Posts Tagged ‘California’

Commercial Debt Collection – How Do I Collect When A Company Owes Me Money?

 businessman with financial symbols coming from hand

In today’s business culture we call businesses working with other businesses B2B. It has always been a popular practice to the alternative, business to consumer. The rules are different governing B2B as opposed to B2C. The legal and business world assume that the B2B relationship and players are more sophisticated.

This post discusses what happens when the B2B relationship sours and one company must collect what it is owed from another company. The most important distinction between the rules of B2B and B2C is that consumers are much more protected by government regulation. The Fair Debt Collection Practices Act protects the consumer, not businesses.

Phases of Collection

Most business think that when an account is overdue, then they call up a debt collection agency and the debt will be collected or its deemed bad debt. Businesses write off huge percentages of accounts receivable every year based off this flawed thinking.

There are at least two phases of debt collection, each of which could arguably be broken down into subcategories. You have a pre-debt fact gathering and document filing stage, as the first phase. Then there is the actual debt collection which can consist of many different options and this occurs after the debt is due. So more of a pre/post mindset.

Pre-Collection Phase – Getting Your Ducks In A Row

The pre-collection phase is often over looked and much more important than the post-collection phase. It is the foundation for the collection. This is the fact gathering and organizational portion.

This phase includes the initial fact gathering on the business. Your business should have an in-take sheet whereby it gathers all important information from the other business. Some of my clients even go as far as running credit checks on the business or getting personal guarantees from its senior members.

For contractors, suppliers and equipment lessors that I represent, this pre-collection phase is essential to keeping the accounts receivable low. This phase also includes sending out notices and filing liens, in a timely manner and properly. All of these essential elements make the post-collection process much easier, more efficient and most importantly successful. The old adage that I preach, is an ounce of prevention equals a pound of cure.

Finally another important aspect of the pre-collection phase is a well written contract between you company and your business client. This contract should have specific default and attorney fee provisions.

Collection Phase – It’s Time To Get Paid

Now your company has all of its intake information, gathered credit reports, personal guarantees, sent your notices, filed your liens, and have a well written contract, but your business client refuses to pay on its obligation to your company, what do you do?

There are a few options here and  only one good solution. Your business could write off the debt, it could try to collect internally, hire a debt collection agency or contact an attorney to collect. Obviously I’m biased here, but I do see this often. Writing off the debt is never good. Collecting internally can be okay but its slightly less successful than a debt collector. Attorneys can do all of the following steps which make the percentage chance of collection go up.

Your commercial debt collection attorney has a number of weapons at his disposal to collect on the outstanding debt. Many of them have time delays built in by law, which slows the process. First is to send a demand letter which includes the Louisiana Open Account Statue language. This is another avenue to get attorney fees and costs associated with the debt collection.

After the demand letter is sent out and thirty (30) days elapse, then its time to file suit against the debtor. Many businesses balk at this option because litigation can be costly and risky. Depending on the size of your debt, you attorney will likely take it on contingency which will minimize the litigation costs. From there your attorney will get a judgment, either by default or after trial.

Once the judgment is obtained, there are a number of possible means of collection. The attorney can examine the assets of the debtor, in a judgment debtor rule hearing whereby the debtor will be sworn-in and give testimony as to what the business owns. Further, the attorney can garnish banking and physical assets of the business. The judgment will be good for ten years and can thereafter be reinscribed. Once a judgment is granted collection chances go up.

Conclusion

In the end, some debts are simply bad and cannot be collected. Others, however may just be tricky or require persistence. Having a good commercial debt collection attorney at your side will greatly increase your collection rates and keep your accounts receivables low.

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Posted in:     Collections, Litigation, Louisiana  /  Tags: , , , , ,   /   Leave a comment

California Civil Procedure Series – How to File Suit

As an attorney in multiple states (California and Louisiana) there are many overlapping rules and theory of law that are transferable from jurisdiction to jurisdiction. However, there are many local and state wide idiosyncrasies that are not necessarily taught in law school or not easily attainable for pro se or pro per litigants. This post has some helpful tips regarding filing a law suit.

California is a jurisdiction of forms. The State Bar has gone to great lengths to make a form for just about any situation. In that same light there are many that overlap and you nearly need a law degree just to navigate through the long list. The California Courts also have very helpful information regarding the legal process and all of the different procedural devices used by lawyers.

A typical checklist for items needed when you file your civil case are 1) Complaint, 2) Civil Cover Sheet, 3) Summons, and 4) Receipt and Acknowledgement. The complaint is your main document to be filed. This is where the Plaintiff lists out all of the facts and causes of action that related to the allegations being asserted in the suit. The complaint is the lawsuit itself and will be a part of the public record. The Civil Cover Sheet is a mandatory form that needs to accompany any new filing. This tells the clerk what type of case is being filed. Next is the Summons. This document tells the court and the opposition who is being sued and what that person/entity’s legal rights are with regard to an answer. Lastly is a handy little form that I like to include called Notice and Acknowledgment of Receipt. This form allows for you to mail serve the Summons and Complaint on your adversary saving time and money. If the defendant does not reply within 20 days, it will be obligated to pay for your service fees. The normal delay to respond to a suit is 30 days.

