How to Collect Attorney Fees From A Debtor. Get Paid!

How to Collect Attorney Fees From A Debtor. Get Paid!

By Adam Whiteman, Commercial Collection Attorney

The famed stage and film actor Will Rogers was fond of saying, “When you find yourself in a hole, quit digging”. This is the very reason why you may avoid taking steps to collect money for goods and services you have sold.  You don’t want to make your customer’s debt worse by expending money on an attorney to collect what you are owed.

Including a well drafted attorney fees provision in the terms of your credit agreements and purchase contracts is a critical tool in the debt collection process. The ability to recover attorney fees from the debtor will dramatically enhance your collection leverage and will help ease the cost of collection if you must pursue the case to judgment.

In Illinois, absent statutory authority or a contractual agreement, each party must bear its own attorney fees and costs. Contractual provisions providing for attorney fees will be strictly construed and the language allowing the recovery of such fees must be specific and unambiguous. In regards to a breach of contract case, one cannot recover attorney fees if there is no contractual provision specifically stating that “attorney fees” are recoverable.

Contractual provisions allowing you to recover “costs”, “cost of prosecution”, “all collection costs”, “other loss and expenses” will not alone support an award of attorney fees. Illinois courts will generally refuse to read attorney fees into imprecise language. Instead, the contract language must specifically identify the right of the creditor to recover “attorney fees and costs”. The goal of using precise language is to put the debtor on notice of their potential liability. In the end, a well- crafted attorney fees provision may inspire your customers to pay on time and thereby be just the leverage you need to prevent them from digging a hole into your bottom line.

Adam Whiteman maintains a law practice in Chicago Illinois which concentrates on commercial collections, real estate law and civil litigation and transactions. Adam can be reached at: [email protected] – (312) 655-1000