The Mutual Benefits of Trust: Building an Attorney-Client Relationship in Collections Work

I'd like to share some of what we've learned about how building this kind of mutually beneficial relationship with our attorneys has been a key component of our success ' and theirs.

Hiring a Partner

Our most successful relationships begin with the “hiring” of our attorneys. No, the attorneys who represent us all across North America are not, in fact, our employees; they are independent subcontractors who handle the local litigation associated with our claims. We maintain a database of attorneys throughout the country so we have one at the ready in most jurisdictions of each state.

It goes without saying that our attorneys must have expertise in the area we're looking to hire them for: collections litigation and judgment recovery. We always want to verify that any attorney we hire primarily or exclusively handles our type of work. Ideally, we want an attorney who deals exclusively in collections, not a general practitioner who is one day doing real estate closings, the next day doing estate planning, and maybe rounding out his or her week with civil litigation.

Collections litigation is a specialized area of the law, and, while clients certainly welcome new attorneys who are eager to immerse themselves in it and learn its intricacies, they will expect a full-time commitment to learning and applying what they've learned. Most clients cannot afford to have an attorney who is “just testing the collection waters” to see if it's right for him or her; they most prefer someone fluent and experienced in collections work or, at the very least, committed to focusing solely on learning it.

Helping to Build a Working Relationship

Beyond this specific focus, every attorney has his or her individual strengths, preferences and quirks, and our staff recognizes these and uses that knowledge to allow us to work best together. In short, our company's staff makes sure our attorneys stay on the ball and that nothing falls through the cracks. They also make sure that the attorney gets quick responses and all materials necessary for resolving a claim in a prompt manner upon request. Once a matter is resolved, they account for all the costs and fees and confirm receipt of the requisite proceeds.

One critical area a client will always look into when hiring an attorney is to see that the attorney's office is organized in such a way as to work best for the client. The simple question is: “Is the attorney set up to take on your type of work?” While any responsible client will make every effort to organize cases and supporting documentation as thoroughly as possible, we look for attorneys who have a robust enough infrastructure and support staff in their office to enable them to work efficiently.

Frankly, a sole practitioner who doesn't have support staff is not going to be happy with our files because we're dealing in volume. If that lone attorney is the one preparing and organizing the documents, doing the initial research, drafting the complaints, and doing all the detail work, he or she is not going to be able to make enough money to cover his or her time.

But if that attorney has a staff that can handle the time-consuming detail work and is trained to use a form-based complaint ' basically, fill in the blanks ' all that needs to be done by the attorney is to review the filing, sign off on it, and see to it that the clerk makes sure it gets filed and served. With this kind of support staff and the attorney only involved directly when matters go to court or interaction with the obligor is necessary, the attorney can work very efficiently and cost-effectively. Of course, if there's a legal representative on the other side or when it's time for settlement, the attorney will be expected to jump in and get things resolved ' as they're the only ones licensed to practice law and approve a settlement.

But regardless of how much support the attorney has, it's always important for the client to include all necessary documents and notes so the attorney has a good picture of the situation and the requisite items to proceed with collection and a lawsuit. A complete and well-organized file is especially critical for an attorney working in a small office, and it's important to have that file in the attorney's hands as soon as possible. Often, the early stages of the collection process can move forward very quickly, and a settlement can appear at any time. When the debtor first calls our attorney, he or she almost always has a “story” to tell. So it's good for the attorney to have all of the documentation in a well-organized file to be up to speed on the facts and have a way to gauge whether the debtor is bluffing or not.

And, of course, the attorney has responsibilities toward his or her client. The attorney must recognize whether he or she can service the client's needs adequately. A mutually beneficial relationship between a client and an attorney is always premised on the notion of both sides having responsibilities. At our company, we would never take the attitude of “We're the client, and we will give you a random case and let you figure it out on your own.” By the same token, we expect our attorneys to be 100% focused on securing the best possible settlement for the accounts we have prepared for them.

