Can a Texas attorney serve a commercial collection agency where the agency's lay staff start the collection process before the lawyer gets involved?

Plain-English summary

The inquiry described an arrangement in which an attorney would keep a file of collection matters referred by a commercial collection agency. A legal assistant in the attorney's office, paid by the agency, would place a telephone call to each debtor urging payment and identifying the named attorney's office; if that failed, a demand letter signed by the attorney would go out, and only later would the attorney be asked whether to file suit, which the attorney would then handle. The attorney would be paid by the agency in a retainer fashion.

The Committee analyzed the arrangement under Canon 3 (a lawyer should assist in preventing the unauthorized practice of law), DR 3-101(A) (a lawyer shall not aid a non-lawyer in the unauthorized practice of law), and EC 3-6 (delegation to lay persons is proper only if the lawyer maintains a direct client relationship, supervises the work, and has complete professional responsibility for the work product). It reasoned that a lawyer's duty to supervise a lay person presupposes that the lawyer has given instructions after acquiring adequate knowledge of the matter, and that this arrangement removes the direct attorney-client relationship critical to acquiring that knowledge and exercising professional judgment.

The Committee concluded that, under these facts, the collection matter is set in motion and conducted by a lay person employed by an independent agency long before the attorney exercises any professional judgment. That initial intervention of the lay person between attorney and client increases the potential for the unauthorized practice of law, as defined in Section 19 of the State Bar Act and by Texas courts, making the arrangement improper, and it prevents the attorney from discharging the ethical duty to supervise delegated work under EC 3-6.

Currency note

This opinion was issued in 1981, under the former Texas Code of Professional Responsibility, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. The Disciplinary Rules have since been amended, and Texas never adopted the ABA's Ethics 2000 framework. The closest current provisions are Texas Rule 5.05 (unauthorized practice of law) and Rule 5.03 (responsibilities regarding non-lawyer assistants), with ABA analogs Model Rules 5.5 and 5.3. Subsequent rule changes or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a Texas lawyer take collection work this way from an agency?

A: Per the opinion, no, not under the described arrangement. The Committee concluded that the arrangement is improper because the agency's lay employee conducts the matter before the lawyer exercises any professional judgment.

Q: Why does the lay employee's early role create a problem?

A: The Committee reasoned that it removes the direct attorney-client relationship the lawyer needs to acquire knowledge of the matter, increases the potential for the unauthorized practice of law under Section 19 of the State Bar Act, and prevents proper supervision of delegated work under EC 3-6.

Q: What rules did the Committee apply?

A: Canon 3 and DR 3-101(A) (not aiding the unauthorized practice of law) and EC 3-6 (proper delegation to lay persons requires a direct client relationship, supervision, and complete professional responsibility), with reference to EC 3-2 and EC 3-3.

Background and rules framework

The opinion interprets DR 3-101(A) (aiding the unauthorized practice of law), Canon 3, and the Ethical Considerations on delegation to non-lawyers (EC 3-6, EC 3-2, EC 3-3) of the former Texas Code of Professional Responsibility, together with Section 19 of the State Bar Act defining the unauthorized practice of law. The closest current provisions are Texas Rule 5.05 and Rule 5.03, with ABA analogs Model Rules 5.5 and 5.3. The analysis turns on the lay employee's intervention between lawyer and client and the resulting loss of supervision and judgment.

Citations and references

Rules of Professional Conduct:

• MR 5.5 (unauthorized practice of law); MR 5.3 (responsibilities regarding non-lawyer assistance), as the modern analogs
• DR 3-101(A), Canon 3, EC 3-6, EC 3-2, EC 3-3 (former Texas Code of Professional Responsibility)

Statutes:

• State Bar Act, Section 19 (definition of the unauthorized practice of law)

See also

• TX Ethics Op. 417: Lawyer Representing and Owning a Collection Agency
• TX Ethics Op. 438: Law Firm's Unsupervised Non-Lawyer CPA Doing Clients' Tax Work
• TX Ethics Op. 403: Firm Name on a Legal Assistant's Business Card

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-401/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_401.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

QUESTION PRESENTED

October 1981
Whether an attorney may ethically serve a commercial collection agency under the arrangement described above.

STATEMENT OF FACTS

The attorney would maintain in his office a complete file of all collection matters referred by the collection agency to the attorney. A legal assistant working in the attorney's office would place one telephone call to each debtor, urging the debtor to pay and stating that the legal assistant is calling from a named attorney's office. Should the legal assistant's telephone call prove unsuccessful, a demand letter signed by the named attorney would be sent, again urging that the debtor pay. The letter would not contain any direct reference to a lawsuit; rather, it would inform the debtor that the creditor would receive future advice as to whether to pursue legal action. Following the attorney's letter, and should there be no response from the debtor, the attorney's advice would be sought as to whether or not to pursue a lawsuit. If the creditor then decided to file a lawsuit, the attorney would handle it.

The attorney would be paid in a retainer fashion by the collection agency to perform this task. The legal assistant would be paid by the collection agency for the hours spent making telephone calls and performing other collection matters.

DISCUSSION

Canon 3 provides: "A lawyer should assist in preventing the unauthorized practice of law." Likewise, DR 3-101(A) dictates that, "A lawyer shall not aid a non-lawyer in the unauthorized practice of law."

EC 3-6 is directly in point: "A lawyer often delegates tasks to clerks, secretaries, and other lay persons. Such delegation is proper if the lawyer maintains a direct relationship with his client, supervises the delegated work, and has complete professional responsibility for the work product."

An attorney's obligation to supervise a lay person pre-supposes that the attorney has given instructions to the legal assistant after the attorney has acquired adequate knowledge concerning the matter entrusted to him.

The factual arrangement described above clearly tends to remove the direct relationship between attorney and client that is critical to such acquisition of knowledge and thus, to the exercise of appropriate professional judgment. See also, EC 3-2, EC 3-3.

Under the fact situation presented here, long before an attorney is called upon to exercise any professional judgment concerning the creditor-client's potential claim, the collection matter has been put in motion and conducted by a lay person employed by an independent collection agency. This initial and crucial intervention of the lay person between the attorney and the client clearly increases the potential for the unauthorized practice of law, as defined in Section 19 of the State Bar Act and as defined by Texas courts, and, as such, is improper. It further prevents the attorney from properly discharging the ethical duty to supervise employees in their delegated work, as required by EC 3-6.

Tex. Comm. On Professional Ethics, Op. 401 (1981)