Debt Recovery Barristers

DEBT RECOVERY- URGENT ACTION REQUIRED BY BUSINESSES AND EMPLOYEES, by barrister David Welch

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Now is the time for businesses small, or large to recover debts as the prospects of doing so successfully are likely to worsen in the next few months or even years. It is somewhat amazing that when chasing unpaid bills the practice adopted by many organisations is just to re send the same invoices every few weeks in the forlorn hope that this will ensure payment.

The more pro-active organisations follow up their invoices with a direct phone call, mail or failing a positive response send a “letter before action” (Lba) by recorded delivery. This Lba letter should state clearly the amount owed and emphasise that a County Court claim will be issued after 14 days if the invoice remains unpaid. Depending on the amount of money at issue the County Court’s/High Court’s pre action protocols may also need to be complied with. The debtor should also be advised to take legal advice on the contents of the letter before action.  Claims can be made up to six years after the amount is due.

In my experience debtors are more likely to respond positively to a letter from a barrister’s chambers than one from an anonymous debt collection company. These companies often send out the same letter time and time again, and only encourage immediate payment on a payment phone line. 

Of course, in the present climate it is not just businesses that are seeking timely payments but also increasing numbers of employees are seeking payment of their unpaid wages or other benefits. 

If employees submit grievances or letters before action, which are unsuccessful, they may choose to either make a claim to the Employment Tribunal (no fee is payable by the Claimant) or the County Court (fees of roughly 10%, full details available online) are payable but is recoverable if the claim is successful.  

The debt recovery problem occurs in all industries but some have particular ways of resolving matters such as mediation and arbitration. I set out below how this plays out in the legal industry as far as barristers are concerned. 

Barristers chambers large and small are some of the worst offenders in this regard by accepting the situation of large amounts of money remaining owed to their chambers and individual barristers, often for years. This problem is labelled as “Aged Debt”. This failure occurs in particular when the money is owed by firms of solicitors to barristers. As a consequence of this behaviour there are a large number of organisations which have sprung up who will take on one’s Aged Debt and attempt to recover it, charging a fee based on a percentage of the money recovered. 

Barristers nowadays not only obtain work through solicitors (“taking instructions”) but also may be directly engaged by the client (usually known as Direct Access work). As far as the work obtained from solicitors, which is not legally aided, solicitors are allowed to receive “money on account” from clients based on the expected legal costs. So at first glance it is difficult to understand why the problem occurs in those situations and thus why it cannot easily be resolved. The problem is exacerbated as far as the actual clients are concerned because in my view it is human nature that most are more reluctant to pay their full bills on time if their particular case has been unsuccessful. Providing better estimates and regular payments on account should avoid the majority of such problems.

Unfortunately, the difficulty is sometimes made worse by the practice of chambers themselves. In some chambers the more senior barristers are having their invoices paid on time but those further down the food chain i.e. barristers in the first few years of practice are left without payment by the same instructing solicitors, and without any recourse to recovery. 

In a former chambers of mine I was told off for having the temerity to request payment from a solicitor of a long standing bill when the same solicitors were wanting to instruct me on a new case. I was instructed in no uncertain terms not to upset this firm of solicitors on the grounds that they were one of our best firms instructing. I reluctantly accepted that instruction, but did not receive payment from those solicitors before I left. 

After leaving that chambers with a number of unpaid bills I contacted the twelve offending solicitors regarding recovery of these debts. After my interventions they all paid up within 28 days, and without the need to go on and lodge claims in the County Court. It is noted that some of the cases had been subject to Legal Aid and thus subject to some delay. It became quite clear that some of the solicitors concerned had in fact received those payments, but were simply holding onto the money. 

It is a reasonable interpretation that they knew that normally they would get away with this retention either completely, or at least put off payment for many months or years. It is acknowledged that some were simply inefficient or just behaving as per the norm in the industry but the fact is that junior barristers are working for free in some cases even where the agreed fee would be less than £100. This may not seem much but over the years it mounts up and more importantly results in this type of poor practice being unchecked. 

Of course I accept that the majority of chambers and solicitors do not act in this way but in any gathering of junior barristers tales like these are plentiful. I expect that this practice is a hangover from the “good old days” when junior barristers knew their place but in my view both arms of the legal industry and the respective regulatory bodies need to take further action to wipe out this practice.

Meanwhile whether you are an employee or a business, or work as a self employed lawyer or other professional, do not sit on Aged Debt. It will give you piles but not piles of money! As my own experience shows, if you pursue a debt you may well be able to recover it.

Barristers.London is very experienced and able to handle  these matters from the outset through to litigation if required. We can give costings for the recovery of debt.

DAVID WELCH

Barrister, Advocate & Litigator

If you seek assistance in recovering a debt, contact Barristers.London without obligation and in strict confidence to see how we may assist you and to discuss the potential costs of such work.

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