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Collection Law Firms vs. Collection Agencies: What physicians need to consider


The differences between the two are important to note in your consideration of your collection strategy

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Despite countless phone calls and emails, you’re still waiting on payment from a client, which can obviously be frustrating. Certainly, sympathy is called for when the client is going through a difficult situation, especially considering the times of crisis we’re living in now. But when you have people on your payroll and expensive equipment and materials to pay for, the survival of your firm can depend on the conversion of these accounts into cash. At a certain point, you have to concede that it’s not something you can handle on your own, and you send it a 3rd party collections firm. The most often pursued options are collection agencies and collection law firms, and the differences between the two are important to note in your consideration of your collection strategy. In terms of their success in pursuing collections and the exceptional caution they exercise in representing your practice, collection law firms prove to be a superior option for firms looking for third-party collections.

Distinguishing Factors

The differences between collection agencies and collection law firms mainly lie at the tools they have at their disposal in pursuing collection. Collection agencies tend to utilize persistence as their main tactic with debtors. They’ll call and ask for payment, and they tend to do so efficiently with sophisticated technological systems, but how productive can this be when you and your front office staff have done this on multiple occasions? They also have the option to place the debt on the debtor’s credit report. Again, this does not seem to be rather effective since the chances are that the debtor will already have multiple delinquent accounts and thus multiple creditors waiting for payment. In fact, about 35 percent of Americans have debt in collection, meaning that without an effective collections strategy, you’ll just be waiting in line behind other creditors for payment.

Collection law firms, on the other hand, have measures they can take in the legal realm to induce payment. The first call coming from an attorney representing you can indicate that you’re serious about receiving payment. From there, with your permission, the attorney can pursue a forbearance plan with the debtor, which would help both parties in avoiding the headache of going to court. However, if the individual is not complying with your efforts, the firm will file a lawsuit on your behalf and move to obtain a judgement in court. The judgement can be used to garnish wages, bank accounts, and tax returns; seize cars; lien property; and compel a debtor's appearance in court to satisfy a judgment. Collection agencies have the opportunity to use legal tools by contracting cases out to collection attorneys, and they sometimes do, but they often refuse to do so because it’ll mean that they’ll have to give up half their fee.

Another factor you must consider is which option will protect your firm from legal and ethical liability. Unfortunately, collection agencies have often been known for their legal errors and ethical transgressions, a reality that puts your firm at risk since they are acting on your behalf. Collection law firms understand the law and ensure they stay within its boundaries as they pursue payment on your behalf. They often even employ a compliance attorney in their office specifically dedicated to matters of liability. In these times where people’s ethical standards should be—and have been—heightened, you cannot afford blunders from those representing you.

As time passes, your chances of collecting on a given account dwindles. In fact, on accounts that are more than 90 days overdue, the account is only worth 20% of its original value. You really can’t afford to be slow to respond to this matter, as every day can count in the world of accounts receivable. Dealing with collections yourself can also be a serious burden on you, your staff, and operations, when you’d much rather be deploying your time and resources toward pursuing new clientele. Having a firm by your side you can rely not only to achieve superior results, but to also express proper legal caution and protect your firm’s image is critical. Collections law firms are more likely to deliver for you in collections and be a good steward of your reputation.

About the Author

Ryan J. Fishman is the managing partner at Fishman Group, P.C. They have succeeded in making the recovery of accounts receivable a profitable endeavor for more than four decades. Today, they use automation technology partnered with the experience of their attorneys and staff to seamlessly integrate with their clients; manage compliance in multiple jurisdictions; and collect for their clients. For more information, visit or call (248) 353-4600.

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