Published Friday, February 10, 2023 by Alan Holdren

This question comes up many times as companies and individuals are out scouting for someone to handle their accounts and provide the biggest return for the lowest fee possible. The answers are a little complicated and not always obvious, but I will attempt to shed some light on the strengths of both types of groups.

Some questions that need to be considered are:

How old are the accounts?

What kind of accounts are they?

Is there a special expertise needed to understand the debt and the industry?

Must the accounts be sued on to recover the money of property?

How many accounts are there per month?

Do monthly payments need to be managed?

Will the debtors scare easy into paying the bill or not?

Based upon the answers to these and maybe a couple others will determine whom you should use to handle your accounts. Some differences between collection agencies and attorney firms is that, agencies typically work on contingency (keep a portion of what is collected) – attorney firms work typically on a fee for service (doesn’t matter the outcome) basis along with filing fees paid by creditor, where many times the collection agencies front the fees for the client if the debtor meets certain criteria for suit. Collection agencies are built to manage large quantities of accounts. Attorney firms are most effective for larger and fewer numbers of accounts. Most attorney firms do not have the staff to manage a mass quantity of business; Agencies are built and have the weaponry to cycle thousands of accounts through with automated and manual collections on accounts. Attorney’s will deal with disputed accounts swiftly and within the requirements of the law and tend to have a more personal touch on them. If your industry tends to litigate more than 60-75% of all accounts, an attorney may be best suited if you are ready to pay the upfront fees for the service, if not an agency can fill the void.

The one stark difference between collection agencies and attorney firms is the ability to reasonably handle a large number of incoming phone calls and payments that can comefrom many debtor groups. Agencies are built like switchboards and expect large call volumes, attorney firms have secretaries assigned to this duty that are working on other things when the calls come in. Skip tracing (locating of debtors when current information is no longer good) is essential to producing great results and most law firms no not have the personnel or mechanics to make this happen.