If your own efforts to collect the overdue balance on your customer’s account are going nowhere, you may foresee a potential debt collection lawsuit in your future and wonder whether you’ll be able to recover your debt collection attorney fees. The short answer is, “It depends.”
While many businesses start by retaining a collection agency instead of an attorney, one of the current emerging trends in the collection business is that debt collection attorneys are becoming involved earlier in the process, making formal demands and negotiating pre-lawsuit payments. Often, these negotiations are successful and a lawsuit can be avoided. But, in the event that a last-resort lawsuit should be needed, you will incur and will want to attempt to recover your debt collection attorney fees.
The Lowdown on Debt Collection Attorney Fees
Whether or not you’ll be entitled to collect attorney fees if you take the legal route depends on your state jurisdiction. However, one critical determining factor in every state is whether your contract with the debtor includes a provision regarding the collection of attorney fees. If so, these fees will generally be allowed. If not, the question may rest on any additional documentation you may be able to produce demonstrating that your debtor was aware of and agreed to these fees, though this question will be entirely up to the discretion of the judge hearing your case.
Another determining factor is whether or not your state’s law specifically permits the collection of attorney fees by the prevailing party in a lawsuit. Because each jurisdiction and each situation differs, you’ll need to find out whether you can expect all, part, or no attorney fees to be covered by the debtor in the event that you win the suit.
Attorney fees for filing a collection lawsuit include court costs and, like the rules and statutes regarding the collection of these fees, vary widely across state jurisdictions. Generally speaking, these fees average $575 for cases under $10,000 and $900 for collection amounts over $10,000. In addition to these up-front costs, you can typically expect to be charged a fee that is based on the amounts actually collected — typically 33 percent — and is contingent upon winning your case. This is called a contingency fee. While your up-front costs are due and payable whether or not you win, the fact that the bulk of your attorney fee is contingent upon winning your case and consists of a percentage of the amount of your award makes it easier and less financially burdensome to pursue your commercial collection claim.
Collection Attorney vs. a Collection Agency
A collection agency can be helpful in recovering certain debts and may, in fact, be the better option for smaller debt amounts. However, if you are to make the best decision about which road to take in your journey to recovering the balance due, you need to understand the limitations of what a collection agency can do for you.
Collection Agency
A collection agency’s function is to attempt to convince your debtor to pay the monies owed you and to work to negotiate a payment arrangement with that debtor. Agency debt collectors do this through repeated contact with the debtor via telephone or mail. It’s important to note that payment requests or demands are as far as a collection agency will be able to go in helping you collect a debt. If you’d like to pursue the matter beyond this point, you’ll need the help of a collection attorney.
For this reason, it would be wise to consider right from the start whether or not you are planning to take your debtor to court in the event that you’re unable to collect the debt through a collection agency process. If so, you should hire a collection attorney as opposed to a collection agency. While a collection agency can use various tactics to collect the amount of your debt — and may do so successfully — if their attempts are unsuccessful, a collection agency will not be qualified to represent you in court. For that, you’ll need an attorney.
Therefore, unless you’re willing to write off the debt in the event that the collection agency is unable to collect, you’ll only end up having to hire the attorney you could have had working for you all along. Since collection agencies’ fees can approach or even exceed the percentages of debt collection attorney fees, you’ll want to carefully consider which entity you choose to collect your debt.
Debt Collection Attorney
For debts greater than $5,000, it’s generally wiser to hire an attorney, while an agency may be sufficient for collecting lesser amounts. However, it may be helpful to keep in mind that legal representation actually increases the likelihood that your delinquent customer will pay the overdue balance. The specter of potential legal action is often enough to convince the debtor that it would be the better part of wisdom to pay up now. Yet, even if the debtor is unpersuaded initially, when you work with a debt collection attorney you will always have the option of initiating legal action against the debtor should that prove necessary.
Stevens & Ricci: A Hybrid Approach to Debt Collection
Stevens & Ricci is not a collection agency, but rather a legally integrated collection firm working with over 40 of the best collection attorneys in the United States. Based on the valuable experience gained during his more than two decades working in various aspects of collections, the firm’s founder and managing partner Ben Ricci felt this evolution was necessary for maintaining high client collection rates in a rapidly declining industry.
The Stevens & Ricci debt collection method differs significantly from conventional debt collection approaches — a factor that works to your advantage. We use a hybrid process that blends traditional collection agents with attorney partners, resulting in higher recoveries. Essentially, we give you the best of the collection agency and collection attorney worlds at the same cost or less than you would pay others. Not only is this highly cost-effective for you, but it also gives you a complete, end-to-end debt collection solution that helps you avoid the headache of having to figure out what to do if the initial collection efforts for which you’re paying a collection agency don’t bear fruit.
The Stevens & Ricci Approach Offers Multiple Advantages
As mentioned above, when you work with our firm, you’ll benefit from our hybrid debt collection approach, which puts all the skills, tools, and resources of the collection trade to work for you.
The many advantages of working with Stevens & Ricci when collecting a commercial debt include the following
- Ben Ricci’s two-plus decades of professional collections and legal forwarding experience, which will be put to work on your behalf
- Our innovative approach to debt collection, which evolved through years of trial and error, outside-the-box thinking, and rigorous real-world testing
- Access to our nationwide network of experienced collection attorneys, including attorneys located in the debtor’s local area
- Our proven success in the commercial debt collection arena, demonstrated by our high recovery rate
- No fees unless a successful collection is made — meaning no recovery, no fee
- Contingency rates that are among the lowest in the industry, giving you the benefit of more powerful representation in return for debt collection attorney fees that are more reasonable than most collection agency fees
From debt collection letters to small claims courts and from collection agencies to debt collection attorneys, you have multiple options for attempting to collect your debt. Stevens & Ricci offers all the guidance you need in wading through these many options and choosing the most viable method for your debt collection situation, considering such factors as the age of the debt and the collection efforts that have already been made. If retaining our firm turns out to be your most viable option, we will not only put forth our best professional efforts to recover all the monies owed, but we will also work to help you recover your debt collection attorney fees.
Give Ben Ricci a call today for a free consultation to discuss your commercial debt collection options.