We're All in This Together

By Tom Hamilton, American Lawyers Company

One of the great things about being in this industry is the opportunity to work with a wide range of collection agencies, attorneys and other professionals who provide leadership in a dynamic, vital and ever-changing business. The commercial collection industry has always been an indispensable safety net for the business community, here in the US and abroad, by helping businesses to maintain their cash flow and financial viability. With tens of billions of dollars being collected by our industry every year, our role is key in keeping the wheels of our global economy moving. 

In order to keep that safety net in place, the commercial collection industry has developed the Triadic System, a symbiotic relationship between collection agencies, law lists and collection attorneys. 

The Triadic System organizes the flow of delinquent accounts, and it has been around for a very long time. In the late 1800’s, collection industry professionals began working together to find the most effective way to serve the credit granting community. The Triadic System quickly became recognized as the most effective way for credit grantors to obtain legal representation, when that becomes necessary for the collection of delinquent accounts. When the credit grantor places a delinquent account with a collection agency, and the agency determines that legal action may be necessary to effect collection, they turn to a law list to find a qualified collection attorney practicing in the debtor’s location, where the lawsuit would have to be filed. 

The Triadic System provides creditors with important benefits and protections throughout the process:

• Collection agencies know precisely the right time to seek legal action. Involve an attorney too soon and the creditor may spend more money than necessary to collect the debt. But waiting too long may mean a financially troubled debtor has spent all available resources on other debts or filed for bankruptcy.
• Law lists carefully examine attorneys' credentials and references, and also require them to have significant collection experience before admitting them to the list. They re-evaluate each law firm continually, and provide a bond that provides financial security to the creditor.
• Specifically, to be on the ALQ list, an attorney must not only meet the initial screening requirements, which includes a credit check and extensive application, but also clear an annual public records check that ensures there are no tax liens, bankruptcies or other potentially disqualifying issues. In addition to these precautions, the ALQ maintains a $2 million bond that protects the collection agency and creditor against theft.

It only makes sense that the credit grantor will increase its chances of recovery by using a collection agency that uses the Triadic System, and we are proud to have been an essential part of that system for more than 117 years. 

This article has been edited by Steven Gan of Stellar Risk Management Services, Inc.

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