed him, and that if he requires any direction or guidance in the handling of the suit it can come only from the client with whom he is free to communicate. Moreover, the lay agent that appointed him cannot assume the direction of either the policy or the details of the litigationto do so is to usurp a prerogative reserved to the client alone. Nor is the attorney to look to the agency for his fees. This is the responsibility of the client. While in the instant case appellants deny that there is not a lawyer-client relationship between the lawyer and creditor and affirmatively allege that appearances are on behalf of the creditor, they also allege that the attorney appears under the immediate instruction of the defendant corporation in the latter's capacity as agent of such creditor. The latter allegation nullifies an indispensable requisite of the lawyer-client relationshipthat no person other than the client direct the attorney in the management of the lawsuit. Such direction of litigation, though as an agent for client, constitutes the unauthorized practice of law if such an agency agreement is not casual, but is done as a regular and usual procedure in the business of collecting claims for others. Admittedly, this is the case here, and the defendants are engaged in the unauthorized practice of law in so doing.