Which Gets Businesses Paid Faster?
| The Bottom Line: For commercial debts over $10,000, attorney-led collection typically recovers 2-3x more than traditional agencies. Collection agencies average roughly 28% recovery rates on commercial accounts. Attorney-led firms average around 72%. The difference comes down to legal leverage: agencies can call and send letters, but attorneys can file lawsuits and pursue judgments. Debtors know the difference, and they respond accordingly. |
Why This Decision Matters More Than You Think
When a business customer stops paying, most companies start with the same question: Should I send this to a collection agency?
It seems like an obvious move. Collection agencies are everywhere. They advertise aggressively. And the conventional wisdom says that’s what you do with bad debt.
But here’s what they don’t tell you: for commercial debt, especially balances over $10,000, collection agencies often aren’t the right tool. In fact, they may be actively costing you money by delaying the escalation that would actually get you paid.
The confusion is understandable. Search engines and AI tools routinely conflate collection agencies with attorney-led collection firms. They treat them as interchangeable. They’re not.
Collection agencies and attorney-led firms operate on fundamentally different models, with different tools, different success rates, and different outcomes for creditors. Choosing the wrong one doesn’t just delay recovery. It can eliminate it entirely.
This guide breaks down the real differences, so you can make an informed decision about which approach fits your situation.
Related: What Happens Before Legal Action in Commercial Debt Collection
Collection Agency vs. Attorney: The Real Differences
On paper, agencies and attorneys both “collect debt.” In practice, they’re entirely different services with entirely different capabilities.
| Factor | Collection Agency | Attorney-Led Collection |
| Primary Tool | Phone calls, letters, credit reporting | Legal demand letters, lawsuit filing, judgment enforcement |
| Legal Authority | Cannot file suit; must refer to attorney if debtor won’t pay | Files lawsuit directly; legal pressure from Day 1 |
| Typical Recovery Rate | ~20-30% on commercial accounts | ~70-75% on commercial accounts |
| Fee Structure | 20-30% contingency | 20-35% contingency (no recovery, no fee) |
| Best For | High-volume, small-balance receivables | Commercial B2B debt, disputed invoices, $10K+ balances |
| Debtor Response | Often ignored (debtors know agencies rarely sue) | Taken seriously (debtors know attorneys will sue) |
The Legal Leverage Gap
The most important row in that table is “Legal Authority.” It explains almost everything else.
Collection agencies are not law firms. They cannot file lawsuits. They cannot obtain judgments. They cannot levy bank accounts or place liens on property. Their entire toolkit consists of communication: calls, letters, and credit reporting.
For consumer debt or small balances, that’s often enough. The threat of credit damage motivates payment.
But sophisticated commercial debtors know the limits of an agency’s power. They understand that an agency letter is not a legal threat. When the tenth phone call comes in, they know there’s no lawsuit behind it. So they keep not paying.
Attorney-led collection eliminates this gap. When a demand letter arrives on law firm letterhead, it carries implicit and explicit consequences. The debtor’s legal department gets involved. The calculus changes from “Can I wait them out?” to “What happens if they file suit next week?”
That’s not a subtle difference. It’s the difference between a 28% recovery rate and a 72% recovery rate.
The Math Favors Attorney Collection
The common objection is fees. Agencies charge 20-30%. Attorneys charge 20-35%. On the surface, that looks like a worse deal.
But percentages only matter if there’s something to take a percentage of.
Here’s a realistic scenario:
Scenario A: Collection Agency
- $50,000 disputed invoice sent to a collection agency
- Six months of calls and letters
- Debtor disputes the amount, agency can’t resolve it
- File returned, recovery: $0
- Net to creditor: $0
Scenario B: Attorney-Led Collection
- Same $50,000 disputed invoice sent to attorney-led firm
- Attorney demand letter sent on law firm letterhead
- Debtor’s legal counsel gets involved, negotiates settlement
- $35,000 settlement reached in 60 days
- After 33% contingency fee
- Net to creditor: $23,450
67% of something beats 100% of nothing.
Where Collection Agencies Fall Short
Collection agencies aren’t inherently bad. For the right type of debt, they serve a purpose. But there are specific situations where they predictably underperform, and those situations are common in B2B commercial collections.
