Drafting a contract requires careful consideration and planning. For purposes of New York debt collection several clauses are of utmost importance. They relate to fee disputes, default provisions, venue, and governing law clauses. Today’s blog will focus on fee dispute clauses which require mediation to collect debt in New York.
An opportunity to sit down with your non-paying customer aided by an impartial party could be ideal. If this attempt to work things out without litigation sounds like a great idea, mediation may be for you. In fact, that may have been the reason you decided to incorporate a mediation clause in your contract. However, now that you are not getting paid, you are not so sure if a sit down will help resolve the fee dispute or further delay payment. You have been trying to obtain payment or at the very least a reasonable resolution of the outstanding balance due for some time now. If you could have worked things out you would have.
Mediation can be very productive for New York debt collection. So much so that the New York Supreme Court has a mediation program and strongly recommends cases are submitted to mediation before the Judge will try a case.
Mediators, without emotion are able to examine the issues that prevented the parties from resolution. Considering the issues, documents, and applicable New York law, the Mediators are able to recommend a “reasonable” resolution.
If you or your customers are unhappy with the suggested resolution, you need not agree to accept the Mediator’s recommended settlement. Mediation is not binding.
Why then would parties agree to accept the Mediator’s recommended resolution? Generally the Mediator’s suggestion is very close to an award that a Judge and jury would order. Because of this very reason, the parties often agree to accept the Mediator’s recommendation to resolve the case and avoid litigation. Since the parties resolve the New York debt collection case sooner than later, they are able to avoid additional legal fees, additional out of pocket costs and spend less time chasing the aged receivable.
One of the sticking points is knowing your customer as you now do; you know they will not agree to pay regardless of the Mediator’s recommendation. Why now must you spend time attempting to mediate a bona fide “fee dispute”?
The answer is if your contract contains a mediation clause, you must offer to mediate. If you ignore the terms in your contract, your case may be subject to dismissal, penalties and costs may be awarded against you.
For more information or assistance with mediation for your New York debt collection contact Jocelyn Nager by email at jnager@ffgnesqs.com or by phone at (212) 686-0100.
[Blog-NY Debt Collection]
