While we all know that collection letter strategies are key components of most collection agencies, what about collection law firms? Is a letter strategy part of your collection practice?
Compliance
If you are already using such a strategy or merely thinking about it, two main considerations need to be addressed. First, do your letters adhere to the FDCPA? My suggestion is to do an inventory of all letters used by your office. Frankly, you may be surprised by the number of letters you actually use and, equally important, who has the ability to send them out. Further, it is critical to review each of your letters for proper compliance, applicable laws, and client work standards. Hiring outside compliance counsel for such reviews is well worth the money.
Cost
Once you have determined your letters are compliant, an issue easily overlooked is the sheer cost of even a modest letter campaign. For example, if you are a firm that prints letters internally and does not pre-sort, sending 1,000 letters may cost you $3.00 per letter or $3,000 in total. Arguably, the amount is more when you add in the time for your staff and other overhead. Outsourcing your letters may provide you with significant savings. It is important to be aware of these costs, review alternatives, and set a budget.
Strategy
Once you have your letter properly drafted and have determined your cost, you need to develop a strategy. This is critical to collection attorneys because our strategic purpose in sending letters differs from a collection agency because of one crucial difference: we have the ability to file a lawsuit while the agency does not. That difference allows you to consider the timing of the mailing as a major consideration. Most letter strategies should change based on where the case is in the litigation process. Depending on your state’s particular collection practices or code of civil procedure, events such as service of process and entry of a judgment are typical triggers for sending a letter.
Your letter strategy may also differ based on the client, fee arrangement, age of the account, and type of the account. Again, a letter strategy can be expensive and all of these factors must be considered. For example, if you are representing an original creditor and the account was recently charged off, you may be more likely to send a letter to the consumer upon service of process in an attempt to resolve the debt prior to entry of a judgment.
Whereas, if you were representing a debt purchaser on an account charged off three years ago, the consumer likely had numerous opportunities to resolve the account and proceeding to judgment may be the best practice. This consumer is generally less likely to resolve the account during this litigation phase. This is a decision you need to make as you develop your strategy.
In my opinion, when a consumer is served with a lawsuit, while they may be aware of the debt, they may not know how to proceed with the litigation. Frankly, they may feel that the creditor and law firm no longer wish to work with them to resolve their account. I feel that a letter at this key event, of service of process, is important to let the consumer know that you and your client are willing to work with them throughout the process.
Once a judgment has been entered without resolution, your letter strategy also needs to be reconsidered. Having expended significant cost and effort to obtain judgment, concerns with putting more money into the file loom large, especially because the cost of letter campaigns is generally not a cost your client will reimburse.
Further, when you are considering a post-judgment letter campaign, it is important you evaluate the time that has passed since obtaining judgment and if there are any changes to the account. You need to establish detailed processes to ensure you have a good address; check bankruptcy records; determine if the consumer is represented by counsel; and validate the judgment prior to proceeding. The manpower devoted to these tasks is significant and must be considered before undertaking any letter campaign.
Bottom line, when used wisely, a letter strategy can have a positive impact on your firm. When not well-planned, it can be a money pit for the firm.
Fred N. Blitt, Esq., is a partner with Blitt and Gaines, PC in Illinois and Couch, Conville and Blitt in Louisiana. He is past president of NARCA. Contact: