Debt Recovery Fees For Business Clients
PERSONS RESPONSIBLE FOR THE WORK
Our debt recovery work is dealt with by our dispute resolution solicitors, Robert Small and Mark Robertson and the work is supervised by, Robert Small, who is Head of the Dispute Resolution team. Robert qualified as a legal Executive in 2007, then as a solicitor in 2010, and has handled a wide range of civil and commercial disputes since the year 2000. He has gained considerable experience in dealing with all aspects of debt recovery, and he is an expert in the procedures involved and the various options and strategies available to creditors to give them the best chance of recovering their debts. For more details of Robert’s experience, see his profile here and see Mark Robertson’s profile here.
BASIS OF OUR CHARGES
Our charges are calculated based on hourly rates, plus expenses (disbursements) we pay or incur on your behalf. Unless otherwise agreed, our hourly rates will be £300 + VAT (at 20%) for Robert Small and £285 + VAT (at 20%) for Mark Robertson.
You will need to pay for expenses (disbursements) in addition to our charges as described above. In a debt recovery matter the most common expenses (disbursements) tend to relate to bailiffs for enforcement action or Counsel’s fees if proceedings are required. It is difficult to estimate what the overall costs would be without knowing about the detail of your case. Please contact us for more information.
Debt Recovery Services
The services and costs shown below apply to claims for straightforward unpaid debts owed to business clients, which are not disputed.
STAGE 1 – LETTER OF CLAIM
This involves sending a Letter of Claim to the debtor demanding payment of the debt, plus interest and other charges (if applicable). The timescale (provided the debtor pays promptly) is likely to be in the region of 2 – 3 weeks from our receipt of your instructions to receipt of payment.
Our estimated costs for Stage 1 are shown in the table below:
| DEBT VALUE | OUR (ESTIMATED) FEES exc VAT (AT 20%) |
|---|---|
| £0 – £10,000 | £300 – £500 |
| £10,001 – £50,000 | £500 – £750 |
| £50,001 and above | £750 – £1,250 |
The above fee estimates for Stage 1 include:
- Taking your instructions and reviewing documents
- Basic investigation / confirmation of the correct identity and address of the debtor.
- Sending a Letter Before Action, demanding payment and otherwise threatening court action.
- Receiving payment (or any other response) and sending on to you.
STAGE 2 – ISSUE A COURT CLAIM
Following a Letter of Claim, if payment is not made, the next stage is to issue court proceedings against the debtor. The debtor has set time limits to respond to the claim and, if they fail do so, a request can be made for Judgment to be entered against the debtor in default. The timescale for issuing a claim up to the point of obtaining default judgment will depend largely on the speed in which the court processes the claim and any request for Judgment. Usually this process will be in the region of 4 – 6 weeks from our receipt of your instructions to start the claim.
Once default Judgment is obtained, sending a letter to the debtor demanding payment otherwise threatening further action to enforce the Judgment.
Our estimated costs for Stage 2 are shown in the table below:
| DEBT VALUE* | COURT FEE** | OUR (ESTIMATED) FEES + VAT (AT 20%) |
|---|---|---|
| £0 – £5,000 | £35 – £205 | £750.00 – £1,000 |
| £5,001 – £10,000 | £455 | £750.00 – £1,000 |
| £10,001 – £200,000 | 5% of the claim value | £1,000 – £1,500 |
| £200,000 and above | £10,000 | £1,500 – £2,500 |
* When calculating the value of the debt, if interest and other charges are added, it may take the debt into a higher banding.
**Court fees are correct at the time of publishing this note, but are subject to change. Up-to-date court fees can be found online here (website valid at date of publishing):
The above fee estimates for Stage 2 include:
- Taking your instructions and reviewing documentation.
- Basic investigation / confirmation of the correct identity and address of the debtor.
- Drafting court papers, sending them to court for issuing, arranging for service of the papers on the debtor (if applicable), all in accordance with the Civil Procedure Rules.
- Where no Acknowledgement of Service, or Defence, is received within the relevant time limits, then applying to the Court to enter Judgment in default.
- When Default Judgment is obtained, writing one letter to the debtor demanding payment otherwise threatening enforcement action.
- Keeping you updated throughout.
- Receiving payment (or any other response) and sending on to you.
- If payment is not received within 1 – 2 weeks after the post-judgment letter, then giving you basic advice on the available next steps and the likely costs involved.
WHAT IS NOT INCLUDED
The above fee estimates DO NOT include any other steps, or work, not mentioned above. For example, they do not include:
- More than one initial consultation (face-to-face meeting, telephone or video call) exceeding 30 minutes.
- Any enforcement action that may be needed where a Judgment is obtained but the debtor still does not pay, ie. even after Stage 2 is exhausted. This might involve instructing the Court Bailiff or a range of other possible enforcement options.
- Any additional work required because the debt is not straightforward or involves complex issues.
FEES WHERE THE DEBT IS NOT STRAIGHTFORWARD OR INVOLVES MORE COMPLEX ISSUES
If the debt is not straightforward, or involves issues making it more complex, our fees will be higher than the above estimates. We will identify them at the outset where possible although they may not be apparent until some point during the above processes. In these cases, we will discuss any further work required and provide you with a revised estimate of fees as necessary. These additional costs will usually be based on our hourly rates, although in some cases we may agree a fixed fee, or fixed fees for specific stages of work.
Examples of issues where the debt is not straightforward or involves more complexity, include:
- There are extensive documents relating to the debt, eg. a large contract that has to be considered, or the paperwork / information you provide to us is incomplete, unclear or not in order.
- Difficulties identifying or locating the correct debtor.
- The debtor responds to the Letter of Claim raising unforeseen issues, which require further investigation and/or advice and/or further pre-action correspondence.
- The debtor asks for time to pay and/or we are required to negotiate a payment plan.
- The debtor disputes the debt for any reason, or makes a counterclaim.
- The debtor does not follow the correct process or protocol.
- Procedural issues arise which require additional investigation, communications or an application to the court.
- There are any insolvency issues, eg. we have to investigate and/or advise you on the debtor’s ability to pay.
- Any limitation (legal time limit) issues.
- There is a foreign element, eg. the debtor is based abroad or the debt is based on a contract governed by a different country’s law or jurisdiction.
RECOVERY OF COSTS FROM THE DEBTOR
- There is generally no entitlement to recover legal fees from the debtor during the pre-action stage (Stage 1 above). In some cases, the debtor may be contractually obliged to pay debt recovery fees but it is unusual to recover any fees in Stage 1.
- Once a court claim is issued, there is an entitlement to add the court fee and a fixed amount (up to £100) towards legal fees in the amount claimed.
- If the claim is not defended, or if it is for £10,000 or less and is defended, no further costs can be recovered from the debtor (except in exceptional circumstances).
- If the claim is for more than £10,000 and the debtor enters a Defence, the claim will proceed as a contested case, which will involve further fees and expenses (disbursements) and the loser will generally be required to pay the winner’s costs, although claims between £10,000 – £100,000 are subject to fixed costs recovery determined by the amount and/or complexity of the claim.
For further information on the above, or to instruct us to recover a debt for you, please contact either:
Robert Small by telephone on 01420 81275 or by email to [email protected]
Mark Robertson by telephone on 01420 81270 or by email to [email protected]
