BUYER BEWARE TAKE CARE NOT TO BE LEAD INTO LEGAL PROCEEDINGS

We got a very frightening piece of news in the office last week.

Whilst talking to a prospective client, one of our Account Executives was told that there are other cheaper firms that offer debt collection. We asked the prospect to prove that this was the case, and they sent us a copy of a letter from Thomas Higgins & Co Solicitors – click here to see the letter yourself. What we found made very interesting, misleading reading.

What Thomas Higgins have done is worrying for a firm that
is regulated by the Law Society

If we dissect the letter, we presume was mass-mailed to hundreds of businesses, what Thomas Higgins have done is worrying for a firm that is regulated by the Law Society. Our copy of the letter has our comments throughout, highlighting misleading comments and explaining hidden agendas.

How much will it cost you should the Debtor not respond or query
the outstanding debt.

To discuss a quick yet important misleading statement, Thomas Higgins state in their letter that Creditors should issue letters before action for only £2.00 + VAT. All very good, but how much will it cost you should the Debtor not respond or query the outstanding debt. How much will those letters end up costing you? Indeed Thomas Higgins neglect to advise that the courts have introduced hearing fees up to £1,000 for claims that are defended. Add to this fixed costs and/or hourly rates that in part may be irrecoverable then contrary to Thomas Higgins statement you can see that legal proceedings have never been so expensive.

Carlo Pegna legal and operations manager for Master Collections comments: -
‘Now more than ever businesses need to be careful about how they handle accounts in dispute and not rely on the courts to resolve. So take care who you choose to collect your debts and what recommendations they make.’

Be sure that you understand what query management processes a Debt Collection Agency (DCA) or law firm have in place. How much does it cost and what does it involve. Some DCA’s will train their collectors to resolve queries over the telephone and you may find this more effective and economical than a solicitor’s letter. Do not get put off by the fact that a professional body like the Law Society does not regulate DCA’s. There are some excellent agencies out there, just be sure that the agent is registered with the CSA and holds a Consumer Credit License with the Office of Fair Trading.

Law firms are useful for court proceedings that are viable and it is often the case that only a lawyer with your interests in mind will be the only one qualified to advise you of that. After all a balance needs to be struck between the increase in court fees against the risk of developing a reputation for dropping the threat of legal proceedings at the first sight of a dispute. As with DCA’s just take care what lawyers you choose to give you advice.

We urge anyone who has dealings with or the responsibility of appointing a Debt Collection Agency and/or Law Firm to forward this article to colleagues and peers who may also benefit from reading this.

© 2007 Master Collections Ltd