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95 N.J.L.J. 105 COMMITTEE ON THE UNAUTHORIZED PRACTICE OF LAW
February 10, 1972
Appointed by the New Jersey Supreme Court
(1) Simulation of Process
(2) Communications to Debtors
Implying Attorney's Consideration of Claim
This opinion concerns the question whether certain practices
pursued with some frequency in New Jersey by collection agencies
constitute the unlawful practice of law. The operation of a
business for the collection of claims without resort to legal
proceedings does not constitute the practice of law; Creditors'
Service Corp. v. Cummings, 57 R.I. 291, 190 A 2 (1937); Public
Service Traffic Bureau v. Haworth Marble Co., 40 Ohio App. 255, 35
Ohio L. Rev. 413, 178 N.E. 703 (1931); and Re Associated Lawyers'
Co., 134 App. Div. 350, 119 N.Y.S. 77 (1909); but the right to
pursue such business does not insulate from successful challenge
certain practices of the agencies which in themselves do constitute
the unlawful practice of law. These practices include principally,
and this opinion is limited to the consideration of:
(1) communications to alleged debtors of customers of the
agency which simulate legal process or court order; and
(2) communications, usually letters demanding payment of the
debt allegedly owed by the addressee to the agency's
customers and sent over the signature of an agency
employee, which wrongfully imply that the document
emanates from or is sent at the direction of an attorney
and usually stating that legal consequences will flow
from the nonpayment of the debt or from the institution
of legal action to collect the debt.
The courts in New Jersey have the exclusive right to determine
whether specific action and conduct constitute the practice of law
in this state. State v. Bander, 106 N.J. Super. 196 (1969), rev'd
on other grounds, 56 N.J. 196 (1970); New Jersey Bar Ass'n v.
Northern N.J. Mtge. Associates, 32 N.J. 430 (1960); and N.J. State
Bar Ass'n v. Northern N.J. Mortgage Associates, 22 N.J. 184 (1956).
The practice of law does not lend itself to an all-
encompassing precise definition, Auerbacher v. Wood, 139 N.J. Eq.
599 (Ch. 1947), aff'd, 142 N.J. Eq. 484 (E.& A. 1948); it is "not
confined to litigation," New Jersey Bar Ass'n v. Northern N.J.
Mtge. Associates, 32 N.J. 430 (1960), and Unger v Landlords'
Management Corp., 114 N.J. Eq. 68 (Ch. 1933), but includes diverse
activities which require the possession of legal knowledge and
skill, Stack v. P.G. Garage, Inc., 7 N.J. 118 (1971).
The right to engage in such practice is limited to those
persons learned in the law who meet the Supreme Court's
requirements of prior education and training, character and
integrity. Cape May Co. Bar Assn. v. Ludlam, 45 N.J. 121 (1965).
Such persons are continuously responsible to the court for the
propriety of their conduct and actions. New Jersey Constitution,
Art. VII, Sec. II, par. 3; In re Baker, 8 N.J. 321 (1951).
The privilege of practicing law is limited to persons licensed
to do so by the Supreme Court to safeguard the public from the
disastrous results that are "bound to flow from the activities of
untrained and incompetent individuals" who are not "bound by the
high standards of professional conduct and integrity which are
imposed on members of the bar by the Canons of Professional Ethics,
which are zealously enforced by the courts for the public good," In
re Baker, supra, 8 N.J. at 334, and to protect "the unwary and the
ignorant from injury at the hands of persons unskilled or unlearned
in the law." N.J. State Bar Ass'n v. Northern N.J. Mortgage
Associates, supra, 22 N.J. at 195.
The collection agency practices referred to above are intended
to and unquestionably frequently do cause a recipient of a
document, such as one of those described, to believe either that
some judicial proceeding has been commenced to collect the debt,
that he is under some court direction to pay the money demanded by
the agency from which the document came, or that there has been an
evaluation by an attorney of the claim asserted with a
determination by the attorney that proceedings to enforce the
collection are warranted. Frequently there is an implication that
an attorney is advising the alleged debtor of the consequences of
nonpayment of the claim made. In each one of those situations, the
intervention of a court or of an attorney is clearly implied.
The simulation of legal process or court order and its
transmittal to an alleged debtor of a collection agency's customer
has been frequently judicially determined to constitute the
unlawful practice of law. Bump v. Barnett, 235 Iowa 308, 16 N.W.
2d 579 (1944); State ex rel. Freebourn v. Merchants' Credit
Service, 104 Mont. 76, 66 P.2d 337 (1937); and State Bar of
Oklahoma v. Retail Credit Ass'n., 170 Okla. 246, 37 P.2d 954
The New Jersey Legislature subjects one who unlawfully
practices law in New Jersey to a criminal penalty, N.J.S.A. 2A:
170-78, and specifically subjects to such penalty any person who
"uses any notice, letter or advertisement in the form or in
imitation of a court summons or any other formal court paper,"
N.J.S.A. 2A:170-87. See State v. Bander, 106 N.J. Super. 196
(1969), rev'd on other grounds, 56 N.J. 196 (1970).
Threats of legal action by collection agencies constitute the
unauthorized practice of law. In re Lyon, 301 Mass. 30, 16 N.E.2d
74 (1938); State ex rel. McKittrick V. C.S. Dudley & Co., 340 Mo.
852, 102 S.W. 2d 895 (1937), cert. denied, 302 U.S. 693, 58 S.Ct.
12, 82 L.Ed. 535 (1937); Berk v. State ex. rel. Thompson, 225 Ala.
324, 142 So. 832 (1932).
The implied representation that a letter demanding the payment
of an alleged indebtedness of a debtor of a collection agency's
customer is the act or is sent at the direction of an attorney, who
does not sign the letter, constitutes the unlawful practice of law.
Bay County Bar Association v. Finance System, 345 Mich. 434, 76
N.W.2d 23 (1956); Bump v. Barnett, supra; and State Bar of Oklahoma
v. Retail Credit Ass'n., supra.
When a collection agency resorts to any one of the
practices first stated above, it is unlawfully engaging in the
practice of law. These practices are particularly offensive
because they tend to bring into disrepute the entire administration
of justice. They are clearly impermissible.
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