Right on the Money: What should you be paying your collection attorney?

vector-vintage-money-graphic-c48924First things first – you don’t pay your collection attorney.

The person that owes you does— your customer/debtor.

Unless you are owed an extremely high dollar amount, you will want to be in a commission fee arrangement with your law firm. In other words, your law firm only makes money when it collects on your debt.

For most new attorney-client arrangements a 25 percent contingency fee is standard. So, if the law firm is able to collect $100 on   your behalf, it will keep $25 as its fee and remit $75 to you.

This arrangement could change if you operate a business where your clientele is exclusively other businesses (as opposed to individuals). Then, there is a more sophisticated system that is industry standard, known as the Commercial Law League of America rates. Under these rates the law firm usually receives a lower percentage.

Also, if you have continued to increase the amount of cases you send to the law firm, or if you feel that your contribution to the relationship enables the law firm to aid its bottom line in some way, you are certainly within your right to negotiate your fee arrangement at any time.

Typically, the only time a law firm would request funds from a client would be shortly after initial placement of a new claim. This means that the firm would evaluate the claim, send a required letter to the customer/debtor and advise you of the amount required to litigate the claim, as well as other possible accompanying fees.

These fees are for court costs, not the law firm. It should be clear between you and your law firm that these funds will be returned to you upon the first receipts from your customer/debtor.

Well, there it is, short and sweet. This should help you to understand the basic costs involved in debt collection and assist you in determining the collection route you’re going to take.

5 reasons to use a professional debt collector

Do you ever day-dream that you saved the day fighting bad guys? Performed an emergency surgery and saved a life?

Who hasn’t had a dream like that?

But the truth is, without proper training, we would probably do more harm than good.  Whenever professionals are available to us, we would be wise to hand those situations over to them and spend our time doing whatever it is we do best.

The same is true in business.  Leave the things you are not trained to do well to the professionals and spend your time doing what you do best.

At Atkins & Ogle Law Offices, our specialty is legal debt collection.

If your business extends credit for your goods or services, then you will inevitably have clients (individuals or companies) that will fail to pay you. When this happens you must then decide whether to stop doing the things that you do best and become a debt collector or send it to a professional.

Here are five reasons using a professional debt collector is better than doing your own collecting:

  1. You are paying out either way.

If you have a person in your business that spends a significant portion of their time in collection efforts, you are better off sending these matters to a professional service.  Either way you are spending money— toward commission or toward payroll expenses.  With a payroll expense, your employee spends less time doing the job you hired them to do, and they are working with limited tools and power, which leads us to reason number two.  A debt collection law firm has specific tools at their disposable as well as the legal authority to pursue your money.

  1. Professionals have more tools at their disposal.

There are two general types of professional debt collection services: law firms and collection agencies.   Although this is an over-generalization, it is fair to say that you can expect both will collect your accounts on a commission basis.  While an agency will typically charge you a lesser commission, the law firm will have more tools to get better results. Obviously, each of those factors will depend on the agency and the law firm.

  1. You may end up hiring a lawyer anyway.

While it’s true that if your unpaid accounts have an average balance of $500 or less you are better off working them in-house or sending them to an agency, balances due above certain amounts ($5,000 is common) will ultimately find you in a court, which requires representation by a lawyer.

Most states have a small claims court and a large claims court.  Your business will be permitted to represent itself without an attorney in small claims court.  But the professional collection firm will likely understand the process and system so well that the commission paid the firm will be well worth the price.  Plus, you will usually be able to remain back at your business doing whatever you do best.  Additionally, when higher amounts owed force you into the large claims court, your state will require you to be represented by a licensed attorney.  You will be well served to select an attorney not only well-versed in contract law – but in debt collection.

  1. You can give them a test drive!

Many debt collection law firms will accept claims for one or two days simply for review.  If these claims fail because of conflicts, statute of limitations, document insufficiencies or other issues, the law firms are generally good to return them to you without charge and without your customer ever knowing that the claims were there.  So, when in doubt – send it out!

  1. They’re trained for the challenges.

As an original creditor, you may or may not be subject to the same debt collection laws as an actual debt collector, such as this firm.  However, any person working on your behalf is wise to understand and take note once a customer challenges the validity of your bill.  You are best at that point to consult with trained professionals.


As a debt collection law firm, of course we want to educate you on the reasons to choose us to handle your past due accounts.

However, debt collection law firms require certain legal documents to support your claim in court.  If a customer owes you on a past due account, you will need to prove that showing, at the very least, your original contract with that customer, a written account history showing all charges, credits, interest, fees and adjustments for the life of the account as well any other documents that you feel would help the lawyer show the court what has happened in the that particular case.

If you do not have those types of documents but are still owed on an account, then perhaps working with a collection agency is a better option for you.

Lastly, it’s not uncommon for a customer to avoid or delay payment, nor is it uncommon for customers to fall on hard times, financially. When this type of challenge occurs, only well trained individuals will know the right ways to maneuver through the extensive obstacles that such a challenge may present.

Therefore, while the thought of hiring a firm such as ours may seem like a drastic option, it will allow you to pass along your problems to a trained staff that will properly and professionally represent your interests, while you get back to the interests of turning (and receiving) a profit!