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Using Lawyers In A Judgment Recovery Company
Judgments are not just debts, they are final orders of a court. Because laws and courts do not help people (or make it easy to) recover judgments, and because judgment recovery requires skills and/or money - most people need help in recovering their judgment money. Others try to find a judgment buyer but want too much money for their judgment, because the sale price depends only on the available assets of the judgment debtor.
The difficulty in recovering most judgments has created a large (always changing) judgment recovery business. People and companies that recover judgments are known as Judgment Enforcers (JEs). JEs include regular people, process servers, Private Investigators (PIs), lawyers, collection agencies, and companies that employ or hire PIs and lawyers.
Most JEs are not lawyers, they are usually smart people that study, memorize civil laws, and learn procedures. Most get judgments assigned to them, so that they become the legal owner of the judgment, and can then enforce the judgment by representing themselves (a Sixth Amendment right) in post-judgment enforcement procedures in court.
In most places, a corporate entity cannot represent itself in court. For that reason, and some other reasons, most JEs do not form corporate entities. However, some JEs do form corporate entities, as discussed below.
Some states and courts are hostile to pro pers (propria persona, which is Latin for people representing themselves in court) enforcing judgments they now own, but did not originally own. In some courts, non-lawyer judgment enforcers are denied their Sixth Amendment rights to enforce judgments they own.
How can you operate a judgment recovery business in hostile courts or states? Part of the answer depends on having a reserve of start-up money, which is good to have when you start any business. Judgment recovery is a business that usually operates at a loss for the first few months (or longer).
To start a JE business anywhere, even in a state or court hostile to your Sixth Amendment rights, you should have an office, and hire lawyers (to sign all documents and appear in court) and PIs (to do skip-tracing and asset searches). You also may want to form a corporation or LLC, which is now an option, because you will not be appearing in court. Setting up a JE as a corporate entity is a more expensive way to start and run a JE business.
As a corporate entity, it is going to be more expensive for each judgment recovery. You must split your (e.g.) 50% potential gross profit with the lawyer and PI, for office rent, etc. However, you can now spend your time finding more judgments while the lawyer and PI do most of the recovery work. You may prefer to operate your JE business this way, instead of doing it all yourself.
You can operate as a sole proprietor, or form your own corporate entity, and be an officer or employee in your own company. You can be the manager and find judgment leads and screen them. You might choose to take assignment of judgments in your name, or not, it is your choice.
If you take the assignment of the judgment, you own the judgment, and your lawyer works on your behalf. The lawyer must be authorized to practice law in the state where the debtor assets are located. In this way, you are not doing any collections yourself, so I assert that in this way, you can collect judgments in any state.
If you do not take assignmentIf you do not take assignment, the Original Judgment Creditor (OJC) remains the owner of their judgment and "your" lawyer represents the OJC to recover their judgment.
You must work out an agreement with either the OJC and your lawyer (or both), to make sure you will be compensated for being the manager and making possible the "magic" (the OJC getting some or most of their judgment money back) happen.
The way this might work is, the OJC retains ownership, the lawyer maintains control, and you work with or for the lawyer, helping with bank locates, private investigators, employment locates, process servers, leg work, phone work, and your general expertise. the P.I., bank locator. POE locator, and process servers. The lawyer may call upon you for your opinions and advice.
To avoid any hint of UPL, have an agreement with the lawyer, so the OJC and you are separated, and you are working for the lawyer, not the OJC.
In SummaryIf you can find the right lawyer, willing to work for or with you, you might be able to bypass collection agency requirements and hostile states and courts; because you are not ever going to show up in court or communicate with the judgment debtor. In many states, the rules of professional conduct require attorneys to put their client's interests ahead of their own.
Some JEs and others use Limited Power Of Attorney (LPOA) forms, so they can represent the OJC when they use lawyers or sell the OJC's judgment for them. One should be very careful and discuss the use of LPOAs with their lawyer.
To operate a judgment recovery business using lawyers, you must find the right lawyer which may take some time. If you do most of the tedious planning and background work, and talking with the OJC, you might be able to persuade a lawyer to discount their rate for you. I am not a lawyer, and you should ask a lawyer if my advice in this article is correct in your County and State.
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