It’s tough collecting past due funds

Collecting past due accounts is difficult and while there is no way to avoid the problem, safeguards can be put into place.
No one, including law firms, is exempt from long accounts receivable lists during tough economic times, according to Daniel Webb, an attorney with the Works & Lentz law firm.
Webb will outline ways to help law firms collect past due monies during the final breakfast seminar series at 7:30 a.m. Oct. 22 at the Tulsa County Bar Association, 1446 South Boston Ave. The topic is ‘‘Collections During Difficult Times.’’
It starts with attorneys willing to work with clients to develop a monthly payment plan they can afford because of the litigation, Webb said. Attorneys must help clients understand the inherent risks in filing lawsuits because of the difficult economy.
Clients, when they file suit, also must factor in the economic picture and look at someone’s ability to pay. That person might have lost his job or had other financial setbacks that either would restrict or prevent making the obligatory payments.
Attorneys need to counsel clients about the cost of launching a lawsuit, he said. There is no reason to spend a client’s money to file that kind of litigation if there is little or no chance of success.
Garnishments against a defendant aren’t always the answer because these sometimes will be reduced so there will be almost no return for the work.
Webb said he has worked on many cases seeking justified hardship exemptions from garnishments.
Contingency arrangements are the most popular payment methods because an attorney gets a pre-agreed percentage of any money that is collected, he said. It’s more difficult to get paid an hourly fee.
Webb, who handles consumer collections, said there is a similar formula in commercial collections to ensure that bills owed the law firm are paid.
He brings almost 30 years of collection experience to the seminar.
He started that role in 1980 after enrolling in the University of Tulsa College of Law after having completed his undergraduate work with a major in political science at the University of Oklahoma.
The Enid native, who didn’t want to have a law degree and be deeply in debt, had decided to pay his way through school. While in school, he studied bankruptcy law that put him in tune with working with creditors.
He had enrolled in night school and it would take him until 1984 to earn his law degree.
Webb went to a TU law school counselor asking for either a full-time or part-time day job.
The counselor sent Webb to the Red Crown Federal Credit Union to apply an account manager’s position.
The credit union regularly used law students in the account manager’s position to collect overdue debts, Webb said. ‘‘When I got the position, I thought ‘OK, I can do this job’ and went to work.’’
‘‘I didn’t know any better, but the account manager’s job was collecting past due accounts,’’ he said. That work at times also required repossessing automobiles.
Economic times in Tulsa were difficult during the 1980s because of the collapse of the oil industry and related difficulties in the real estate market.
Interest on homes at that time was in double-digit figures, and like now, people were being laid off from work and couldn’t pay their bills.
The credit union job served a dual purpose for the law student.
Webb finished law school owing $6,000, half of which came from the credit union, the balance borrowed from his parents. Both notes were quickly repaid after graduating.
He was reasonably debt free and had developed skills that improved his job marketability.
With those collection skills, Webb went to work for Tom Drummond and Jerry Raymond.
Part of the practice was in collections and he was assigned to that role.
It’s not a whole lot better today despite the apparent recovery in the stock market, he said. At one point, Oct. 2007, the Dow Jones Industrial Average was over 14,000 points. It cratered to 6,549 points last March.
It is more important than ever that attorneys gather all the information possible up front about clients, Webb continued. That includes checking references and getting information about where the client can be located. It also is important to work out a payment plan if the client cannot pay the bill up front. That applies today, the same as it did in the 1980s.
That volatility affected everyone and it impacted collections, Webb said.
When a case is accepted, it is important to make certain a client is happy with the legal service. Attorneys must do the best they can to make recommendations to the client, making them aware of what they might expect, Webb said. They also must make certain they get paid.
Webb can be contacted at the Works & Lentz Inc. law firm, 1437 South Boulder, Suite 900. The telephone number is 582-3191.

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