HB2474 / SB2563 – Officers of Company to Practice Law

There is a proposed bill in the Tennessee General Assembly that reads:

SECTION 1. Tennessee Code Annotated, Section 23-3-101, is amended by adding the following at the end of subdivision (3):
However, it shall not be considered the “practice of law” for the owner of a sole proprietorship or, with the consent of a majority of the stockholders, the president of a corporation or limited liability corporation to represent the corporation before a court in this state for the exclusive purpose of collecting debt owed to the corporation, provided that no single debt being collected exceeds one thousand dollars ($1,000). A prevailing owner or president is entitled to recover court costs and the reasonable costs of bringing the collection action.

This proposed new law would allow certain officers of a corporation or LLC to represent the company in small debt collection cases only. It is typically difficult for companies to find a lawyer to represent them in small collections, as legal fees could easily exceed the amount owed. Small businesses often either never attempt to collect the debts because of the costs, or the debts are sold to debt collection companies for a fraction of what is owed. The proposed law seeks to give companies the option of having the president/owner of the companies represent the company in court in these small cases.