But in the end, both sides must always realize that the most demanding part of collecting on charged-off debts is not getting the judgment, but collecting on it. Quite frankly, if these debts could be paid, chances are good they would have been long before they became charge-offs ' and they certainly would not be in the process of being litigated. For any one of many reasons, the people with whom we deal will attempt to find any way imaginable to avoid paying their obligation. One of the most common tactics is that they just don't respond. In such cases, we're probably going to succeed in getting a default judgment. So once we have that, we are confronted with the real question: What are we going to do now? How, exactly, do we collect? That's where we really need the most experienced and tactically savvy attorneys ' especially if they also have good investigators who are skilled at finding hidden assets.

Doing Due Diligence

Perhaps no area of building a successful relationship between a client and an attorney is more important than the commitment of the client to conducting thorough and complete due diligence on any account that is being sent to one of its attorneys. My company makes a point of doing all due-diligence research on the viability of the debt and the likelihood of collection before we send it out to one of our attorneys. Therefore, most of the files that we send have a strong likelihood of rendering some form of a settlement result. Of course, some of the obligors may file for bankruptcy or the claim may go stale before judgment, but, at least on its face, the greater percentage of our files yield some sort of collection result for our attorneys and for us.

So, before even considering sending an account to an attorney, the client must confirm that it has a reasonable expectation of being collectable. Beyond common professional courtesy, this is crucial toward cultivating a strong relationship with the attorney. There's absolutely no need to waste the attorney's time and your court costs if the matter is not likely to render a return to both parties.

In short, one proven way to build a strong relationship is to not stick your attorneys with weak, flawed, uncollectable accounts, and there's no better time to make this determination than before they leave your office. Our attorneys tell me they appreciate that we send them collectable files. Other clients, they tell me, will send them everything and anything they have without screening it for collectability or merit or even, in some cases, bankruptcy of the obligor. We investigate the obligor to gain an understanding of what assets, if any, are collectable. Sometimes, we discover the debtor is dire, in which case we're not going to collect anything ' but just have our attorney spinning his wheels and wasting time and money. Neither of us benefits then.

The Fine Balance of Contingency Fees

When discussing fee arrangements, there has to be something that's comfortable to both sides. The client has to understand his fee structure ' whether hourly or contingent ' and has to be careful to not short-change the attorney. The simple truth is if the attorney's fee is too low, you're going to be on the bottom of his or her list when other matters, usually involving higher compensation, need attention. On the other hand, as the client, you can't give away the accounts you purchased and the time and effort you've invested in performing your due diligence on them. To stay in business, you must earn a return on some portion of the settlement proceeds from the accounts you bought and distributed to your attorneys. So there has to be a fee structure that works for both sides to get what's fair.

Keeping the Relationship Healthy

Maintaining a mutually beneficial relationship, then, often comes down to being proactive about ways to improve it ' for both sides.

The attorneys always need responsiveness from the client ' especially if they're just working for a contingency fee out of what they collect. If they have litigated successfully to the point of having an obligor who's eager and ready to settle but the client is either not getting back to them or is being irrational as to what it wants or expects out of the case, there's not much the attorney can do. If the client doesn't get back to the attorney at all, or does respond but with an irrational or uninformed settlement offer, the attorney can lose the opportunity to settle altogether. So it's critically important for attorneys to do their own due diligence of their potential clients before they take on their accounts.

For the client, many proactive steps can be taken to earn the attorney's appreciation and loyalty. Beyond the need for thorough due diligence and packaging of every account that is sent to the attorney, a host of other courtesies can ensure that the attorney values you as a client not just because you give business but because of the quality of the business you send and your responsiveness to his or her needs in settling it.

The first simple rule of thumb is to always pay the attorney promptly. Pay any fees and court costs immediately upon receipt of the bill. This sounds simple, but many clients are slow in paying their bills ' which is no way to show you really value your attorney as a partner in your efforts. Prompt payment shows that you are on top of their work and value it.

The second rule is to always return e-mails and phone calls promptly. Beyond common courtesy, you're keeping the lines of communication open and allowing your attorney to remain focused on settling the account. Help the attorney with any questions he or she may have; they may need you to answer discovery, request a date for a hearing, or require settlement authority on your behalf. By being proactive and responsive to these needs as they arise, you are reinforcing the partnership structure. And remember always that just because you are the client does not mean you should act like one. Always look for ways to assist in positive outcomes.