Once you get your complaint filed you will want to serve your adversary with the documents to complete the process. You can use the Notice form listed above but if that fails then you will have to hire a process server to get the suit to the defendant. Regardless of how you serve them the clerk of court requires proof of service. This too is another form, Proof of Service of Summons. This helpful form has a long check list of methods of possible service. You make sure you followed one of the statutory required methods, file your proof and then your law suit has formally begun. You then must wait for your adversary to answer.

This blog post is a part of the California Civil Procedure Series written by Wolfe Law Group. You should contact an attorney when dealing with procedure issues as there are strict time limitations which need to be followed.

Posted in:     About Our Services, Business Matters, California, Construction News, Dispute A Lien, Disputes, From The Experts, Litigation  /  Tags: , , , , , , ,   /   Leave a comment

California Civil Procedure Series – Litigation Tips

Legal ConfusionAs an attorney in multiple states (California and Louisiana) there are many overlapping rules and theory of law that are transferable from jurisdiction to jurisdiction. However, there are many local and state wide idiosyncrasies that are not necessarily taught in law school or not easily attainable for pro se or pro per litigants. I felt it appropriate to do this series so that it will help individual litigants, business owners and contractors so that they have a better understanding of only some of the nuances which I have come across.

Topics That I plan to cover include, 1) basic discovery rules, deadlines and concepts; 2) a CA C.C.P. 998 offer of settlement and its impact on litigation, 3) filing and obtaining a default judgment, including CA C.C.P. 1033 declarations and letters of intent, 4) basic filing procedures for a Complaint and subsequent  pleadings including proof of mailing forms.

The purpose of this series is to better educate anyone who gets involved in the legal process. There are a number of resources out there but sometimes simple tasks can be daunting in the legal industry. Other times certain jurisdictions emphasize things that are simply overlooked in others. Lastly, California has a vast network of forms that in theory set out to be helpful yet in the end can send one in a fit of confusion. I will attempt to show some helpful way to navigate that stream of information.

Posted in:     About Our Services, California, Construction News, From The Experts, Litigation  /  Tags: , , , , ,   /   1 Comment

Construction Insurance Rates Predicted To Increase

According to a recent Press Release from Marsh, a leader in insurance broking and risk management, construction firms across the U.S. will be facing new challenges in the upcoming year. Insurance rates have been declining for close to a decade, but rates are forecasted to increase between 8 and 10 percent. Firms with poor loss histories will receive higher rates, and some may not even be able to renew their policies.

This rise in rates is apparently the result of “soft market conditions” in recent years. Michael Anderson, Leader of Marsh’s U.S. Construction Practice, stated, “This comes against the backdrop of medical cost inflation and changes to some state statutes that have extended coverage beyond the insurers’ originally intended scope.” Mr. Anderson also goes on to explain that even with the increase in rates, the industry’s capital is still strong resulting in market conditions remaining competitive.

To read more about this Press Release and other interesting Construction Market Updatesclick here.

Contractors need to be sure to stay current on all insurance so that the contractor will limit its exposure when occurrences happen. Being insured is a major expense in all construction companies. That expense will be justified when a claim is made. Insurers seek to exclude or deny coverage, therefore a good attorney will be needed to fight back. Here at Wolfe Law Group, LLC we handle situations where we work with insurers to aid our clients and other situations where we fight insurers to get them to pay our clients what they are owed under the policy.

Posted in:     Business Matters, Construction News, Insurance  /  Tags: , , , , , , , ,   /   Leave a comment

California Legislature Further Helping Subcontractors

I recently found a good article on JDSupra.com, always a great source for solid legal content, regarding California Senate Bill 474. This Bill protects subcontractors when contracting so that they cannot be held liable to indemnify the general contractor or owner from certain types of negligence. Author, Maria Giardina of Sedgwick, LLP, does a very good job of explaining the step that the California Legislature has taken to further protect the interest of subcontractors who often enter into one-sided contacts with general contractors in order to procure work in this troublesome economy.

This Bill raises a bigger and more overarching question as to why do state legislatures feel the need to make rules to restrict the freedom to contract. The legislature here is essentially trying to protect the subcontractor from itself. In a perfect world, general contract presents the subcontract document to the subcontractor, and that sub has its lawyer review the contract to see if the terms can be negotiated so that its a fair document for all involved. This new Bill, allows for subs to enter into subcontract agreements with general contractors and then after-the-fact afford the sub protections because the general contractor had a well written contract.

William M. Hill and Mary-Beth McCormack author a well written article on protecting a subcontractor from itself. This article deals with a hot construction law topic, pay-when-paid vs. pay-if-paid clauses.

It seems from the face of California Senate Bill 474 and many others like it across the country, that we are on a path toward heavy government regulation of our business relations. I understand that the little man needs protection from corporate might, but I believe that we have gone too far. Let the parties contract to whatever they want. If it goes against public policy, then the provision is void on its face. There is no need to waste taxpayer money to draft, argue, and pass bills such as these.

For more on this topic, see Gordon & Reese, LLP article and Senator Noreen Evans.

Posted in:     California, Construction Contracts, Construction News, Insurance, Litigation  /  Tags: , , , , , , , , , ,   /   Leave a comment