Collection litigation: choosing your breach of contract lawyer.

• Author: Magleby, James E.
• Position: Legal Briefs

COMPANIES HIRING COLLECTION lawyers ask two things: "What will it cost?" and "How much will I get?" The answer is, inevitably, "It depends." The following are some tips for finding, hiring and managing your collection lawyer.

Tip 1: Be prepared to act on bad debts. "Even legitimate, long-established companies are late on paying their debts," notes Salt Lake City attorney Gregory M. Constantino, who specializes in consumer and commercial collections. Consumer bad debt is also on the rise. Salt Lake City lawyer Jeffrey W. Shields, who specializes in representing creditors trying to get paid from bankrupt debtors, says, "Right now, Utah has the highest number of individual Chapter 7 bankruptcies of any state in the country."

Tip 2: Hire a lawyer before the account is more than 60 or 90 days past due. "Most local companies hold onto their bad accounts for too long," says Richard Frandsen, who practices only commercial debt collection. "If the debt is more than 90 days old when it gets to me, it is a whole lot less likely to be collected."

Tip 3: Consider writing off uncollectible bad debt. Litigation, particularly debt collection, should not be conducted as a matter of principle.

Tip 4: Remember that a collection action is only a breach of contract case. Vendors understand their own business and contracts and can evaluate and understand the merits of the case before hiring a lawyer.

Tip 5: For each bad debt, gather and maintain all information relevant to the case, including the contract(s), invoice(s), purchase order(s) and all communications with the debtor about the debt.

Tip 6: A company can represent itself in small claims court, which has a jurisdictional limit of cases involving $5,000 or less. This is a change from prior law, which required a company to appear through a lawyer at the small claims level.

Tip 7: Get the fee agreement in writing. Utah attorneys must put an agreement for a fee likely to exceed $750 in writing, unless the client and lawyer have a regular commercial relationship. Similarly, all contingency fee agreements must be in writing.

Tip 8: Consider discounting the debt to get an early resolution. Most individuals and companies want to honor their contracts...