It does indeed vary by state. Some states do not allow representation by an attorney in the court itself but one is permitted to consult with one prior. Some states allow attorneys as long as both sides are represented by attorneys. Some states do not allow attorneys for the small claims proceeding but then do allow attorneys to be involved if there is an appeal. One needs to check the laws of his/her own state. There is no "blanket" law across the US prohibiting representation by an attorney in small claims court.
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