COLLECTION AGENCY: EMPLOYING ATTORNEY                                                   S.B. 385:

                                                                                                    SUMMARY OF BILL

                                                                                      REPORTED FROM COMMITTEE










Senate Bill 385 (as reported without amendment)

Sponsor:  Senator Jim Stamas

Committee:  Regulatory Reform




The bill would amend Article 9 of the Occupational Code, which governs collection agencies and provides for their licensure, to revise restrictions pertaining to collection agencies' employment of attorneys to collect claims.


Article 9 prohibits a licensee from employing or retaining an attorney to collect a claim. A licensee may employ the service of an attorney on behalf of a creditor if authorized to do so in writing and the licensee's conduct is at all times consistent with a true attorney-client relationship between the attorney and the creditor. Under the bill, a licensee would be prohibited from retaining (but not employing) an attorney to collect a claim.


Also, a licensee is prohibited from sharing the compensation for service performed by an attorney in collecting a claim or demand. The bill specifies that this would not apply to a licensee that employed an attorney, or to an attorney who was employed by a licensee, to engage in the collection of claims.


In addition, Article 9 prohibits a licensee from listing the name of an attorney in a written or oral communication, collection letter, or publication. The bill would prohibit a licensee from doing so, unless the attorney was an employee of the licensee and was engaged in collecting a claim.


A licensee also is prohibited from engaging in the practice of law or instituting a judicial proceeding on behalf of another. Under the bill, this provision would not apply to an attorney who was an employee of the licensee.


Additionally, Article 9 prohibits a licensee from sharing quarters or office space, or having a common waiting room with a practicing attorney or a lender. The bill, instead, would prohibit a licensee from doing so with a lender or a practicing attorney who was not an employee of the licensee.


MCL 339.915a                                                         Legislative Analyst:  Stephen Jackson




The bill would have no fiscal impact on State or local government.


Date Completed:  9-18-17                                                     Fiscal Analyst:  Josh Sefton


This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.