Of course, the attorney must do his or her part to help build a strong relationship. It's often as simple as reciprocating with the common professional courtesies that are being extended by the client. Always return client e-mails and phone calls promptly. Set aside a regular time to update the client, at least monthly, on the status of any litigation or collection matter. If the attorney gets a settlement, call the client and gloat ' that's right: gloat. After all, it's a cause for mutual celebration. Don't be afraid to let the client know that you are proud of having done a good job, would like to have the opportunity to do a similarly good job on additional work in the future, and you want them to know it. Let them know they did a good job in sending you a well-vetted and organized account.

In conclusion, I have found the best relationships with my attorneys have grown out of a mutual recognition of what each of us needs to achieve a common goal: the best possible return on the charged-off debt they have been sent to settle. In our relationships, I've had attorneys say, “I love you as a client because you pay your bills, you get me my costs immediately, you're responsive with answers when I need them, and you send me collectable accounts.” This tells me my attorney understands what we're looking for, and is in synch with my goals and objectives. Building this sort of mutually beneficial relationship is the best way to ensure rewards for both of us.

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Brett Boehm, Esq. is the principal/director of business development for TBF Financial LLC. Headquartered in Deerfield, IL, TBF has purchased charged-off equipment leases and other forms of distressed commercial obligations since its inception in 1998. Boehm may be reached at [email protected].

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Let's face it: Collections work is not for every attorney. But it has been my experience that with a commitment to some fundamental operating principles and a focus on building a mutually beneficial relationship, both the collections attorney and his or her client can develop and maintain a long-term working relationship that really is, for all intents and purposes, a partnership.

Of course, I am coming at this from a client's perspective: My company buys commercial debt, primarily from equipment leasing companies, banks and other asset-based lenders that have decided not to attempt to recover it ' or perhaps attempted but were unsuccessful. We purchase these debts after they have been “charged-off” by the leasing company or other lender who has decided that its best hope for collecting any return from these charge-offs is to sell them to us.

When my partners and I founded our company 15 years ago, we knew the key to making it succeed would be found in building and developing a network of attorneys who could represent our interests. Nothing we have learned in the past decade and a half has convinced us that there is any greater priority to our ongoing success than hiring, cultivating and compensating the best attorneys we can find. Our ultimate return is only as good as the efforts of our attorneys. Therefore, building a partnership with them and earning their loyalty are key factors in our success.

I'd like to share some of what we've learned about how building this kind of mutually beneficial relationship with our attorneys has been a key component of our success ' and theirs.

Hiring a Partner

Our most successful relationships begin with the “hiring” of our attorneys. No, the attorneys who represent us all across North America are not, in fact, our employees; they are independent subcontractors who handle the local litigation associated with our claims. We maintain a database of attorneys throughout the country so we have one at the ready in most jurisdictions of each state.

It goes without saying that our attorneys must have expertise in the area we're looking to hire them for: collections litigation and judgment recovery. We always want to verify that any attorney we hire primarily or exclusively handles our type of work. Ideally, we want an attorney who deals exclusively in collections, not a general practitioner who is one day doing real estate closings, the next day doing estate planning, and maybe rounding out his or her week with civil litigation.

Collections litigation is a specialized area of the law, and, while clients certainly welcome new attorneys who are eager to immerse themselves in it and learn its intricacies, they will expect a full-time commitment to learning and applying what they've learned. Most clients cannot afford to have an attorney who is “just testing the collection waters” to see if it's right for him or her; they most prefer someone fluent and experienced in collections work or, at the very least, committed to focusing solely on learning it.

Helping to Build a Working Relationship

Beyond this specific focus, every attorney has his or her individual strengths, preferences and quirks, and our staff recognizes these and uses that knowledge to allow us to work best together. In short, our company's staff makes sure our attorneys stay on the ball and that nothing falls through the cracks. They also make sure that the attorney gets quick responses and all materials necessary for resolving a claim in a prompt manner upon request. Once a matter is resolved, they account for all the costs and fees and confirm receipt of the requisite proceeds.

