Thursday, January 3, 2008

Civil Suits and Collections

Between a telephone call last evening to reading After losing lawsuit, practice may dissolve this morning, I decided a quick post was needed.

After graduating from last school, I worked for a local collections attorney for about a year. I had no idea that a lawyer could have a practice just collecting money. Law school taught us to know the elements of case, write an appellate brief, and argue a case. Among the many things not taught us was that a plaintiff (the person suing) in a contracts or torts case wants money.

For the non-lawyers reading this, the law requires a showing of injury that can be quantified into dollars. We call that damages. There are other elements, too. In a contracts case, those other elements are duty and breach.

I break collections into two categories. First, Those cases having a fight and the question will be if we when where does the money come from? One can win the battles but lose the war. History is full of examples of this: Germany in World War I, Germany in Word War II until 1941, the American Revolution and an ancient Greek general who gave his name to Pyrrhic victory. The case reported by the Indianapolis Star sounds like one of these:

A Marion County jury awarded Pollack $480,853 in damages after a 21/2-day trial. With interest dating to 1996, when Pollack left the practice, the claim could top $1 million.

An attorney for the 17- employee practice, based on the Northeastside, has proposed to creditors that the practice close its doors and liquidate its assets, which it estimates are worth about $300,000, according to a letter Pollack received from his attorney.

Under the plan, Pollack would collect just $219,000 of his judgment paid over 10 years. Pollack, as a result of his civil damage award, is the practice's largest creditor.
An attorney for Cardiac & Vascular, Michael McCrory, said, "I am not prepared to make a comment" on the likelihood the practice will close and liquidate its assets. The practice was closed for business Monday and Tuesday, and its administrator, Tim Hare, did not return a call seeking comment.
My experience doing collections and bankruptcy work makes me ask about assets and collecting the judgment. I still get people offering me these great cases where I will make a lot of money except that the cases disappear so quickly when I start asking how we will collect that money.

The other type of collection cases pose no great issues of liability (the opposing party's) or damages, but only on how to get the money. I spent a good deal of time the other night explaining how these cases work to a potential client: mostly likely we will get a default judgment and then I will spend a very long time trying to get the money as the defendant had a history of switching jobs. I suspect she operated under the illusion of many that all I had to was get a judgment and the money would appear on her doorstep. Because of people quitting jobs as soon as a garnishment order arrives, a collections practice requires volume for success.