History

This client is one of the UK’s most successful business brokers who arrange the sale of hundreds of businesses per year; this is a service they have provided since 1974. Like any company, they had a debt ledger. However, these debts stood at around £1.5m and were made up of hundreds of different commissions from the businesses that were sold.

At the time, London Solicitors that were appointed were struggling to collect these debts. On average, they were only collecting £200,000 a year with £1.3m left outstanding.

This was increasing the company’s Days Sales Outstanding (DSO), meaning they were unable to turn sales into cash as quickly as they had hoped. Moreover, they were writing off many debts as urecoverable, further damaging profitability.

Their solicitors gave the following reasons for their underperformance:

1. The debts were complicated and often included various legal issues involved in buying and selling businesses.
2. The claims were against experienced business people who knew their way around debt collection and could often call on their own solicitors for assistance.

Our role

After looking through some of the cases and the reasons for the late payments, we concluded that this project required complicated litigation rather than standard debt recovery. The reasons for non-payment were often down to disputes over the terms of the contract or triggers for payment of the commissions.

However, as the client was busy managing other day-to-day functions within the company, they wanted to avoid being bogged down with technical issues on each debt. It was agreed that, to maintain transparency, we would keep them up to date on all debts, but in the majority of cases Flint Bishop would be left to the task of collecting the debts owed to our client. We built a dedicated team of legal professionals to work on this project, made up of two paralegals and a senior solicitor.

On top of the usual processes covering deadlines and workflows, we created a specific Risk Assessment document that we gave to the client at the start of our work. This gave a ‘snap-shot’ view of all the risks involved with each debt along with the likelihood of being paid. We then updated our Risk Assessment as the debt progressed. Our client was pleased with this approach as it gave them all the information they needed along with our legal opinion. It also meant they could get involved as and when they wanted to with knowledge of the key issues.

We also:

• Created a suite of precedent documents in conjunction with the client covering items like initial contact letters, court pleadings and settlement agreements.
• Gave the client access ti all of their files via an online dashboard, which gave up-to-the-minute information on all their debts via a computer, smart phone or tablet.

Results

In the first 12 months of our management of this litigation and debt recovery we collected over £1m, an increase of over 352%; this increased over the subsequent months as we dealt with the newer debts and the older debts had been collected. More importantly, in over 95% of all cases, we did not need to involve the Courts, saving our client time, hassle and cost.

Why was this so successful?

We built a unique system for the needs of the client. When we planned our approach to this project, we decided it was commercial litigation and not a standard debt recovery service.

We possess the specialist skills required for such matters in-house, with our Tier 1 Legal 500 ranking demonstrating our experience.

Finally, unlike most firms, we do not view debt recovery as a standard ‘factory process’ or offer a ‘one-size-fits-all’ off-the-shelf package. We aim to get to know each of our clients to ensure that their systems are built to their needs, allowing us to collect the debt as quickly and efficiently as possible.