Member Links

IACC Blue Book

IACC Logos

Scope

IACC Listserve

Benchmarking

Members Only Resources

Bylaws

	Home About .

PRESS RELEASE

Contact: Nate Thompson, Public Relations Specialist

(952) 928-8000, ext. 714, or thompson@acainternational.org

FOR IMMEDIATE RELEASE

Commercial Collections: Transitioning the Account from Collector to Courtroom

(MINNEAPOLIS, May 18, 2004) Often in the business-to-business marketplace, past due accounts are ultimately resolved in the legal system. The process of getting paid might start out with friendly reminder calls from the sales staff in-house and progress to placement of the account with a third-party debt collection agency. Yet, even after applying the specialized knowledge and resources of a professional collector, some debtors will only respond to their obligations when presented with legal consequences. Given this reality, why doesn’t the creditor take these legal receivables directly to a law firm instead of placing them with a collection agency first?

The International Association of Commercial Collectors (IACC) offers the following guide to inform businesses how their accounts are transitioned from agency to courtroom.

Agencies, Law Lists and Law Firms: The Triadic System

Collection agencies have a unique ability to service legal collections, because of their expertise in this field, the volume of legal matters they handle, and the resources they have available.

Agencies obtain legal services through the use of a law list.  These lists provide a network of law firms who are educated and experienced in handling collection matters and provide their services on a contingency fee basis.  These law firms work with the agencies within a strict set of rules (Operative Guides set forth by the Commercial Law League of America) and abide by the usual and customary practices peculiar to the collection industry, thus assuring a high level of service.

Furthermore, the law firms are carefully screened by the list, who provide bonding coverage up to $3,500,000 to the agencies on all matters forwarded through this medium.  Thus, the creditors are protected against the possibility of any loss due to fraudulent or dishonest acts.  This bonding coverage is available only to collection agencies and law firms, not direct to creditors. Because of this bonding insurance coverage, the law lists continuously monitor and evaluate the performance of their listed law firms. 

These law firms receive a large volume of business from collection agencies that represent 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, you may have a case or two to place, whereas a collection agency may have many such matters to place on behalf of all of its legal collections clients.

In turn, the volume of business flowing to the law firm over law lists because of its use by many collection agencies gives even more leverage to the list.  Millions of cases flow from agencies through bonded law lists to their network of law firms.  The leverage of such a list becomes available to your collection agency on behalf of you, the creditor.

Such leverage has many advantages.  Discounted rates are offered to collection agencies.  This reduced rate means that a collection agency can handle a creditor’s file for the same rate that you, the creditor, would be charged by the firm if you had sent the work direct.  By outsourcing to a collection agency, you benefit 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 have even already 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 collection 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 files 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.

Firms that process a large volume of collection matters may develop specializations within the field, so that they have particular expertise in handling claims involving the Miller Act, the insurance industry, subrogation, transportation, or healthcare.

Collection agencies have personnel that deal only with legal collections.  These departments handle thousands of files each year.  They develop professional relationships with the attorneys they use, and sometimes personal relationships as well.  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.

Why not make use of the advantages afforded by the use of a collection agency and its network of law firms to collect your legal accounts receivables?  The law firms are fully bonded, screened and monitored on a continuous basis by both the agency and the law list.  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. 

It only makes sense that use of a collection agency will increase your chances of collection, at a lower cost, thus having a positive impact on your bottom line, as a result of your decision to outsource your legal receivables to a collection agency.

This article was prepared for IACC by Thomas W. Hamilton, an IACC member. Hamilton is also the Executive Vice President and General Manager of the American Lawyers Quarterly, Cleveland, Ohio.

With 215 collection agency members and 142 attorney members, The International Association of Commercial Collectors Inc. (IACC) is the world’s largest international trade association for commercial debt collection professionals. Headquartered in Minneapolis, IACC serves members throughout the United States and in 24 other countries worldwide. Members of IACC recover millions of dollars annually for their clients and provide valuable assistance to credit departments in controlling mounting debts. To learn more, visit the IACC Web site at http://www.commercialcollector.com.