Delivery of warning letters
A warning letter to the client for non-payment of the debt to the organization will include the details of the debtor and the debt data as provided by the organization and, in addition the client’s number in the organization, the phone number in the organization that can be contacted (if the organization decides that it wants to be a collection partner with the lawyer), and of course an address, phone number and the email address of the law firm. The letter will include the period and the final date in which the client is required to transfer the proceeds before being moved to the next step in the legal collection process.
It is recommended that an explanation of the next step in the collection process in case of non-payment is provided. To motivate the customer to action, we recommend that the period of time given to the customer for an answer and payment should not exceed 14 days.
Each country will have its own regulations concerning the pre-claim stage and the content of the pre-claim warning letters. The UK is an example where the Regulator instructed a detailed protocol to help both the debtor and the claimant avoid legal proceedings.
See: https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct
Handling returned letters: locating customers.
After sending the first warning letter to all clients, it is likely that the lawyer will receive several return letters from the post office for various reasons (unknown address, left, etc.). All customers whose first letter was returned will be immediately referred to the skip-tracing department at the lawyer’s office to find out the reason for the return and to take all legal means to locate the client’s address. Here, there can be an application to work with investigative and tracing offices, subject to the organization’s prior approval. After locating the customer, another letter will be sent, and the customer will enter the beginning of the general collection process described in this chapter.
The lawyer usually charges the skip-tracing service. The organization needs to decide if handling the skip-tracing in-house (either by subscribing to a skip-tracing service or by contracting with a skip-tracing service provider) or through the lawyer’s firm.
Answering incoming calls for debt inquiries
Following the delivery of the demand letters, some debtors will contact the attorneys’ offices by telephone to obtain information on the nature of the debt, including requests for documents such as copies of invoices, standing orders, and receipt of the service or product. Some debtors will make additional claims regarding a defective product or poor customer service, requests for credits, and more. A detailed compilation of possible reasons for non-payment and targeted ways to deal with them can be found in the Reasons for Non-payment section, which discusses the collection process.
It is important that a standard time be set on this issue (SLA) – that is, the maximum amount of time that will elapse from the time the lawyer’s office requests the organization to provide it with documents or other certificates until the lawyer’s office receives them. It is important to note that this is a mutual requirement because the organization requires the lawyer to finish handling the case within a given time and cannot delay requests for documents and thus prevent the lawyer from finishing the handling. We must not forget that there is also a debtor in the picture, and towards him, all parties are obligated to the maximum processing speed (for example, if the customer does not know why he owes or thinks he has paid).
If documents are missing or the client has genuine claims about the balance of the debt, the lawyer should examine the feasibility and legality of continuing the procedures as soon as possible.
Proactive outbound collection calls to debtors.
After the waiting period listed in the warning letter has passed and the client has not paid his debt and has not called the lawyer’s office or the organization’s offices, the lawyer’s office will make proactive calls to the customers to advance the collection before filing a claim. The goal in these conversations is to increase the percentage of collection before entering a claim process that will entail many expenses and lasting discomfort for both the organization and the customer.
Some lawyer’s firms are reluctant to perform outbound calls as it is a costly exercise. The Collection manager must understand and approve in advance the contact strategy of the lawyer and include it in the contract. Reviewing the strategy once a year and considering potential changes that might improve the collection’s results is recommended.
Response to debtors’ claims
In the collection calls with the debtors, some of the debtors will claim that the debt or part of it originated in error, and here, too, pre-agreed standard response times should be set for responding to customers.
Checking the feasibility of continuing proceedings
The lawsuit will be filed against each debtor, whose amount will be determined according to economic viability and the organization’s policy, and the wording of the lawsuit will be coordinated with the organization according to its needs.
In debts whose balance is less than an amount of X new in accordance with the economic viability test of the organization, no lawsuit will be filed (it is recommended to file a lawsuit in a sample of these cases in order not to create a feeling in the market that it is possible to accumulate debt without a lawsuit).
The decision to file a lawsuit.
After the lawyer has exhausted all the options as stated above and all the problems raised by the clients have been resolved, there is no choice left, and a decision is required to file a lawsuit subject to the economic viability test. When it comes to a large number of small and similar cases, the decision will be made by the lawyers according to clear criteria agreed in advance. In large cases, there should be a consultation with the organization before deciding on a lawsuit.