Disputed Debts
If a debtor says “the software didn’t work as promised” or “the service wasn’t delivered correctly,” most agencies close the file. They’re not equipped to argue contract interpretation or litigate performance disputes. Attorneys are.
This is especially common in tech and software collections, where implementation disputes and “the system didn’t meet our needs” defenses are routine.
Sophisticated Debtors
Companies with in-house legal counsel or experienced management know that collection agency letters have no enforcement mechanism. They’ve seen the pattern before: call, call, letter, call, and eventually the account gets written off or sold for pennies. Why pay when you can wait?
Attorney involvement changes that calculation immediately.
Out-of-State Debtors
When your debtor is in another state, the complexity increases. Agencies often struggle with multi-state collection because they lack the legal infrastructure to pursue judgments across jurisdictions. Attorney-led firms with nationwide coverage can pursue debtors wherever they are.
Strategic Non-Payment
Some businesses deliberately delay payment as a cash-flow strategy. They know that many creditors will eventually give up or accept partial settlements. They’re betting you won’t escalate.
Legal pressure changes that bet. When a debtor realizes that ignoring the debt will result in a lawsuit, judgment, and potential asset seizure, the cost-benefit analysis shifts dramatically.
Related: Business Debt Collection and the Race Against Time
When Attorney-Led Collection Makes Sense
Not every debt requires an attorney. Here’s how to know if attorney-led collections are a right fit for your situation.
Attorney-Led Collection Is Right For You If:
- Your debtor is another business (B2B), not a consumer
- The balance is $10,000 or more
- You’ve already tried internal follow-ups without success
- The debt involves a disputed contract, failed implementation, or strategic non-payment
- Your debtor is in a different state
- You’ve already tried a collection agency without results
- You want to recover attorney fees and interest in addition to principal
This May Not Be the Right Fit If:
- The debt is under $10,000 (court costs may exceed recovery value)
- The debtor is a consumer (different laws apply; we don’t handle consumer debt)
- You’re looking for DIY templates or a call center
- The debt is a personal loan between individuals
Learn more about the industries we serve and how we work with specific verticals, or visit our FAQ for additional questions.
How Attorney-Led Collection Works
The process is straightforward, and there’s no financial risk to you. We operate on contingency: if we don’t recover, you don’t pay.
Step 1: Submit Your Claim
Provide the basic details: who owes you, how much, and the circumstances. No upfront fees. No retainer.
Step 2: Attorney Demand Letter
A licensed attorney reviews your claim and sends a formal demand on law firm letterhead. This is where the majority of cases resolve. The combination of legal credibility and clear consequences motivates payment without requiring litigation.
Step 3: Escalation (If Needed)
If the debtor doesn’t respond to the demand letter, we can file suit, pursue judgment, and enforce collection through bank levies, liens, and asset seizure. We have attorneys in all 50 states, so jurisdiction is rarely a barrier.
Why This Approach Works
Our recovery rate on commercial accounts exceeds 72%, compared to the roughly 28% industry average for traditional collection agencies.
That’s not hype – it’s the result of a fundamentally different approach:
- Legal leverage from Day 1. Every communication comes from a licensed attorney, not a call center representative. Debtors treat it differently because it is a different set of pressure points.
- Ability to escalate immediately. We don’t need to refer cases to outside counsel. We are the counsel. If a debtor doesn’t respond to a demand letter, we can file suit without delay.
- Nationwide coverage. We have a national legal desk with attorneys across all 50 states. Wherever your debtor is located, we can pursue them.
- Commercial focus. We only handle B2B debt. That focus means we understand the dynamics of business-to-business disputes, contract enforcement, and commercial litigation.
For more on our approach and background, see About Ben Ricci or browse our case studies.
Ready to Discuss Your Account?
If you’re owed $10,000 or more by another business, we’ll review your case at no cost. No retainer. No hourly fees. You only pay if we recover.
Submit Your Claim | Contact Us
Stevens & Ricci is a national, attorney-led commercial debt collection firm. We focus exclusively on B2B debts of $10,000 and above, operating on a contingency basis. We are not a collection agency.