One critical area a client will always look into when hiring an attorney is to see that the attorney's office is organized in such a way as to work best for the client. The simple question is: “Is the attorney set up to take on your type of work?” While any responsible client will make every effort to organize cases and supporting documentation as thoroughly as possible, we look for attorneys who have a robust enough infrastructure and support staff in their office to enable them to work efficiently.

Frankly, a sole practitioner who doesn't have support staff is not going to be happy with our files because we're dealing in volume. If that lone attorney is the one preparing and organizing the documents, doing the initial research, drafting the complaints, and doing all the detail work, he or she is not going to be able to make enough money to cover his or her time.

But if that attorney has a staff that can handle the time-consuming detail work and is trained to use a form-based complaint ' basically, fill in the blanks ' all that needs to be done by the attorney is to review the filing, sign off on it, and see to it that the clerk makes sure it gets filed and served. With this kind of support staff and the attorney only involved directly when matters go to court or interaction with the obligor is necessary, the attorney can work very efficiently and cost-effectively. Of course, if there's a legal representative on the other side or when it's time for settlement, the attorney will be expected to jump in and get things resolved ' as they're the only ones licensed to practice law and approve a settlement.

But regardless of how much support the attorney has, it's always important for the client to include all necessary documents and notes so the attorney has a good picture of the situation and the requisite items to proceed with collection and a lawsuit. A complete and well-organized file is especially critical for an attorney working in a small office, and it's important to have that file in the attorney's hands as soon as possible. Often, the early stages of the collection process can move forward very quickly, and a settlement can appear at any time. When the debtor first calls our attorney, he or she almost always has a “story” to tell. So it's good for the attorney to have all of the documentation in a well-organized file to be up to speed on the facts and have a way to gauge whether the debtor is bluffing or not.

And, of course, the attorney has responsibilities toward his or her client. The attorney must recognize whether he or she can service the client's needs adequately. A mutually beneficial relationship between a client and an attorney is always premised on the notion of both sides having responsibilities. At our company, we would never take the attitude of “We're the client, and we will give you a random case and let you figure it out on your own.” By the same token, we expect our attorneys to be 100% focused on securing the best possible settlement for the accounts we have prepared for them.

But in the end, both sides must always realize that the most demanding part of collecting on charged-off debts is not getting the judgment, but collecting on it. Quite frankly, if these debts could be paid, chances are good they would have been long before they became charge-offs ' and they certainly would not be in the process of being litigated. For any one of many reasons, the people with whom we deal will attempt to find any way imaginable to avoid paying their obligation. One of the most common tactics is that they just don't respond. In such cases, we're probably going to succeed in getting a default judgment. So once we have that, we are confronted with the real question: What are we going to do now? How, exactly, do we collect? That's where we really need the most experienced and tactically savvy attorneys ' especially if they also have good investigators who are skilled at finding hidden assets.

Doing Due Diligence

Perhaps no area of building a successful relationship between a client and an attorney is more important than the commitment of the client to conducting thorough and complete due diligence on any account that is being sent to one of its attorneys. My company makes a point of doing all due-diligence research on the viability of the debt and the likelihood of collection before we send it out to one of our attorneys. Therefore, most of the files that we send have a strong likelihood of rendering some form of a settlement result. Of course, some of the obligors may file for bankruptcy or the claim may go stale before judgment, but, at least on its face, the greater percentage of our files yield some sort of collection result for our attorneys and for us.

So, before even considering sending an account to an attorney, the client must confirm that it has a reasonable expectation of being collectable. Beyond common professional courtesy, this is crucial toward cultivating a strong relationship with the attorney. There's absolutely no need to waste the attorney's time and your court costs if the matter is not likely to render a return to both parties.

