What Can You Do When A Customer Hides Behind An Attorney?

 

This article on debt collection advice originally appeared in CreditToday which provides advice to Credit and Collection professionals who sometimes need a collection agency like The Kaplan Group.

At our commercial collection agency, we aren’t afraid to talk to attorneys. When we call a debtor and they tell us to talk to their attorney, our biggest fear is that the attorney will not actually talk to us.

Once we are instructed to talk to a company’s attorney, we are no longer allowed to contact people at the company directly. All communication must go through the attorney once the company has identified who represents them and the law firm confirms they have been retained. Unfortunately, all too often the attorney will not communicate with us after this initial confirmation.

Our collection agency often becomes frustrated when a debtor hides behind his attorney because communication can be completely stymiedThere could be a number of reasons for their lack of communication. The attorney may not have the information from their client to have an informed discussion. Or, the attorney may also be owed money by the client and does not want to invest more time until they have been paid. The attorney may be so involved in other cases that we aren’t even on page 1 of their priority list and there will be a long delay before they can devote attention to the issue. In all of these situations, there is some chance that eventually we can talk to the attorney, have meaningful conversations, and ultimately resolve the matter.

When a debtor hides behind his attorney, this can make debt collection difficult and frustrating.Alternatively, the attorney may be refusing to engage as a defined strategy agreed to with their client. They realize that if they don’t talk, our only option is to file a lawsuit. This can be a very effective debtor strategy if they believe the circumstances make the chance of litigation very small. For example, if the cost to litigate is high relative to the amount owed, it may not make economic sense to file a lawsuit. Or, if the debtor’s financial situation is unclear, or worse, known to be poor, they know it will be difficult for the creditor to justify investment in collection litigation when the chance of eventually getting paid is highly uncertain. When a debtor is using this ‘hiding’ strategy, it means they have decided that in no circumstances will they consider paying anything unless a lawsuit is filed.

We find this situation very frustrating, as we know that if we can’t get engagement, we don’t have any chance of collecting without litigation. Somehow this is worse than being stonewalled by the debtor, as we have many different strategies to pursue in that situation. For our clients, this is an insult added to the injury of providing goods or services and not getting paid. Their customer, who they trusted to keep their payment commitment, has now spurned them in a defiant manner. Thankfully most businesses do not utilize this effective yet ethically questionable strategy.


About The Author:

Dean Kaplan is Principal at The Kaplan Group. Dean's exper­tise is widely rec­og­nized in the debt col­lec­tion indus­try. His advice has been pub­lished in a num­ber of indus­try newslet­ters such as Credit Today and InsideARM and he is a fre­quent speaker at indus­try events.