Debt recovery firms come in all shapes and sizes and businesses must decide which provider can recover more debts, in less time and at less cost. Of course, a firm that has the right tools and resources available to it will be in the best position to achieve this.
If you are interested in getting results, a key attribute to look for in a debt recovery provider is its access to legal expertise and advice. Debt collection services on their own, can really only provide a discrete, isolated service, and can only take you so far. They’re a bit like a monorail that is confined to operation within a closed circuit. Similarly, the recovery options available to standalone debt collectors are limited to circular processes which may or may not produce results. If you need to venture beyond that circuit, you need to find an alternative provider.
In contrast, the combined affordability of a debt collection firm together with the expertise of a legal practice means you have an array of recovery options at your fingertips.
Read Also: Consequence of Neglecting Debt Recovery
10 Reasons Debt Collectors are More successful When They Offer A Complimentary Legal Practice
Debt recovery providers that also offer a complementary legal practice are a step ahead of their peers in a number of respects and are more successfully able to achieve good outcomes for their clients. Why do we say this?
Here are 10 Reasons
- It represents a more holistic legal approach. At the end of the day, debt recovery is a legal matter which is directly related to and interdependent upon a number of other legal issues within your business. It, therefore, makes sense to take a holistic approach, rather than considering the discrete issue of debt recovery in isolation.
- Debt collectors do not have the expertise to provide legal advice on contractual disputes. The majority of all debts are contractually based. Lawyers have the expertise to advise you on whether or not you have grounds to make your claim under contract and to assess any contractual defences raised by the debtor.
- When securities need to be enforced or the debtor is potentially insolvent, lawyers are needed for advice and to take legal action. This is a common occurrence in cases of bad debt, and steps often must be taken as a matter of urgency. Having to instruct a separate lawyer to take on the matter causes unnecessary delay and costs.
- Debtors respond more quickly to letters sent from lawyers as opposed to debt collectors. Being able to involve lawyers early in the piece can motivate debtors to resolve a matter sooner, in order to avoid litigation.
- Seamless information flow. Close working association of debt collectors and lawyers mean both parties can have unimpeded access to the history, details and documents on a file and expertise can be shared.
- Better recovery strategies can be formulated. The recovery process can be complex and the circumstances of each debt are unique, requiring a customised approach. Strategies that incorporate legal advice on complex issues, estimates of cost and assessments of litigated outcomes will obviously be more effective and benefit the client.
- A matter can be swiftly transitioned to the litigation phase when required. Having lawyers on hand enables the institution of legal proceedings without delay, and avoids the complication of having to outsource to another third party service provider.
- Commercial competition between collectors and lawyers is eliminated. Stand alone debt collectors may hesitate or delay in handing over a matter to a third party law firm for fear of losing out on fees which may delay resolution of the matter.
- A business can be helped to avoid debts and better protect itself. A firm with a complementary legal practice can provide front-end legal services and advice which can help clients to improve their internal processes and legal documentation such as clients agreements, credit applications and terms and conditions of trade. This can enhance their legal rights when trading and reduce risk.
- A cheaper and more convenient service can be provided. Since overlap in fees and services is minimised, firms with a legal offering can provide a more robust, yet convenient and cheaper service to clients.
Debt recovery services and general legal services are inextricably linked and must be delivered as such. Businesses are wise to cultivate a relationship with a firm who can provide holistic legal services which include debt collection, debt recovery and general business legal needs.