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Why should a creditor use a commercial collection agency to handle legal collections, rather than going directly to a law firm?
by Thomas W. Hamilton
Executive Vice President and General Manager
American Lawyers Quarterly
Because of their expertise in this field, the volume of legal matters they handle, and the resources available to them, a reputable and experienced commercial collection agency has the unique ability to service legal collections.
The best collection agencies obtain legal services through the use of a law list. These lists provide a network of law firms educated and experienced in handling collection matters. These law firms, which provide their services on a contingency fee basis, work with the agencies within a strict set of rules (Operative Guides set forth by the Commercial Law League of America). And, they abide by the usual and customary practices peculiar to the collection industry, thus assuring a high level of service.
Law firms listed are carefully screened and are bonded up to $3,500,000 per law firm on all matters forwarded through the use of the list. Thus, creditors who use agencies that employ the lists are protected against the possibility of loss due to fraudulent or dishonest acts since this bonding coverage is available only to collection agencies and law firms, not directly to creditors. Because of this bonding insurance coverage, the law list continuously monitors and evaluates the performance of their listed law firms. An established collection firm will also carefully monitor the law firms it utilizes on a quarterly basis. Items generally tracked include timeliness of reporting, accuracy of reports and recovery rates.
Commercial collection agencies provide listed law firms with a large volume of business representing many creditors. The potential to bestow large volumes of business gives the agency leverage with a law firm that a creditor cannot obtain on its own, particularly in a remote area, where the creditor may have only a case or two to place. A collection firm, on the other hand, may have many to place on behalf of all of its legal collections clients.
Because of its use by hundreds of collection agencies, the volume of business flowing to the law firm as a result of law lists gives added leverage to agencies using the list. That leverage then becomes available to the creditor using those commercial agencies.
Such leverage has many advantages. Discounted rates may be offered. This reduced rate means that the commercial collection agency is in a position to handle a creditor’s file for less than the creditor would be charged had the creditor submitted the case directly to the law firm. By outsourcing to a collection agency, the creditor benefits from the services they perform on your behalf at essentially no cost. Thus, you save personnel costs, rent, technological equipment costs, and variable costs such as postage and stationery.
Access to top-notch legal services is another advantage. The volume of claims handled by these firms gives them intense experience as collection specialists. They know debtors and their tricks. They may even have had experience with the particular debtor with whom you have a claim. An experienced collection law firm can often settle a case, or even bring it to trial without the necessity for you to provide a witness.
The volume provided by agencies makes collections profitable for these law firms, and thus they commit resources to their collection practices, including superior technology, personnel, a dedicated legal collections staff, and prioritized partner time. When a law firm processes a volume of collections over an extended period of time, they are committed to this practice, and they establish a reputation with local debtors. This reputation can eliminate a lot of "stall tactics" and increase the probability of settling your cases without protracted litigation.
An experienced collection agency has personnel that deal constantly with legal collections. Many handle thousands of files each year. They develop professional relationships with the attorneys they use. They are active in associations that provide them with continuing education on the ever-changing laws that deal with collections and bankruptcy. Many of these organizations also afford them the opportunity to network with receiving attorneys.
It is clear that using a commercial collection agency and its network of law firms to collect your legal accounts receivable has a number of important benefits. The law firms are fully bonded, screened and monitored on a continuous basis by both the agency and the law list. The best collection agencies and their correspondent law firms are specialists in collections. They are educated and experienced in the latest changes in the law, and have the latest credit and collection services and technology at their disposal.
Of course, selecting the right firm is critical to assuring that you receive the maximum benefit that comes from using a collection agency. Over the years our experience has led us to know that ABC-Amega Inc. is one of the most professional, respected, and experienced commercial collection agencies associated with the use of law lists. In fact, we feel confident in saying that outsourcing your legal receivables to ABC-Amega Inc. will not only increase your chances of collection but also lower your costs, providing yet another benefit - a positive impact on your bottom line.
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Printed with permission of ALQ - American Lawyers Quarterly, Cleveland, Ohio.
This information is provided by ABC-Amega Inc. -- providing 1st and 3rd party commercial collection services since 1929, and collecting in more than 200 countries worldwide. For further information, contact email@example.com.