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Massachusetts Collection Law Firms Are Now ‘Debt Collectors’

2000px-Seal_of_Massachusetts_svgIn an Opinion Letter letter dated Nov. 2, the Massachusetts Division of Banks declared that collection law firms in Massachusetts are required to obtain a debt collector license pursuant to Mass. Gen. Laws Ch. 92, § 24 et. seq.

The Opinion Letter was in response to correspondence from a Massachusetts collection law firm inquiring whether the firm, self-described as “overwhelmingly concentrated in the area of consumer debt collection on behalf of its clients,” was required to be licensed.  At issue was the applicability of the licensing exclusion for “attorneys-at-law collecting a debt on behalf of a client.”  In its Opinion, the Division clarified that the determination “turns on the extent of the debt collection activity conducted by the firm.”

The Division reasoned that the Massachusetts definition of “debt collector” includes any person “who regularly collects or attempts to collect, directly or indirectly, a debt owed or due or asserted to be owed or due another.”  Drawing upon the definition of “regular” from Black’s Law Dictionary, the Division explained that the limited “ ‘attorney-at-law’ exclusion applies to ‘attorneys collecting a debt on behalf of a client’ rather than attorneys who regularly collect debts on behalf of a client.” (emphasis in original)

Thus, based on the law firm’s description of the nature of its practice, the Division concluded that the law firm’s “principal purpose is the collection of debts and therefore its activities are beyond the scope of the attorney-at-law exemption.”

In a footnote, the Division gives Massachusetts collection law firms six months to comply, noting “the debt collector licensing requirement for law firms composed of Massachusetts licensed attorneys, as set forth in this Opinion, is a new requirement that will not be imposed retroactively on affected law firms. Furthermore, the Division recognizes that immediate compliance by affected law firms is not feasible.”

Many state debt collection statutes exempt attorneys from the licensing requirements, so it will be important to stay abreast of this issue in the event other policymakers consider adopting a similar position.

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Eric Rosenkoetter is a principal at Maurice Wutscher LLP, where he provides counsel to businesses and consumer financial services firms nationwide. For many years, he has focused his practice on various aspects of financial services law. As a litigation attorney, he has conducted every aspect of the litigation process, including countless depositions, motion proceedings, bench and jury trials, and appeals in various courts. In addition, he has significant experience as a compliance and transactional attorney, providing strategic, business growth, legislative, compliance and regulatory advice to national corporations and trade associations. For example, he has drafted consumer contracts and disclosures designed to state-specific statutory requirements, and developed “Best Practices” guides and state-by-state compliance grids, for national financial services companies. He also conducted research and crafted a metrics report for a national trade association with analysis designed to counter the claims of advocacy groups. Eric’s experience also includes working for a national corporation as Executive Counsel, Chief Compliance and Ethics Officer, and Director of Legislative Affairs, and as a federal lobbyist and Director of Government and Public Affairs for a national financial services trade association. In the government sector, Eric presided over approximately 6,000 state administrative hearings, served as a staff attorney for the Missouri Senate, and handled litigation in 33 counties as a regional managing attorney. Eric frequently speaks to audiences on topics relevant to the financial services industry including regulatory compliance, data privacy law and related advocacy initiatives. For more information, see

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