Collection Attorneys versus Collection Agencies

Written by Adam Peck Category: Injury Law January 15th, 2013 3 min read

Whether you are a business that regularly has customers or clients in collections or you are an individual that is owed money by another person you should seek an attorney that specializes in the field of collections. Too many times people will go either to a collection agency or an attorney they have worked with in the past or have been referred to even though they have no or little collection experience. Usually, these experiences end either ineffectively, costly, or both.

Let’s talk about effectiveness. You tell me what is more effective, a letter from a law office or from a collection agency? How about a call from an attorney or a collector? A collector has hundreds if not thousands of accounts on his call list. He treats them all the same because to him they are. He calls, he blows out the person on the other end, and moves on. A collection attorney will take the time to know your file because he is the one that may one day have to appear in court on it. Collection attorneys are also skilled negotiators who will listen when it is time to listen and press when it is time to press. They can, and often do, incorporate many styles of negotiating into a single claim depending upon the situation. Often times they will get a deal on the table when a collector will not.

What about cost? Collection agencies work on volume. Therefore, if you are not providing them with a large number of accounts then you will probably be charged a fairly high contingency rate. Furthermore, they need to incorporate an attorney’s rate into their rate in case they cannot collect and the claim needs to go into litigation. For example, if they charge you 33%, they will pay the attorney 25% out of that rate if it goes to litigation. If you go directly to an attorney you may be able to negotiate the same or lesser rate and skip the “middle man”, so to speak.

What else does cutting out the “middle man” mean? It means you do not have to assign your claim as is so often required by collection agencies. This means that instead of the legal right to collect the claim being in their name, it stays your name. Granted, if an assignment occurs the agency will owe you a fiduciary duty, however, you are essentially giving up your rights and should never do this. Collection agencies can go out of business overnight and/or collect money and not remit to the original creditor. It has been known to happen. If you go to a collection attorney they represent YOU, and they are not going to risk their practice and years of expensive schooling by not looking out for your best interests.

Maybe you are thinking, “If my account goes to a collection attorney anyway if the agency cannot collect, why not take two bites at the apple?” As we discussed, the collection agency is likely going to charge you a higher contingency. Also, the account may no longer be in your name. Of additional importance is that now that the collection agency is involved they will stay involved even once the account goes into litigation because they have a vested interest in it. So instead of dealing with the attorney directly, you are still dealing with the collection agency who is dealing with the attorney. He is essentially their attorney, not yours.

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Written by Adam Peck

Expertise: Personal Injury

Adam J. Peck, ESQ is a principal with Peck Law Group, APC. In 2008, Mr. Adam Peck received his Juris Doctorate from Whittier Law School where he graduated Cum Laude. His practice is primarily dedicated to representing Elders, Dependent Adults, along with their loved ones and family members, who have suffered horrific personal injuries.