Why Is My Collection Attorney Billing Me Hourly to Defend Counterclaims?

images (3)When you decide to pursue litigation against a former client, there is always the possibility that your former client, now the debtor, may respond with a counterclaim. If the debtor chooses to answer the summons and complaint, they will prepare an answer to be filed with the Court. The debtors’ answer may contain a general denial, which can include a complete denial of everything filed in the summons and complaint, as well as a laundry list of possible defenses. The debtor may also file a counterclaim against your company. The counterclaim does not have to stem from the same transaction that is the basis for your suit. The only requirement is that the parties are the same. While counterclaims do happen, you shouldn’t let them stop you from pursuing litigation.

In my 20 plus years as a debt collection attorney, I’ve discovered that it only takes a few hours get to the bottom of a counterclaim. Once we can demonstrate that the counterclaim is bogus, we’re able to bring our evidence to the Court’s attention and ask that the counterclaim be dismissed. With the counterclaim out of the equation, the debtor has very little to stand on.

Because counterclaims need to be handled and treated differently, the model for attorney’s fees is different as well. It is an industry-wide standard to charge an hourly rate for defending counterclaims. Of course, we understand this is may be hard to swallow. As the client, you may feel it makes more sense to increase the contingency rate in order to cover the cost of counterclaims; however, the contingency fee was not designed to cover defense proceedings against counterclaims. Plus, given what little time it takes to investigate a counterclaim, paying hourly can cost less than raising the contingency fee.

An hourly rate is fair for both you and your attorney. As the client, you receive:

1) Experienced collection counsel. One who understands counterclaims and knows how to flush them out in a shorter time period than other counsel.

2) A fair fee. Collection counsel’s hourly fees are significantly less than the standard NY defense firms you would need to retain in the absence of your collection attorney.

3) Higher quality results. By fairly compensating your collection firm, you are ensuring that your claim is taken seriously.

Want to learn more about New York debt collections? Send us an email or call and we’ll happily answer your questions