News

CONTINGENCY FEES ?

In the International Collection business there are many rules and regulations that apply for many countries or states, but if you think you know them all, al of a sudden you discover that there are also a lot of differences you have to reconsider.

In the USA and Canada it is common that lawyers work under contingency conditions and some US and Canada based companies think that is the same in Europe.

NO, IT IS NOT, and even prohibited by law.

In the pre-legal phase of a collection an agency or collection lawyer mostly offer services on a ‘no cure-no pay’ basis, but as soon as the case has to go to court one is hit with hourly wages.

This is why we try to stay away from court as much as possible, but this is not always possible.

Although there cannot be a contingency rate, it is always possible (and wise) to negotiate the hourly rate. These vary by country from $ 200 - $ 500 and upwards, depending on the case and the seniority of the lawyer. The rate the lawyer charges has nothing to do with the amount you and your client get when you win the case. Court grants to the winner by stating the costs based on their own point system. If your lawyer charges you 20 hours at $ 400 = $8,000, it is entirely possible that the Court awards only $ 3,000 due to their marking system. That is different in Germany. There the Court decides how much a case will cost and if you win you get the total amount from the debtor IF HE CAN PAY.

If you lose the case you have to pay the court costs of the debtor. Before starting a case have that always bear that in mind – THERE IS NO CONTINGENCY.

To find out if it is wise to go to Court and what the costs will approximately be, ask the lawyer or agency you work with abroad. They should know and give you good advice and the lowest rate. If you don’t have any, you can always call on us.

Sincerely,

Jan Hazes,
The Dutchman

(Newsletter, January 30, 2010)