While costs and procedures differ materially from state to state, attorneys will usually request sufficient sums to cover expenses for the filing fee, service of the summons and complaint, costs for the entry of judgment, writ of execution, abstract of judgments, the Marshal’s or Sheriff’s costs, etc. Court costs and Sheriff’s fees are established by law and, if the client prevails, are chargeable to the debtor. These costs are usually advanced by the creditor. The cost advance requested is the average amount in the attorney’s experience that is required to process a case of this size from the filing of the suit through the recording of an abstract of judgment. Should it become necessary to obtain a writ of execution or other process to enforce the court’s orders or judgment, additional cost advances may be required. If, in the attorney’s professional judgment, it becomes necessary for them to advance court costs to protect the client’s interests or to expedite the client’s action against the debtor, the client shall be expected to reimburse the attorney upon request. Where possible, most creditor right’s attorneys will make every attempt to allow the client the opportunity to approve or disapprove such additional expenditures before they are incurred. Upon the conclusion of the case, the prevailing attorney submits an accounting of all costs expenditures to the court and they are included, together with statutory interest, in the amount of the judgment. All such monies advanced by you are held in the attorney’s trust fund. Thus, at the conclusion of the case, an accounting will be provided from counsel and any unexpended costs will be refunded in full, as will any costs recovered from the debtor. It is important to note that authorization to file suit by sending the documents and funds requested constitutes an assignment to the attorney’s law firm of any attorney’s fees awarded by the court and recovered from the debtor, which shall be in addition to other fees and commissions. Should you have a signed valid contract with the debtor calling for the cost of collection, such is usually in addition to the above but does not cover any court awarded attorney fees. Note that the attorney’s normal contingent commission, excluding his suit fee and court costs, are paid for out of the percentage fee quoted to you by your professional collection agency for litigated matters.
This is a charge by the attorney for the filing of suit and following through with litigation on your behalf. Factors usually considered in determining the amount of the suit fee include: How much work counsel has to do in the way of drafting documents or rendering legal opinions; the attorney’s past experience with the debtor; the nature of the action being undertaken; the size of the claim; is the claim disputed and what is the attorney’s appraisal of the validity of the dispute; the expectations of whether the claim will necessitate a full trial on the merits. Such fee is also required in the instance where counsel does not recommend suit but, as a matter of principle, the client has decided to proceed with litigation in any event. In this scenario, the attorney charges a suit fee in order to assure himself of adequate compensation for his services knowing that the chances for recovery are negligible. Most suit fees are non-contingent and are advanced by the creditor at the time that the costs are submitted. In other words, the attorney is entitled to the suit fee regardless of the outcome of the case. Standard retainers are 10% of the amount of the claim; however, many professional collection agencies have negotiated with attorneys special arrangements depending upon the circumstances of the case. In some instances, the suit fee may be totally contingent upon collection or a portion (usually 5%) of the suit fee will be non-contingent with the balance being contingent upon collection. In certain instances, an attorney may waive his suit fee entirely, but request an increased commission contingent upon collection. The standard in most cases is to advance a 5% non-contingent suit fee with the remaining being contingent upon collection.
The suit fee discussed above does not include prosecution of a contested matter requiring extensive depositions, discovery related court appearances, services rendered in connection with any appeal of the case or services rendered in connection with any Bankruptcy proceeding involving the Debtor other than the normal filing of a proof of claim; nor does it include the defense of a counterclaim or cross-action or the pursuit of ancillary or extraordinary remedies before or after judgment. In the event a contest develops, or the Debtor files Bankruptcy, the attorney always reserves the right to request additional fees for additional services necessitated by the contest. The amount of any additional fee will be commensurate with the services to be rendered and unless extraordinary circumstances arise, you will be informed of such and usually have an opportunity to halt all actions before such charges are incurred. If a counterclaim or cross-action is filed in which you desire our attorney to defend on your behalf, the attorney reserves the right to do so at an hourly rate. Once again, this is usually an agreed upon rate that is preapproved by the client should the situation warrant such a defense.