5 Tips for Effective Legal Debt Collections

The legal industry is often lenient when collecting aging client balances in order to foster good client relationships and ultimately referrals.  But now, firms that previously never experienced cash flow issues are feeling the effects of the current economy where clients are slower to pay and a higher percentage of balances are written off.  Follow the steps below to help your firm develop an effective debt collection process.

  1. Check out new clients:  Complete a credit check prior to taking on a new client.  You will know in advance what kind financial risk you may be taking.  Some firms opt to charge a client deemed “High Risk” a higher hourly rate to help mitigate potential future losses. 
  2. Assume your clients want to pay:   Begin your debt collection process in house.  Communicate gently with the overdue client to remind them of the payment oversight.  This will nurture positive client relationships while collecting many balances before they become seriously past due.
  3. Be willing to negotiate:  Consider that 50% of a balance collected is much better than none.  Often, a client may be able to repay a debt over a period of time that will allow your firm to collect on a debt while not adding additional financial hardship to the client.  When a special arrangement is made, a Managing Partner should decide whether to continue to take new cases for the client. 
  4. Be consistent:  Create a program that consists of calls, emails and mailings that are polite but firm for your seriously past due accounts.  Keep track of when, how and the result of all contacts in the event that you need proof of your attempts later.  Most importantly, make sure any communications you send are in accordance with local, state and federal laws including the Fair Debt Collection Practices Act (FDCPA) that can be found at www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf.  Making a mistake can jeopardize future legal proceedings.
  5. Know when to use a collection agency:  If a client has failed to abide by a payment plan or has not attempted to pay their balance after several months, you may consider looking into an outside debt collection agency that specializes in aged balances.  However, remember that a debt collection service will often take a large percentage of the balance as their fee and can alienate clients.  This option is best for clients you determine are unlikely to pay and who you do not plan to do business with in the future.

The Juris Suite Collections module was created to help firms manage delinquent accounts and reduce time spent on collections activities.  Your firm can identify past due balances, customize collection letters, track and document communications, exclude special arrangement clients and simultaneously produce communications for all past due clients.  For additional information on adding the Collections module to your Juris system, contact your Juris representative or visit www.juris.com.  For training on how to utilize the Collections module effectively, visit www.lexisnexis.com/university.

About Kelly McNamee

Kelly McNamee is an End-User Trainer for LexisNexis’ Business of Law Software Solutions team. In her role, she trains her students on how to efficiently use their LexisNexis software products. She is certified to train all end users on InterAction and Juris functionality. She also has sharp skills in designing and developing instructor-led and self-paced training. She graduated Summa Cum Laude with a Bachelors Degree in Communications from Benedictine University. Her background includes skills in accounting and real estate sales management and education.