Can the Tennessee Collection Service Board require out-of-state attorneys (those not licensed in Tennessee) to get a collection-service license even though attorneys are statutorily exempt?

Plain-English summary

Tennessee's Collection Service Act (Tenn. Code Ann. §§ 62-20-101 et seq.) requires anyone engaging in the "collection of delinquent accounts, bills or other forms of indebtedness" to hold a valid collection-service license. The statute then says: "This part does not apply to attorneys at law." Tenn. Code Ann. § 62-20-103(a)(2). The Collection Service Board, which administers the Act and may adopt rules under § 62-20-104(g), asked whether it could narrow that exemption to only attorneys licensed in Tennessee, requiring out-of-state attorneys to get a collection-service license before engaging in collection conduct in Tennessee.

The AG said no. The statutory exemption uses the unqualified term "attorneys at law" and does not condition the exemption on the state of licensure. An agency may make rules consistent with its enabling statute, but cannot adopt a rule inconsistent with that statute or one that affects substantive rights the legislature created. The Tennessee Supreme Court said as much in Tasco Developing & Building Corp. v. Long, and the Court of Appeals applied the same principle in Cady v. Tennessee Board of Veterinary Medical Examiners. A Board rule narrowing the attorney exemption would do both: it would conflict with the unqualified statutory language and would extinguish a substantive statutory right (exemption) the legislature gave to out-of-state attorneys. The Board's only available avenue, if it wants a narrower exemption, is to seek legislative amendment of the Act.

The opinion does not address the separate, important question of whether an out-of-state attorney's collection conduct in Tennessee might amount to the unauthorized practice of law under other statutes or court rules. That issue is governed by Tennessee's UPL framework and the Tennessee Supreme Court's regulation of the practice of law, neither of which this opinion touches.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Does this mean any lawyer from anywhere can collect debts in Tennessee?
A: It means the Collection Service Act's licensing requirements do not apply to attorneys, regardless of where they are licensed. It does not mean Tennessee's separate UPL rules go away. An out-of-state attorney's specific activities might still raise UPL concerns under different statutes and rules administered by the Tennessee Supreme Court, not the Collection Service Board.

Q: Can the Board still regulate attorneys who collect debts?
A: Not under the Collection Service Act, by the terms of § 62-20-103(a)(2). Attorneys remain subject to the Tennessee Rules of Professional Conduct, the federal Fair Debt Collection Practices Act (when it applies to their activities), and ordinary contract and tort law.

Q: Could the legislature change this?
A: Yes. The exemption is statutory, so the General Assembly could narrow it. The Board itself cannot.

Q: What if the Board adopted such a rule anyway?
A: Under Cady and Tasco, the rule would be invalid. A regulated person challenging an enforcement action under the rule would have a strong argument.

Background and statutory framework

Tennessee's Collection Service Act tracks the general pattern of state collection-service licensing regimes, with broad coverage of for-profit collection activity and a small set of statutory exemptions for entities that are already meaningfully regulated under other regimes (notably attorneys and certain creditors collecting their own debts). The Board administers the Act and has rulemaking authority under § 62-20-104(g), which permits rules "relating to the general conduct of collection service business that are consistent with recognized business practice and [the Act]."

The opinion's central legal point is well-settled in Tennessee administrative law: agency rulemaking power is interstitial and cannot expand or contract the statutory framework. When the legislature speaks in unqualified terms, the agency cannot add qualifications by rule. The Tasco Supreme Court decision and the Cady Court of Appeals decision both stand for that point.

