Costly Costs

Costly Pic

In April earlier this year the Law Society Gazette reported ‘Junior Solicitor Banned for lies about briefcase lost on a train’. The headline is soon lost when you read about the excessive costs charged by the solicitor representing the Solicitors Regulation Authority, (SRA), including overcharging as a result of duplication of work.

The tribunal agreed the rates were too high and had the effect of penalising the Junior Solicitor. There had been ‘significant and unnecessary’ duplication of work by the SRA and costs were cut from £55,000 to £10,000. A massive overcharge of £45,000.

Unique case you might think? No the sad fact is overcharging as a result of significant and unnecessary duplication of work and excessive costs happens. We are talking to a Wholesaler that is being charged by their Debt Collection Agency to instruct a solicitor at every stage of the legal and enforcement process, plus commission upfront on the sum claimed on top of the solicitors costs.

Costly Door to Door Debt Collection

But it does not stop with solicitors. We are advising a business owner that was charged £10,000 upfront for debt recovery in connection with collection of a £300,000 debt prior to collection of the same. The invoice does not breakdown court fees and solicitors costs, it just lists one item ‘Debt Recovery.’ The business owner was advised by the Debt Collection Agent in return for £10,000 they would attend the home of the director of the company debtor during the peak of Lock Down to acquire settlement. This is wrong on so many levels, not only because the Debt Collection Agent did not deliver on what they promised, but they never could, firstly the business owner does not have a Personal Guarantee warranting enforcement and secondly at the time of instruction attending residential premises during Lock Down for the purposes of debt collection was not permitted. Suffice to say the debt has not been collected, the company debtor entered administration shortly after the business owner parted with their £10,000 for a service that for the aforementioned reasons is not deliverable. A con maybe, but at the same time courts expect business owners to be careful and commercially minded with their decisions. Indeed there is an argument in the present case the business owner was negligent to part with so much money when the strategy invested in at the time did not fit permitted activities during Lock Down. Admittedly at first sight this would make the contract illegal, but a big hill to climb nonetheless in setting it aside and getting their money back.

Curious ?

If you think your current debt recovery service provider is overcharging you call award-winning credit professional and commercial lawyer Carlo Pegna today on 01920 481467 to find out how Master Collections compares.

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