Statistics show that as an Invoice ages, it also becomes harder to collect. Accordingly, we operate a structured credit control process, designed to improve the speed of cash collection without affecting the client relationship. That said, the best way to reduce credit risk is to request Costs on Account ahead of undertaking the work. These will be held in client account and can be applied against the Invoice when it is issued.Our Invoicing Team operates a highly professional debt collection process as detailed below. This usually proves effective. However, if you do not wish our Invoicing Team to seek payment for you, then you need to notify them. This is addressed when you set up the matter, and Client Owners can amend it anytime.
Our credit control process is summarised below.
Days Overdue
Action
5
Email sent to Client Owner/Lead Lawyer listing sums overdue.
9
Statement sent to client and cc'd to Client Owner/Lead Lawyer.
19
Further statement sent to client and cc'd to Client Owner/Lead Lawyer.
32
Client Owner/Lead Lawyer notified by email that we are about to escalate the file to our in-house Credit Controller.
33
Client contacted by our in-house Credit Controller, by email, phone and potentially letter.
>33
If our internal credit control process is unsuccessful, we will contact you about next steps. See below for more details.
If, at the end of this process the client has still not paid, then Central Office will consider taking legal action. You will receive an email asking for details of any possible complaint or claim. Central Office will then review your reply and look to serve a claim form on the client, unless doing so would not be prudent or cost-effective. The cost of all debt collection work is deducted first from any sums recovered. If Central Office believes it would not be economical to start legal action, then the lawyer with the most time on the file may request an assignment of the debt. Consent will only be given where pursuing the client is not thought likely to cause issues. If it so consents, then Central Office will subrogate its 25% to the bottom of the recovery waterfall, disbursements are at the top of that waterfall.
You should note that where the Engagement Letter does not clearly state the work to be done and give a cost estimate, then it can be very difficult to recover unpaid fees. You should also note that where a client is complaining or claiming against the firm, then this too can make suing for a debt very difficult. Before issuing a letter before action, we will ask you some questions to flush out any issues that might be triggered by us taking action for unpaid fees.
There are a number of tricky areas such as dealing with interest, foreign exchange exposure and clients who refuse to allow us to use Costs on Account for the intended purpose.