If your business needs help collecting receivables, it’s important to know how a collection lawyer and collection agency differ from each other. This article will discuss the main differences, so you can make an informed decision when choosing between them.
Collection Lawyers Can Sue, Collection Agencies Can’t
A collection lawyer can sue a nonpaying customer, obtain a judgment, and seize its assets. Collection agencies can’t sue, but can be persistent with demand letters and collection calls. However, if the customer doesn’t pay voluntarily, they’ll eventually have to forward the account to a lawyer.
Collection Agencies May Accept Cases Lawyers Decline
Many collection agencies can accept small cases that lawyers decline. For many lawyers, the cost of litigating small balances can be prohibitive. Yet collection agencies can auto-generate their calls and letters, so they’re set up for high volume and small cases.
Collection Lawyers And Agencies May Charge Differently
Contingency rates vary among collection agencies. Some charge less than lawyer rates if they collect an account themselves. However, they may also charge more if they forward it to an attorney.
But you may not want a contingency fee in every situation. In New Jersey, a lawyer who offers contingency billing must also offer hourly billing. You may prefer hourly, for example, for a very large claim or one you expect to collect easily.
Collection Lawyers And Agencies Move Cases Differently
Collection agencies make more money when they recover accounts than when they forward them. When their calls and letters prove unsuccessful, they may keep trying for months before eventually forwarding the case to a lawyer.
On the other hand, collection lawyers make more money when they move cases quickly. In the time an agency takes to forward an account, an attorney may have filed suit and settled, taken a judgment or otherwise moved it toward resolution.
When choosing between a collection agency and a collection lawyer, the differences between them are important. Understanding those differences will inform which is better for your needs.
For more information on collection lawyers and collection agencies, or if you’d like to discuss a specific collection issue, call me at 856-667-1669 or contact me here.
This material is for informational purposes only and should not be construed as legal advice. No person should rely on this information without seeking the advice of an attorney.