Once a collection goes "legal": a short series for creditors.(extra credit)(Reprint)

Many collection or credit managers spend a great deal of time preventing collection problems, whether in the granting process or the in-house collection phase. More experienced personnel understand what happens when an account can't be collected or adjusted in-house and has to be placed with an outside agency. Most managers have had experience with collection agencies and have some sense how that process works. The more experienced managers have systems and relationship set up so their team knows exactly when an account gets placed and how that happens.

Fewer know the ins and outs of what happens after the agency makes its efforts, but can't collect or settle the account. This short series will cover the legal placement and litigation process for a typical collection claim for goods sold and delivered.

(Part 4 is the final part of this series. Part 1 appeared in the June issue, Part 2 appeared in the July/August issue and Part 3 appeared in the September issue. Many thanks to Robert Bernstein and the Bernstein Law Firm for the use of this material.)

Part 4: What Communication Should the Client Expect?

The short answer is that the client should expect to be kept adequately informed of steps and progress, as well as risks. The longer answer depends on the agreement with the agency as to frequency and method of reporting. Generally speaking, the client wants the agency to be the agent or the buffer for information from the lawyers. Agencies prefer that lawyers communicate with the agency so they can make sure the information is appropriate and meaningful for the client.

One of the many benefits collection agencies can provide is help in the management of account portfolios. If the agency has a large number of accounts for the client, there may be economies that can be achieved by setting up reporting and authorization systems in advance. As to reporting, perhaps the client wants ...