Devonshires has claimed to be one of the first City law firms to offer a ‘no win, no fee’ debt recovery service to give “companies of all sizes a professional and affordable alternative to debt collection agencies”.
The services on offer from the separately branded Debt Collection Centre range from telephone and letter collection of debts and High Court enforcement to company litigation and insolvency – “tasks debt collection agencies may struggle to deal with if they don’t have experienced in-house lawyers”, the firm said.
Devonshires will typically charge UK clients about 10% of the debt as commission if it recovers the debt.
Partner Matthew Hennessy-Gibbs said more companies were outsourcing their debt recovery. “Our corporate clients instruct us to do debt collection because they know we won’t damage their reputation or our reputation through the methods we use to collect the debt.”
He argued that receiving a letter from a well-known law firm rather than a small debt collection agency can encourage the debtor to pay the debt quickly, citing one corporate customer who had 75% of its debts paid after an initial letter from the firm.
Late payment and unrecovered debt was particularly bad in the construction, food and recruitment industries, the firm said, while research from the Asset Based Finance Association calculated that SMEs were owed about £67bn in unpaid invoices, up 8% in the last year, and 36% since 2011.