Citations and references

Statutes:

• Tenn. Code Ann. § 62-20-101 et seq. (Tennessee Collection Service Act)
• Tenn. Code Ann. § 62-20-102(3) (definition of collection service)
• Tenn. Code Ann. § 62-20-103(a)(2) (attorney exemption)
• Tenn. Code Ann. § 62-20-104(g) (Board rulemaking authority)
• Tenn. Code Ann. § 62-20-105(a) (license requirement)

Cases:

• Tasco Developing & Building Corp. v Long, 368 S.W.2d 65 (Tenn. 1963) (Tennessee Supreme Court; agency rule cannot create substantive rights)
• Cady v. Tenn. Bd. of Veterinary Med. Exam'rs, No. M2008-02551-COA-R3-CV, 2009 Tenn. App. LEXIS 597 (Tenn. Ct. App. Aug. 27, 2009) (Tennessee Court of Appeals; agency rule cannot conflict with enabling statute)

Subject

Opinion No. 15-03, Scope of Attorney Exemption from Collection Service License Requirements, January 7, 2015

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2015/op15-03.pdf

Original opinion text

STATE OF TENNESSEE
OFFICE OF THE ATTORNEY GENERAL
January 7, 2015
Opinion No. 15-03
Scope of Attorney Exemption from Collection Service License Requirements

QUESTION

Does the Tennessee Collection Service Board, established under the Tennessee Collection Service Act, Tenn. Code Ann. § 62-20-101 et seq., have the authority to interpret Tenn. Code Ann. § 62-20-103(a)(2) to exempt only attorneys licensed to practice law in Tennessee from the requirements of the Act, but to require attorneys who are not licensed to practice law in Tennessee to obtain a collection service license before engaging in any collection service conduct in Tennessee?

OPINION

No. The regulatory and rule-making authority granted to the Tennessee Collection Service Board does not allow it to limit the scope of the attorney exemption in Tenn. Code Ann. § 62-20-103(a)(2) to only attorneys licensed to practice law in Tennessee.

ANALYSIS

Under the Tennessee Collection Service Act, any person engaging in, or attempting to engage in, "the collection of delinquent accounts, bills or other forms of indebtedness" must hold a valid collection service license. Tenn. Code Ann. §§ 62-20-102(3), 62-20-105(a). But by its own terms the Act "does not apply to attorneys at law." Tenn. Code Ann. § 62-20-103(a)(2). Thus, "attorneys at law" are exempt from the Act and from any rules or regulations promulgated under the Act.

The Act created the Tennessee Collection Service Board and authorized the Board to regulate the collection service industry, including promulgating rules "relating to the general conduct of collection service business that are consistent with recognized business practice and [the Act]." Tenn. Code Ann. § 62-20-104(g). Under Tennessee law, even an administrative body that has been given the power to make rules and regulations "does not have the power to make a rule or regulation which is inconsistent with other law on the subject and it does not include the authority to enact laws, or to make rules affecting or creating substantive rights." Tasco Developing & Building Corp. v Long, 368 S.W.2d 65, 67 (Tenn. 1963). "If an administrative agency or board is statutorily authorized to make rules and regulations, the rules and regulations promulgated by the agency or board may not be inconsistent with the enabling statute." Cady v. Tenn. Bd. of Veterinary Med. Exam'rs, No. M2008-02551-COA-R3-CV, 2009 Tenn. App. LEXIS 597, 11 (Tenn. Ct. App. Aug. 27, 2009) (citations omitted). Rules adopted by the agency or board that are inconsistent with the statute are invalid. Id. at 11-12.

The Act clearly exempts from its scope "attorneys" without any limitation. Accordingly, all attorneys are exempt from the licensing requirements of the Act. Any attempt by the Board to narrow this exemption by rule or regulation would be inconsistent with the enabling statute and would, therefore, be invalid. In particular, a rule promulgated by the Board limiting the Act's attorney exemption to only those attorneys licensed to practice in Tennessee would be invalid because it would be inconsistent with the plain language of the Act and because the Board would be making a rule that affects a substantive right, i.e., the legislatively-created statutory right of exemption for all attorneys.

HERBERT H. SLATERY III
Attorney General and Reporter

ANDRÉE SOPHIA BLUMSTEIN
Solicitor General

CRISTIN F. HAMBIDGE
Assistant Attorney General

Requested by:
Mr. Bart Howard
Chairman, Tennessee Collection Service Board
500 James Robertson Parkway
Nashville, TN 37243