QUESTION.
Our local SCORE counselor has suggested I seek advice from someone listed on the SCORE Web site. I chose you for the reasons that you are an attorney and have the qualifications that come closest to the business I am contemplating.
I am a paralegal and have been employed with a law firm for the past 11 years specializing in insurance subrogation and other collections. I really enjoyed the insurance subrogation which was approximately 60-75% of my workload, and did everything from preparing the complaints (the majority were small claims) to tracking the payments and license suspensions. The firm is no longer representing the insurance company and there are times when I question my future with this firm.
I have been contemplating the idea of starting my own collection agency. I’d like to target the insurance companies but still keep other options open. My problem is that I don’t know whether there is a market or demand for this service. Can you give me any guidance on this?
ANSWER.
I was just speaking to a collegue of mine last week who wanted to know about starting a collections firm. She wanted to know if I had done much of it when I practiced law. I did some, but I didn’t specialize in it.
Since you have worked in a law firm you view the collections work from a law firm perspective. In reality, collections work at a law firm is not a collections AGENCY. Instead, it is a collections FIRM since filing lawsuits and negotiating settlements is the practice of law. As a paralegal you are not authorized to legally practice law and thus the collection work you are involved in is not an option for you should you try to start your own business.
Collection agencies do follow-up billing mailings and make phone calls to try to get late payors to pay what is owed. They typically have doctors offices and other private practicing professionals as clients. When they cannot collect the debt, then they hand off the matter to a law firm that does collections work. There is money to be made doing this, but it is not the same type of work you are used to doing.
If you want to continue doing the type work you have been doing, then you may want to get a job at another law firm that does that kind of work. Or you might want to get a job at a large insurance company that will hire you to do all the administrative work its law firm does in the collection process. Your work product would be handed off to the law firm. The insurance firm would benefit in lower costs because it would be cheaper to have you on its payroll than to pay exorbindant legal fees for the same work.
I do a little book reviewing at Amazon and stumbled across a woman who does collections work. See her site at www.credit-and-collections.com. Her books don’t get reviewed all that well, but the site might give you some ideas.
I hope my comments are helpful to you. Good luck! Regards, -Jeff
Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com
