August 23, 2019

Colorado Supreme Court: Debt Services Company Cannot Avoid DMSA Regulation by Associating with Attorneys

The Colorado Supreme Court issued its opinion in Coffman v. Williamson on Tuesday, May 26, 2015.

Uniform Debt-Management Services Act—Legal Services Exemption—CRS § 12-14.5-202(10).

The Supreme Court examined the legal services exemption in the Uniform Debt-Management Services Act (UDMSA) to determine whether the original version of the exemption applies to Morgan Drexen, Inc., a company of non-lawyers. The Court also analyzed whether the amended version of the exemption violates the separation of powers doctrine in the Colorado Constitution and the Commerce Clause and Privileges and Immunities Clause in the U.S. Constitution because certain out-of-state attorneys may be subject to regulation under the UDMSA.

The Court held that the trial court erred by concluding that Morgan Drexen’s services fall within the scope of the legal services exemption in the original UDMSA, CRS § 12-14.5-202(10)(A). The original exemption encompasses non-lawyer assistants; however, Morgan Drexen’s activity here does not fall within the scope of that exemption because it performs substantive debt-management services without meaningful instruction and supervision by an attorney. The Court also held that the amended UDMSA does not violate the separation of powers doctrine in Article III of the Colorado Constitution or the Commerce and Privileges and Immunities Clauses of the U.S. Constitution. The Court reversed the trial court’s order and remanded that case for further proceedings consistent with this opinion.

Summary and full case available here, courtesy of The Colorado Lawyer.

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