The Triadic System

When an account is referred to third-party collections, the process leads to one of three conclusions:

1. The agency is able to collect the balance due.
2. The agency determines that the balance is uncollectible (because the debtor is bankrupt, deceased, out of business, or a number of other factors).
3. The balance might be collectible, but not by the agency.

When your agency has exhausted their efforts and is looking at number 3, it may be time to consider filing suit. That’s when the Triadic System comes into play.

The litigation system is sprawling and complicated. Many debtors and their attorneys count on it being too much of a hassle for creditors to navigate, hoping that the problem will go away when it ceases to be worth the creditor’s time and expense.

The three sides of the Triadic triangle work together to support the creditor:

• The collection agency continues to serve as the creditor’s point of contact, helping to demystify the process, making sure all the right information and documentation gets where it needs to go, and advocating for the creditor’s best interests.
• The law list provides a referral to a law firm licensed and experienced in the jurisdiction where suit will need to be file, acts as liaison between the agency and attorney as needed, and insures the creditor’s investment in the lawsuit through a bonding program.
• The attorney makes demand on the debtor and files suit, typically on a contingent fee basis, representing the creditor’s interests in court and reporting regularly to the agency on the progress of the case.

For quality of service and peace of mind, be sure your agency is a certified member of a professional organization such as Commercial Collection Agencies of America, and that they work with law lists and attorneys affiliated with such an organization.

To learn more about how Brennan & Clark can help your business navigate the system, contact us.