When it comes to collecting outstanding fees from legal consultancy services, having a structured recovery system in place is crucial. This article outlines a 3-phase Recovery System for recovering company funds from outstanding fees. Each phase involves specific actions and recommendations to ensure successful fee collection from debtors.
Key Takeaways
- Implementing a structured recovery system is essential for collecting outstanding fees efficiently and effectively.
- Sending initial letters and conducting thorough investigations are key steps in the recovery process.
- Consideration of legal action should be based on a thorough assessment of the debtor’s assets and the likelihood of recovery.
- Understanding the costs and implications of legal action versus closure of the case is important in decision-making.
- Rates for collection services vary based on factors such as the age of the account, amount owed, and involvement of an attorney.
Recovery System for Outstanding Fees
Phase One
Within the first 24 hours of initiating Phase One, a multi-channel approach is deployed to engage the debtor. Immediate action is taken to ensure that the debtor is aware of the outstanding fees:
- A series of four letters is dispatched via US Mail.
- Comprehensive skip-tracing and investigation are conducted to gather optimal financial and contact data.
- Persistent contact efforts are made through phone calls, emails, text messages, and faxes.
Daily attempts to reach a resolution continue for 30 to 60 days. If these efforts do not yield a settlement, the transition to Phase Two is seamless, involving the transfer of the case to an affiliated attorney within the debtor’s jurisdiction.
The goal is to create a sense of urgency and open a dialogue for negotiation. The effectiveness of Phase One is critical to the overall success of the recovery system.
Phase Two
Upon escalation to Phase Two, the case is transferred to a local attorney within our network. This shift signifies a more formal approach to debt recovery. The attorney’s actions include:
- Drafting and sending a series of authoritative letters on law firm letterhead.
- Initiating direct telephone contact with the debtor to negotiate payment.
In this phase, persistence is key. The attorney’s consistent efforts aim to convey the seriousness of the situation to the debtor.
If these intensified efforts do not yield results, a detailed analysis of the case is conducted. We then prepare to advise on the viability of moving to Phase Three. The decision to proceed is critical and based on a clear understanding of the debtor’s financial status and the likelihood of successful recovery.
Phase Three
Upon reaching Phase Three, the path forward becomes clear. Our firm will present you with a critical decision based on our comprehensive assessment of the debtor’s assets and the facts of the case. The options are straightforward:
- If recovery is deemed unlikely, we advise case closure with no fees owed to us or our affiliated attorney.
- If litigation is recommended, you face a choice:
- Withdraw the claim at no cost.
- Continue standard collection efforts.
- Proceed with legal action, incurring upfront costs.
Should you opt for litigation, the following fees are generally expected:
| Jurisdiction | Estimated Costs |
|---|---|
| Debtor’s | $600 – $700 |
Upon payment, our attorney will initiate a lawsuit for the full amount owed, including filing costs. Failure to collect via litigation results in case closure without further obligation.
Our competitive rates are structured based on the number of claims and their age. For instance, accounts under one year are charged at 30% of the amount collected for 1-9 claims, and 27% for 10 or more. Older accounts and those under $1000.00 have different rates, with all accounts placed with an attorney incurring a 50% fee upon collection.
Frequently Asked Questions
What is the Recovery System for Outstanding Fees?
The Recovery System for Outstanding Fees consists of three phases: Phase One involves sending letters to debtors, skip-tracing, and contacting debtors for resolution. Phase Two includes forwarding the case to an attorney for legal action. Phase Three involves either closing the case if recovery is unlikely or proceeding with litigation at the client’s decision.
What happens if recovery is not likely in Phase Three?
If recovery is not likely in Phase Three, the case may be closed with no fees owed to the firm or attorney. Alternatively, the client can choose to proceed with litigation by paying upfront legal costs. If litigation fails, no fees are owed.
What are the rates for the Recovery System?
The rates for the Recovery System vary based on the number of claims and the age of the accounts. Rates range from 27% to 50% of the amount collected, depending on the specific circumstances.
What actions are taken in Phase One of the Recovery System?
In Phase One, letters are sent to debtors, skip-tracing is conducted, and attempts are made to contact debtors for resolution. Daily contact attempts are made for the first 30 to 60 days.
What occurs in Phase Two of the Recovery System?
Phase Two involves forwarding the case to an attorney who sends demand letters to the debtor and attempts to contact them. If no resolution is reached, the client is informed of the situation and the next steps.
What are the options if the case proceeds to litigation in Phase Three?
If the case proceeds to litigation in Phase Three, the client can choose to pay upfront legal costs for the lawsuit. If the litigation is unsuccessful, no fees are owed to the firm or attorney.
