1. What are complex commercial collections?
Any debt collection that will require the imputation of that debt to more solvent non debtor entities using various collection remedies, including fraudulent transfer law, piercing the corporate veil, or successor business liability.
2. How do you determine the fees to be charged?
All fees are basically a contingency based. However, there are some cases where an advance fee is charged in addition to the contingency. Degree of difficulty and probability of success are some of the factors that are used to determine any advance fee. Client is also responsible to cover all direct and indirect costs of litigation, including filing fees, service, depositions, experts, etc. The initial cost deposit is determined when the case is started. If additional costs are necessary, client will be informed as to the amount and purpose.
3. Will a client have to pay additional fees during the litigation?
As a general rule, there are no fees beyond any advance fees. The exception to this rule occurs if the debtor files a counterclaim or otherwise claims the product or services was defective or negligent. In that event, time incurred in defending the integrity of the product or services (defending the counterclaim) are charged on an hourly basis in addition to the contingency.
4. How much involvement will a client have in the collection process?
Unless the debt is actually contested and/or a counterclaim is filed, clients’ involvement is limited in a legal sense. Once the matter is post judgment, clients usually have very limited knowledge of a Debtor’s finances and even less knowledge of who might be a recipient of debtor assets. These facts are determined by reviewing the debtor’s business records. Of course, the client is always involved in any settlement negotiations.
5. Is the client entitled to recover the fees and costs incurred?
That will usually depend on whether the client has a contract with the debtor that has an attorney fee clause and/or whether there is a statute that allows for an award of fees (as when a creditor forecloses a mechanic lien). Otherwise, the answer is no on fees and yes on costs, if the matter hasn’t settled before a judicial ruling. As a practical matter, all of the clients legal rights to fees and costs for collection services merge into the settlement offer, and whether to settle becomes far more of an economic decision than a legal one. It must be understood that all “right” of collection that a creditor may have, merge into the first settlement offer, and whether to settle is more of an economic decision than a legal one.
