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 When Our Client Becomes the Debtor

It's so nice when year after year clients keep placing claims with your agency or law firm. The long term relationship just keeps getting longer, deeper, and more rewarding. We feel as though our client is as "good as gold" and we would never think for a moment that they themselves might become a payment problem.

Although we trust our client, especially a long term one, to pay us when debtor payments are sent directly to them, the truth is that from time to time, our client may not pay us. No matter whether our client is a small or medium size business, or a large international corporation, every company can have a cash flow issue that at some point will cause a law firm or agency to find itself in the horrible position of having to collect from the client. When this happens, especially with a long term client, it’s very demoralizing.

Just like we tell our clients to know their customers and be vigilant towards any credit and payment red flags, law firms and agencies should be on the look out for what might turn our own clients into debtors from whom we have to collect our fees. Here’s a quick list of red flags. Take note of when the client:
  • asserts that they still haven’t received the funds but the debtor can show you a canceled check.
  • "forgets" to send you some commissions, although others have been paid.
  • complains to you that you only had the claim for an extremely short period of time, even though that one call or letter is what did the trick in getting the debtor to pay.
  • does not come to the phone, answer emails, or respond to other requests to remit the fees and commissions.
No agency or law firm is immune to the idea that a few clients may end up not remitting their commissions and fees. When clients are in the position of owing you money, it is not a bad idea to treat them with the same kinds of credit risk management controls that you advise your clients to take with regard to their customers.

Thomas W. Hamilton

 Industry Articles and Information

Faster payments moving ahead slowly in the US
The ACH payments network in the U.S. — the one that takes several days to transmit a payment — was almost overpowered at the recent NACHA conference in New Orleans by new tech firms offering real-time payments.
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Introducing the 2015-2016 CLLA President
The Commercial Law League of America (CLLA) is pleased to announce that Robert S. Bernstein, of Bernstein-Burkley, P.C., in Pittsburgh, PA, will serve as its 2015-2016 Board of Governors president. This makes Bernstein the only two-term president other than the group’s founder, William Sprague, in 1896.
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What does it take to be a good communicator for collections?
By Lou Figueroa
As a third party collector, from time to time many clients have asked what I think makes a good collector for their organization. Although there is no short answer to this question, a good collector requires many skills that go beyond their educational training, which include their attributes and personality. Evaluating and assessing your company's needs for a collector is often as unique as the company's products, services, corporate culture and the relationship it has to its customers.
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529 college savings accounts: Who owns the money?
By Windtberg & Zdancewicz PLC
"But it's my kids' money!" This refrain may be common, but it's not necessarily accurate when it comes to a debtor talking about money in a 529 College Savings Account. When the accounts are held "FBO" a child, courts are likely to find that money belongs to the debtor, not the child.
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Debt collection watchdog faces debt collection grievance
The Wall Street Journal
The U.S. Consumer Financial Protection Bureau has emerged as the federal government's chief watchdog of debt collectors, by fielding, investigating and responding to tens of thousands of complaints from consumers with stories about getting hounded about debts they say they don't owe.
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Can you rely on an 'electronic signature?'
By Amanda Yurechko
The Electronic Signatures in Global and National Commerce Act, commonly known as "ESIGN", was enacted June 30, 2000, and is found at 15 U.S.C. 96. This federal law allows the use of electronic signatures in interstate and foreign commerce. The law ensures the validity and legal effect of contracts entered into electronically.
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 Thought of the Day

"Experience is a hard teacher because she gives the test first, the lesson afterwards." - Vernon Sanders Law

What our clients have to say:
ALQ is a law list you can TRUST. Their list and website make the entire forwarding & bonding process for a collection agency an absolute breeze! They then top this off with beyond excellent service. THANK YOU ALQ!!

— Sarah McIver , Legal Department, Biehl & Biehl Inc., Carol Stream, IL

I have enjoyed a long and rewarding relationship with ALQ. Through ALQ, I have established many long standing clients and have grown my collection business. ALQ and Jeremy Brown epitomize professionalism, and cooperation. Jeremy is always responsive and prompt with any of my issues and often introduces my firm to new clients. I attribute much of my firm’s success to my professional relationship with ALQ.

— Michael C. Code, Attorney at Law, UBC LLC, Metairie, LA

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