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Collection Attorneys and the Contingent Fee Agreement
When seeking out a commercial collections attorney, one thing to consider is the fees the firm charges to collect your business’ past due accounts. The worst feeling in the world is to throw good money after bad and find your balance sheet bleeding red ink due to fees charged by a law firm or collection agency. That’s where the contingent fee agreement comes into play. No attorney fees are due unless money is collected.
Massachusetts has a specific statue which governs contingency fee agreements. One of the main requirements is that the agreement be in writing and the contingency on which the fee is based must be clearly stated. Fees can’t be excessive based on the service rendered. Also, there are certain situations where contingency agreements can’t be used as doing so would be against public policy. Attorneys can’t use them in child custody cases for example.
Interestingly, commercial collections are an exception to the statute. There are several reasons why this is the case. In personal injury cases like car wrecks or medical malpractice, proving liability is the hard part. Once the attorney shows the other party was negligent and caused the injury, it’s just a matter of determining damages. Collecting them is usually easy because there are insurance companies with deep pockets involved.
Collections cases are the opposite. Liability is fairly straightforward in most situations, but getting a judgment satisfied is difficult. Your debt may be one of many and often the IRS or other governmental agencies are at the head of the line. It takes an experienced attorney to navigate all options and aggressively pursue collection. Since the lawyer makes no money unless he/she collects, there’s ample incentive to do everything possible to bring accounts current.
Even within commercial collections cases, fee arrangements can vary. The standard is for the attorney to get one-third but clients that refer a high volume of accounts on a regular basis may negotiate a different arrangement and accounts with substantial balances may have a sliding scale apply.
If you’d like to learn more about how to effectively collect your commercial accounts without additional expense, please contact us. Our fee arrangements are easy to understand and work to improve cash flow without incurring more costs.
Give us a call or send us an email. There is not cost to have us evaluate your claim.