mug blittOur firm had the opportunity to add a substantial book of commercial business when we recently combined with another firm. While primarily a consumer firm, expanding into a new line of business was attractive. Although it was a positive move, meshing the practice areas has been more difficult than expected.

After years of consumer collection, there is a sense of liberation with the commercial side: no FDCPA, no CFPB, – who could say no? However, the reality is most commercial creditors are equally concerned with your treatment of debtors. While they don’t exactly push you to adopt the kid-gloves approach prevalent in today’s consumer world, commercial creditors make it clear they expect you to understand many of these debtors are old customers of the creditor who have come upon difficult times. Still, if you misspell a commercial debtor’s name on your demand letter you’re not going to end up being liable for $10 million dollars in damages and attorney’s fees, so that’s a good thing.

So why not add a commercial component to my practice, you might ask. After all, you are a collection lawyer and a collection case is a collection case is a collection case. Well, not so fast.

Commercial vs. Consumers

If you handle consumer claims on a volume basis, you may find adding commercial claims to the mix creates unwelcome logistical issues; but why? Commercial creditors or forwarders have fewer claims and they are generally larger, so they are minutely tracking every claim you have. While consumer clients tend to view things from 10,000 feet, with regular electronic reporting, scorecards and performance calls, commercial clients hold your feet to the fire the moment a claim hits your office. Natural lags in activity from demand to suit are generally unacceptable. Moreover, the client contact is more like retail politics – simply swapping data will not suffice, phone contact and case-specific emails are the expectation.

Consumer clients send you a claim with the expectation you will be filing suit on it, barring some intervening circumstance such as death and bankruptcy. On commercial files, after an initial demand, the client wants your opinion on the suitworthiness of the claim based on the amount of the claim, the viability of the business, plus any other information gleaned from your initial efforts. In the same report you will also provide a cost and time estimate to successfully litigate and collect on the claim.

Unlike many consumer creditors for whom you may advance costs and may have an overall costs budget, commercial clients generally provide court costs upfront. This is a positive aspect of commercial work, but it can be a danger because once you expend the costs, you generally must seek permission from the forwarder or the client to proceed with additional filings, even if it is as simple as a $5.00 fee to issue an alias. This is vital, because while many commercial creditors will reimburse you if you overspend your initial allocation, they are not required to do so and some flat-out won’t do it. Hence, develop an internal alarm system prompting you to request additional costs before proceeding further.

Income Prediction

It is also difficult to predict income based on these files. Commercial claims are profitable, but the monthly grosses tend to show more fluctuation than consumer claims, which is balanced by the potential for a big hit on a high-dollar matter. This, of course, tends to skew the numbers, as the big hits do not occur with any degree of consistency. Additionally, higher balances offer rewards but can be a challenge to collect with fewer enforcement remedies and the ease with which business entities can disappear.

So, is it worth it? For us, I believe the answer is “yes.” The amount of resources we have thrown at these claims is not overly burdensome. We have one attorney who manages our commercial practice, tracking the litigation process, client contact and reporting. If you are adding a commercial component to your practice, a dedicated staff member is an absolute necessity. Our attorneys seem to enjoy litigating these claims, as they present challenging situations not normally associated with consumer cases. (If you were like me in law school and dozed through Secured Transactions, now is when you get your comeuppance). Ultimately, I would have to say I’m glad we took these claims on. It has expanded our brand, made life a little more interesting, and has generated additional revenue 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: This email address is being protected from spambots. You need JavaScript enabled to view it..