In Focus Commercial Credit
Left-right: Penny Daisley; Rob Thompson; Lorna Trueman; Peter Gent; Wendy Miles >>
distinguish whether a debtor ‘can’t pay’ or ‘won’t pay’. Many clients are
now viewing lawyers differently: it is not just using us for litigation, it can now be using us to make calls and assessments. As a result, you can bring all the right tools for a given debtor.
MT: It is a two-way process – you must liaise with your clients at the outset and obtain as much information as you can, and then couple that with any information you can gain during the process, enabling you to advise clients and ensure that, collectively, you make more informed decisions.
RT: There has been an evolution over the past 20 years, but certainly ramped up in the past two or three. Now, when we go down the route to suggest legal action and get the engagement from the customer, there are any number of outcomes driven by lawyers, not just legal action. Identifying a case as suitable for a hardship or vulnerability programme, for example, is a good result for the client, as you have that engagement and they are able to deal with that case in the appropriate way.
JG: It is all about building client relationships to develop trust. Somebody has got to really trust you for you to be able to have a difficult conversation – to be able to call them up and say ‘this company owes you X, I am really sorry, but we are not going to get it, and this is why we are not going to waste any of your money to collect it’. You cannot have that conversation with somebody who does not trust what you are telling them. We are all in it for the long term – there are people trying to steal clients, so we always have to go the extra mile to be their legal partner. As a solicitor, we should thrive on that: the client comes to you because they have a problem, and they trust you to offer a solution.
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RA:My background is the financial sector, and that can be anything from cards through to asset-based lending and mortgages. Where I came in to the industry 12 years ago, we only knew fixed fees, and a partnership approach. We had protocols in Scotland and England on mortgage recoveries 10 years ago, and percentage-of-recovery fees are no longer something that any of the financial institutions will entertain from either law firms or DCAs. I think that a lot of the consumer-debt trends are now starting to permeate into the business-to-business world. In terms of how busy the industry is, I think we are at the bottom of the cycle. I think that if you look at both consumer and business debt, macro-economic factors and the headline figures seem reasonably strong, but when you prod a little below the surface, you have consumer debt beyond where it was in 2007, interest-rate rises probably coming this year, Sterling devalued by 25%, high inflation, and real incomes decreasing. So financial institutions are now starting to see spikes in their unsecured books, and it does feel like the cycle is starting again.
SP: The question on the data we receive from clients is whether it is accurate or not. Clients are usually prepared to pass us the information, because they want a successful collection, but is it accurate, and do they have it in the first place?
Do you support a change in the High Court and County Court Jurisdiction Order 1991 that would allow HCEOs to do Consumer Credit Act work? SP:We would all want to have a full range of enforcement options available to us. The opportunity for the HCEOs to go after debts of less than £600 would be very significant. Clients constantly question me about why we cannot use HCEOs more for lower balances.
RA: The bailiff service in England and Wales could be better. I started working in England two years ago, having worked in Scotland where sheriffs officers are self-employed and work in a variety of firms: large to smaller, niche companies. They are all either owners of companies or are salaried, but enforcement of judgments is conducted entirely in the private sector. The caliber of information you get back, and the ability to deliver results, compared to bailiffs, is just so different. When you meet a HCEO, it is immediately apparent it is a higher caliber of person, who is driven by rewards and is proactive. I do think that we need reform down in England, because it is not working the way that it is.
As a solicitor, we should thrive on that: the client comes to you because they have a problem, and they trust you to offer a solution
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RT: If you look at the figures for warrants of control, the issue rate is through the roof. HMCTS is asking the CCUA why we think this is, and the answer seems to be there is a lot of use by bulk issuers: part of it is you get a reduced fee if you issue electronically, whereas you do not for other enforcement. So I think it is recognised there are difficulties with bailiff performance, but all this traffic is driven because of the fee structure. As far as judgment creditors are concerned, they want enforcement that works, they do not care how that is arrived at. But I think that the county court bailiffs have a proven track record of failing to deliver. So we need a change. CCR
April 2018
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