I am hoping to gather an idea to legal liability (if any) of collecting on commercial debt owed to a client of my firm.

Q. (cont.) I hold a position with a professional services firm (accounting firm). I head our internal collections and AR. We have a client (corporation) who is owed monies by one of their clients (also a business). I have provided some minor AR consultation, but have now been asked if I would be able to directly collect on some of the debt owed to our client by theirs. Am I OK to do this, as we already represent our client, and/or is there any special licensing I would need to collect on our client’s behalf?

A. According to attorney Adam Goodman, this is a question of state law. No federal law regulates business-to-business collection. But, some states arguably regulate it, and states and accounting professional associations may regulate the services that accounting firms can offer, and whether those services can be offered across state lines.

The safest course of action would be to obtain input from an attorney who looks into the law of the state of the accounting firm's office, as well as the law of the debtor's state if it is different, says Goodman, of Goodman Law Offices LLC in Chicago. The accounting firm might also wish to consider whether its malpractice policy covers exposure associated with this activity.

Goodman says it is probably not worthwhile to engage in this activity on a one-off basis. The cost of researching its propriety is too high, and the accounting firm may not do a good job if they aren't experienced in the area. Referral to a full-time business collection agency or law firm might make more sense.

For more information about state regulations, please visit State Collection Laws.

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