In short, one proven way to build a strong relationship is to not stick your attorneys with weak, flawed, uncollectable accounts, and there's no better time to make this determination than before they leave your office. Our attorneys tell me they appreciate that we send them collectable files. Other clients, they tell me, will send them everything and anything they have without screening it for collectability or merit or even, in some cases, bankruptcy of the obligor. We investigate the obligor to gain an understanding of what assets, if any, are collectable. Sometimes, we discover the debtor is dire, in which case we're not going to collect anything ' but just have our attorney spinning his wheels and wasting time and money. Neither of us benefits then.

The Fine Balance of Contingency Fees

When discussing fee arrangements, there has to be something that's comfortable to both sides. The client has to understand his fee structure ' whether hourly or contingent ' and has to be careful to not short-change the attorney. The simple truth is if the attorney's fee is too low, you're going to be on the bottom of his or her list when other matters, usually involving higher compensation, need attention. On the other hand, as the client, you can't give away the accounts you purchased and the time and effort you've invested in performing your due diligence on them. To stay in business, you must earn a return on some portion of the settlement proceeds from the accounts you bought and distributed to your attorneys. So there has to be a fee structure that works for both sides to get what's fair.

Keeping the Relationship Healthy

Maintaining a mutually beneficial relationship, then, often comes down to being proactive about ways to improve it ' for both sides.

The attorneys always need responsiveness from the client ' especially if they're just working for a contingency fee out of what they collect. If they have litigated successfully to the point of having an obligor who's eager and ready to settle but the client is either not getting back to them or is being irrational as to what it wants or expects out of the case, there's not much the attorney can do. If the client doesn't get back to the attorney at all, or does respond but with an irrational or uninformed settlement offer, the attorney can lose the opportunity to settle altogether. So it's critically important for attorneys to do their own due diligence of their potential clients before they take on their accounts.

For the client, many proactive steps can be taken to earn the attorney's appreciation and loyalty. Beyond the need for thorough due diligence and packaging of every account that is sent to the attorney, a host of other courtesies can ensure that the attorney values you as a client not just because you give business but because of the quality of the business you send and your responsiveness to his or her needs in settling it.

The first simple rule of thumb is to always pay the attorney promptly. Pay any fees and court costs immediately upon receipt of the bill. This sounds simple, but many clients are slow in paying their bills ' which is no way to show you really value your attorney as a partner in your efforts. Prompt payment shows that you are on top of their work and value it.

The second rule is to always return e-mails and phone calls promptly. Beyond common courtesy, you're keeping the lines of communication open and allowing your attorney to remain focused on settling the account. Help the attorney with any questions he or she may have; they may need you to answer discovery, request a date for a hearing, or require settlement authority on your behalf. By being proactive and responsive to these needs as they arise, you are reinforcing the partnership structure. And remember always that just because you are the client does not mean you should act like one. Always look for ways to assist in positive outcomes.

Of course, the attorney must do his or her part to help build a strong relationship. It's often as simple as reciprocating with the common professional courtesies that are being extended by the client. Always return client e-mails and phone calls promptly. Set aside a regular time to update the client, at least monthly, on the status of any litigation or collection matter. If the attorney gets a settlement, call the client and gloat ' that's right: gloat. After all, it's a cause for mutual celebration. Don't be afraid to let the client know that you are proud of having done a good job, would like to have the opportunity to do a similarly good job on additional work in the future, and you want them to know it. Let them know they did a good job in sending you a well-vetted and organized account.

In conclusion, I have found the best relationships with my attorneys have grown out of a mutual recognition of what each of us needs to achieve a common goal: the best possible return on the charged-off debt they have been sent to settle. In our relationships, I've had attorneys say, “I love you as a client because you pay your bills, you get me my costs immediately, you're responsive with answers when I need them, and you send me collectable accounts.” This tells me my attorney understands what we're looking for, and is in synch with my goals and objectives. Building this sort of mutually beneficial relationship is the best way to ensure rewards for both of us.

'

Brett Boehm, Esq. is the principal/director of business development for TBF Financial LLC. Headquartered in Deerfield, IL, TBF has purchased charged-off equipment leases and other forms of distressed commercial obligations since its inception in 1998. Boehm may be reached at [email protected].

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