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Legal representation vs Agency Placement
Understand the differences between judgment enforcement and collection agency placement
What are the main differences between a collection agency and a law firm?
A collection agency is a business that is licensed to make phone calls and send letters to debtors either before or after a judgment is entered. They may have a call center full of "collectors" that are trying to negotiate payment. They are required to be insured and are regulated.
Law firms are composed of attorneys and paraprofessionals and may also be licensed as collection agencies. Attorneys have extensive educational and licensing requirements before and after becoming attorneys. Attorneys, and only attorneys, can represent individuals and businesses in court proceedings including bringing lawsuits, obtaining writs of garnishment, handling objections, and appearing in court. Law firms may negotiate payments, send legal correspondence, and make phone calls.
When should you choose a law firm?
In many circumstances, the law firm is going to be your first choice if available. Whether you work with our team or another law firm, if you can at least have a case evaluation from a law firm that can go a long way. A lawyer can give legal advice. That advice can then be used to help you decide which route to go.
In general, if you want to garnish wages and bank accounts then only attorneys can do that. If you want to bring a lawsuit, then only attorneys can do that. If you want to consider enforcing a lien against property, then only attorneys can do that. Any collection agency that indicates they can do any of those things will need to hire an attorney to do so, and some do. Indeed, we represents numerous collection agencies.
When should you choose a collection agency?
Collection agencies normally operate with businesses and not individuals that only have a single matter, so that is one limitation. It is a practical limitation though and some agencies do not have that restriction.
If you have a large volume of small non-litigation type cases, then choose a collection agency. Most law firms will not be willing to take on cases about an unpaid $371.89 bill even if there is 100 of them, because the volume of work, risk, and even court costs (without regard to any fee to the firm) is often unreasonably high. Better to have an agency send out the 100 letters, make the 500 phone calls, and then probably close any that fail to voluntarily pay in relatively short order.
Another good use of an agency might be as a first step if your business routinely has accounts receivable, but not high enough to justify hiring someone as an employee to address the issue.
Finally, a collection agency is a good last stop as well. Some debtors cannot be legally forced to pay. For whatever reason it is not possible. For example, a debtor may be retired without any disposable income or property. There is no legal way to make such a debtor pay a debt, but a collection agency may talk the debtor into paying
