OUR APPROACH TO COLLECTIONS

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At Brown Litigation, we are trial lawyers, and our Commercial Litigation group regularly advises businesses and individuals on collection matters. We recognize that in order for our clients to be able to make the business decision to pursue an outstanding account, they require cost certainty, and some assurance that the total costs of proceeding will remain proportionate to the amount of money at issue.

In order to achieve these objectives, we offer the following:

1) Preliminary Collectability Assessment

Brown Litigation reviews the details of the account, the debtor, and the client objectives and provides an opinion on whether the account remains collectable;
Brown Litigation undertakes a variety of searches on the debtor (bankruptcy filings, PPSA registrations, Execution Act – prior judgments) to assess if the debtor has assets against which to collect, and further, if a voluntary payment from the debtor is likely after commencement of litigation;
Brown Litigation delivers an informal report to the client containing our search results, opinion, and assessment on whether the account remains collectable.

2) Assessment/Cost/Outcomes

Brown Litigation delivers a comprehensive engagement email with an overview of the collectability assessment, collection/litigation strategies to be employed, estimated timelines, fee estimates, and likely outcomes.

3) Ongoing Assessment

– upon being engaged to pursue the account, Brown Litigation delivers regular electronic reporting on the status of the matter, any interaction or correspondence with the debtor, and Brown Litigation’s continual assessment of the collectability of the account.

Throughout this process, Brown Litigation aims to assist the client in making sound, timely, and cost effective business decisions with all available information prior to and during the collection process.

GENERAL OVERVIEW OF COLLECTIONS

While every account can be unique, and each debtor brings unique challenges in collection, we can still offer the following insights into how we pursue these matters:

Claims under $25k

These fall under the jurisdiction of the Small Claims Court.

Small Claims Court procedures involve less time than general litigation. In terms of rough estimates, in Small Claims Court matters there is approximately 1 – 2 hours in reviewing the account and conducting an initial assessment of collectability, 2 – 5 hours to prepare the claim, 2 – 4 hours in preparation for and attendance at Settlement Conference, and 2 days of preparation time for every 1 day in trial (most Small Claims matters do not exceed 1 day of trial).

In order to keep fees proportional, we have developed a tiered flat-fee structure for Small Claims Court litigation whereby we charge a fixed flat fee depending upon the quantum of the claim:

A) Claims under $5,000.00.

B) Claims over $5k and under $10,000.00.

C) Claims over $10k and under $25,000.00

Disbursements and HST are charged to the client in addition to fees. In Small Claims matters the disbursements are generally less than $500.00 total.

The flat fee structure for Small Claims include the initial written demand letter through to a 1 day trial. In the event that a matter is resolved at some point prior to trial, either by way of a settlement or determination not to pursue further, Brown Litigation typically revisits the fee structure and reduces the charge accordingly to ensure proportionality in fees.

Brown Litigation uses flat-fee arrangements as hourly rate structures in Small Claims matters generally result in fees becoming out-of-proportion to the amount at issue in the litigation.

Claims $25k to $100k

For any collection amount which is greater than $25k but less than $100k, the claim would proceed under the Simplified Rules of Procedure for litigation. This procedure eliminates much of the oral discovery process (and attendant time and fees) inherent in general litigation, and is best suited to collections matters.

For collections matters under the Simplified Rules, we typically offer to undertake the process identified at 1, 2, and 3 above, and commence the claim before the courts through to a 1 day trial, or summary judgment motion (if appropriate) at an agreed hourly rate, in addition to HST on fees, and disbursements. In addition, where appropriate, we offer an alternative billing arrangements’ including agreeing to cap our hourly rate charges at a fixed amount in addition to a success fee reflecting a percentage of the total amount recovered including principal, interest, and legal costs.

Disbursements in Simplified Rules matters increase as the matter proceeds.

Claims exceeding $100k

For claims exceeding $100k it is still possible to commence the action under the Simplified Procedure, however if the debtor objects in a Defence to the claim, the claim must proceed under the Ordinary Procedure. The Ordinary Procedure results in higher overall fees. Out-of-court examinations for discovery typically exceed 1 to 2 days.

At any point on any claim exceeding $25k, a party can bring a motion for summary judgment. This process is effective in standard collection/breach of contract matters, even where there is a counterclaim. The summary judgment motion is labour intensive, and the fees can be significant, however, they can assist in bringing matters before the court in a more timely fashion and are well suited to collections matters.

For matters exceeding $100k, Brown Litigation provides services based on our agreed hourly rate, and at the outset prior to our retainer, we provide a full Litigation Cost Estimate setting out the process and anticipated legal fees and disbursements from which the client can make a determination if they wish to proceed.

ENFORCEMENT

Enforcement of judgments requires some creativity and customization of the process for each matter. Brown Litigation develops enforcement processes to maximize recovery while minimizing legal fees.

Typical enforcement activities after judgment include garnishment of bank accounts and contracts, registry of writs, and undertaking examinations in aid of execution. Further, Brown Litigation uses the services of investigators for locating assets, and banking locations in situations where a debtor may try to obscure its assets or defeat enforcement.

We are experienced in bringing motions to reverse fraudulent or credit-proofing transactions where the situation requires.

With any enforcement action, we provide an overview of the intended strategy to be pursued along with a cost estimate prior to commencing these proceedings.

GENERAL

Very few collections matters actually proceed to trial, and the majority are resolved well before to that point, and in most circumstances, the actual fees incurred are likely to be less than the fee cap or estimate.

Our corporate clients find that our billing structures and litigation cost estimates assist them in obtaining the cost certainty they seek, while still maintaining proportionality to the amount of the account.

Our commercial lawyers are more than happy to meet or discuss the specifics of your business and any questionable accounts or breach of contract matters generally, and to discuss how our firm could assist you in these matters.

At Brown Litigation, we remain willing to discuss alternative billing arrangements, and to work with your business to fashion a collection process and billing structure that helps you achieve your specific objectives.

Posted by D. Jared Brown – Lead Counsel

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