Preliminary Considerations

• Jurisdiction: Maryland

II. PRELIMINARY CONSIDERATIONS

A. Prospects of Recovery

Upon receipt of a client's request for assistance, the lawyer should examine both the legal and practical aspects of handling the claim. One consideration is whether a court will recognize enforcement of the obligation. Factors that a lawyer should consider include whether there is a written agreement and whether there are payments toward the debt and/or an acknowledgement of the debt.

Once the lawyer decides that the client's claim can be the subject of a valid action to enforce the obligation, an analysis should be performed on the prospects of recovery. Although assessing the prospects of recovery is a matter of both business judgment and legal analysis, i.e, assessing the nature of the debtor's property and the ability to enforce a judgment against such property, the lawyer always must bear in mind the practical object of his or her efforts—actual repayment to the client. Some debtors are "judgment proof," meaning that they have more debts than assets, or no attachable assets. Throwing good money after bad, or loaning money to an "insolvent entity" and then paying more money to try unsuccessfully to recover it, can be a costly mistake for a client. Filing suit should be economically feasible and lawyers should set a minimum dollar amount that is justifiable when compared with return to the client.

The lawyer also must be mindful of costs and fees to be charged in relation to the size of the debt. If the debt is small and the prospects of easy recovery dim, expensive litigation may be an unwise option. Also related to the cost of litigation is the likely defense of the debtor to payment. Some defenses make litigation more complex, and therefore more expensive, than others. Expenditure of costs should be closely monitored.

After deciding to litigate, one of the first issues that the lawyer must examine is the timeliness of bringing a claim on a defaulted contract. Generally, civil actions at law must be filed within three years from accrual of the cause.⁸ The general rule in a contract case is that the cause of action accrues from the date of breach.⁹

However, if the debt arose from the sale of goods, the four year limitations period of Md. Code Ann., Commercial Law § 2-725 (2013 & Supp. 2019) (hereinafter Com. Law § ___) trumps the three year limitations period.

An action on a specialty, including an instrument under seal, bond, or judgment, must be commenced within 12 years after the accrual of...