Production of documents
The production of documents must be carried out as soon as possible in order not to delay the lawyer in his work. Every time the lawyer is forced to stop the process and wait for the document, the chance of a long, poor, ineffective handling of the case increases.
Most cases must reach the lawyer in a “full kit”, and when this is not done, the timetables for responding to the lawyer must be clearly defined.
The organization will provide all the documents required to file a claim, including the contract documents, an instruction to debit an account, contract agreements for special services, annexes to the agreement, promissory notes, the details of the debt, copies of invoices and current correspondence, and the history of the debt and its payments. The documents will be transferred from the organization to the lawyers through a computer system or will be delivered manually.
The organization will also provide the lawyer with additional required documents that are not on the above list. There are organizations that file online lawsuits and produce only the basic documents for the law firm. Later, they provide the required documents according to the different stages of the claim and progress. This situation might extend the duration of legal proceedings if not managed properly.
In addition to the above, the organization will provide full support to the law firms in those cases where the documents are insufficient, when signatures and various affidavits are required, and/or the organization’s representative is required to appear before the court. In these cases, the organization must distinguish between urgent inquiries that require immediate attention and other inquiries.
Answering inquiries and questions
When the lawyer manages to contact the client for the first time, in writing or in a telephone conversation, the debtor sometimes asks for answers to questions or inquiries regarding his debt. If the information is not available to the lawyer as part of the material forwarded to him, the organization must provide an answer as soon as possible in order not to delay the lawyer’s work.
The organization must decide whether it is ready to respond directly to the debtor or only through the lawyer. Several aspects should be considered in this regard: on the one hand, there is a cost consideration since providing a direct response to the customer takes time from the organization. On the other hand – in the service aspect, it will be more convenient for the customer to manage the contacts directly with the organization instead of with his lawyer, and the process will be more “correct” in terms of customer retention. On the third hand (wait, what?) – insisting on communication only through the lawyer constitutes a rigid position, which sometimes encourages the customer to pay his debt and get rid of contact with the lawyer.
Credits – Settlement discounts
Sometimes, the customer gets partial or full credit for the debt. The organization must provide a quick and accurate answer to this question to allow the lawyer to finish the treatment as soon as possible. Sometimes, the customer will refuse to pay the balance of the debt before he receives confirmation of the partial credit due to him.
The organization must prepare a special procedure for credits and compromises with clients in legal collections. The round of approvals must be defined in advance and executed quickly. Also, the method of registering the credits must be clearly defined as part of the procedure for closing the case.
Representing the organization in court hearings
The organization must decide who is authorized on its behalf to appear in court hearings. Not every court session is similar to another, and a distinction must be made between ongoing sessions about a specific case and court sessions that might have a broader impact on the organization’s activities and create a legal precedent. In the latter case, the organization must thoroughly consider the consequences on the organization of the representation and only then decide who will represent it in court.
Signing affidavits
As part of managing the day-to-day activities, the lawyers require the organization’s representatives to sign written affidavits that they consider to be documents and whose contents are a substitute for testimonies given in court.
Giving testimony in court
Sometimes, the organization’s representatives are required to testify in court and represent the organization’s position in discussions dealing with customer objections or claims.
Handling debt write-offs in the organization
Turning debts into bad debts and writing them off is a difficult event for the organization; this is because, after many collection efforts made by the organization’s employees and additional collection efforts made in legal collections at significant costs (financial, economic and image), the organization finds itself forced to give up, according to the lawyers’ recommendation, the expected income from debts due to him by law, and classified as lost debts that it will no longer be able to collect.
Considering the above, it is important to adhere to a set of engagements and procedures that ensure that recommendations for debt cancellation that are forwarded to the organization should indeed be written off.
The lawyers’ recommendations should be forwarded to the parties authorized by the organization’s management to approve the write-off recommendations and include the control reports on the integrity of the entire process.
After the approval, we must report to the lawyer about the bad debts approved for write-off, make a status change and actual deletion in the organization’s books, and adjust the status in the organization systems to the status registered with the lawyers.
Conflict of interest in write-offs
When a law firm recommends writing off a debt for a company, conflicts of interest can arise in relation to the interests of the organization that owns the debt. These conflicts might include:
- Financial Impact vs. Legal Prudence: The law firm might recommend writing off a debt as a legally prudent move, especially if the cost of pursuing the debt exceeds the potential recovery. However, this could conflict with the financial interests of the creditor organization, which may prefer to pursue the debt for accounting or financial reasons.
- Reputation and Relationship Management: Writing off a debt might be seen as a way to preserve business relationships or protect the reputation of the creditor organization. However, this approach could conflict with the organization’s need to maintain a firm stance on credit policies and debt recovery to deter future non-payments.
- Fee Structure of the Law Firm: If the law firm’s compensation is tied to the recovery of debts, they may have a disincentive to recommend writing off debts, even in cases where it might be in the best interest of the creditor organization to do so.
- Long-term vs. Short-term Interests: The law firm may prioritize resolving the matter quickly through a write-off, which may align with short-term legal efficiency but not with the creditor organization’s long-term financial strategies, such as improving cash flow or maintaining a certain level of accounts receivable.
- Impartiality in Advice: The law firm needs to provide impartial advice that serves the best interest of their client (the creditor organization). However, there might be a conflict if the firm has any vested interest in the outcome, such as a desire to avoid lengthy litigation or a relationship with the debtor organization.
- Risk Management and Litigation Prospects: The law firm might advise a write-off based on an assessment of the risks and prospects of litigation. This advice, while legally sound, might conflict with the creditor organization’s willingness to take risks or its assessment of the debtor’s ability to pay in the future.
- Tax Implications and Accounting Practices: Writing off a debt can have tax and accounting implications for the creditor organization. The law firm might not fully consider these implications in their legal advice, leading to a conflict with the financial strategies or accounting practices of the creditor organization.
In summary, the conflict arises from the law firm’s focus on legal outcomes and efficiency, which may not always align with the creditor organization’s financial interests, risk tolerance, and long-term business strategies.