It’s here! Those nine months of waiting for the year-end push has finally arrived. For those
Lately the idea of enough has plagued me, the idea of when is enough… really enough. For anyone who has studied marketing, buyer’s behavior is very complex. In regards to research, compiling information, making the purchase and ultimately faced with either more fact-finding or buyer’s remorse. However, on the collections side I have yet to see an article that deals with the psychology of collections. I can only surmise that there are complex emotional states of those associated with the process of AR collections.
In the perfect world, counsel would have undertaken due diligence in securing the client. In so much as documenting expectations of both the client and how the firm expects to get compensated. From there, work would be performed and ultimately the time billed. To this point, the foundations of collections have been established. The moment the bill goes out the door, the nature of the foundation is put to the test. If the foundation of the attorney-client relationship is solid, the firm will be paid in a timely manner. If not, the collections artillery is brought into action.
Through the passage of time, the collections team undertakes increasingly more effort in the collections rendering, to get the account paid. However the point ultimately arrives, when a tremendous amount of cost has been expended on the account only to find the client isn’t budging. The client is not paying! This is the point in the relationship that fascinates me the most…the “now what” moment.
It seems that when the “now what” moment hits, firms have no idea what to do. I believe that this moment is filled with emotion and making a decision solidifies reality. What are the firm’s choices? There are a couple of key options. If the firm feels completely justified that they have done their due diligence at the onset and throughout the relationship, then they should litigate and collect what is rightfully theirs. Alternatively, the other option is simply write off the account and move on.
Interestingly enough, when faced with the reality of the seriously delinquent account, firms don’t act in a reasonable sense. They neither litigate nor write off the account. I believe their reason for which is deeply rooted in the psychology of the attorney-client relationship. To litigate would be to stand strong in the belief that the firm did everything right and is rightly due payment. However as we all know, that isn’t always the case. Doing things right is more the exception than the rule. Another reason for not litigating is the probability of a malpractice countersuit and the stigma of being the firm in the community that becomes known as the “litigious thugs”. So firms are very apprehensive to litigate.
The only other option is to concede that there was a failure in the relationship and the account should be written off. However, the simple act of writing the account off moves the emotions from an ‘unrealized’ failure state to a ‘realized’ failure state. It is much easier to live in hope that one day, one miraculous day, the client will have an epiphany and pay. What makes this all the more entertaining is that often these accounts are delinquent by years. Sometimes far exceeding the statute of limitations!
The failure to realize failure is simply poor business sense. It is in the recognition of failure that learning takes place. Admitting that one’s actions were the probable cause of a relationship going sour is an important learning exercise. The timeliness with which the situation is internalized and the course of action is taken, hastens the learning and ultimately mitigates the probability that similar mistakes aren’t made in the future.
A colleague of mine, a finance director for an oil exploration company, explained the degree of analysis with which their organization examines differing business opportunities. Using statistical analysis, ventures are examined on their ROI to the 1/1000th of a penny. When the market price of petroleum shifts, even by as much as a penny that could be immediate motivation to simply cap an oil well.
I think it is high time that law firms, who truly want to be profit driven, cast off the shackles of the victim mentality. Stand tall in the belief that your client will tell you, by way of their check book, what they feel about you and the work you have done! Attorneys and the firm’s support infrastructure have to do the job right the first time, believe they have done the job right and be willing to stand by it. Then if things go wrong on the payment side, be strong enough to cast off the emotion and take action. Realize that the relationship has ended, maintain integrity and take action to protect your bottom line!