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Why Arizona Law Firms Need Outside Collection Attorneys

There are many advantages to hiring outside collection attorneys to collect receivables owed to your law firm.   For instance, if your firm does not engage in collections or civil litigation, it may not be equipped to handle the litigation.  Also, if the client is already not paying their bill because they are mad, they are only likely to be angrier if they have to see you repeatedly throughout the course of the collections lawsuit.  Hiring outside counsel puts a buffer between you and your (ex) client; let them be mad at the attorney who is chasing them to get you paid, instead of you and your firm.

Also, you make money on your new business, not on chasing old receivables.  So you should focus on the new business to keep moving forward.

But aside from all of those reasons, there is a new one:  Division 2 of the Arizona Court of Appeals just issued a decision holding that Law Firms cannot recoup attorneys’ fees when “representing themselves.”     The Court noted Arizona case law precludes self-represented parties from being able to recoup attorneys’ fees.  It then went on to hold that clients can hire law firms to represent them in actions, and that apparently the Arizona Supreme Court allows both individuals and entities to practice law, and so when the members of a law firm represent the firm in a collections matter, that constitutes the firm representing itself.

No matter what you may think of the legal reasoning in that case, until it is overturned or clarified on appeal, that is now the law in Arizona.   Note that this decision does not appear to be limited to attorney fee claims made under A.R.S. §12.341.01, either, but could apply to all matters.  It might preclude a law firm from collecting attorneys’ fees in an action against a former client even where the representation agreement expressly allows for it.

If you are a law firm faced with having to sue a former client, now more than ever by representing yourself you will be faced with the “law of diminishing returns.”  You will also represent the old mantra that an attorney who represents himself has a fool for a client.

If your firm needs to collect from a former client, use an outside collection attorneys.  The lawyers at Thomas Craven PLLC have extensive commercial litigation experience and have helped attorneys collect their outstanding receivables against former clients.   Give us a call at 480-222-2225 or you can contact us through this website.

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