Burlingtons can assist clients with the recovery of debts of all sizes.
As a guide, we set out below our typical fees for recovering an undisputed debt for less than £100k.
These fees do not include VAT or disbursements (i.e. fees payable to third parties including agency, process server or barrister’s fees (if necessary) which will be payable in addition at the rate of 20%.
They are based on the assumption that the debt is undisputed and that the recovery action is straightforward.
They are also provided on the basis of the usual number of hours typically spent on the matter by our fee earners. The time spent depends on the number of documents provided, whether any further information is required as well as the complexity of the matter (i.e. whether the dispute involves legal or factual issues which require more detailed analysis).
You can help us to reduce the number of hours spent on a matter by providing us with all the relevant documents at the outset. Typically, in order to advise in relation to a debt recovery matter, we would require the following documents:-
The invoice(s) giving rise to the debt;
The underlying written contract (if any) or correspondence evidencing an agreement;
Correspondence chasing the payment of the debt / raising any dispute in relation to the debt; and
Purchase Order(s) (in relation to the sale of goods) and any applicable terms and conditions.
Our Hourly Rates
Our hourly rate for debt collection matters are as follows:
Head of Litigation
Where possible we will use more junior fee earners (supervised by a partner) to keep costs at a minimum.
Our hourly rates are reviewed annually. The above rates apply for 2020 and may be subject to change from time to time.
Issuing a Claim at Court
Letter of Claim
The first step to take before issuing a debt claim in Court is to send a Letter of Claim to the debtor in accordance with the relevant Pre-action Protocol. If the recovery of the debt is brought by a company against an individual, the Pre-action Protocol for Debt Claims (Protocol) will apply which will also involve providing them with forms to complete on their income and outgoings and with the individual being allowed more time to respond.
Typical fee: £750 – £950
Typical timescale: If the Protocol applies, the debtor should be given 30 days to reply and complete the necessary forms. However, if the Protocol does not apply, the debtor is usually given a period of14 / 21 days.
We will also advise you in relation to claiming interest on your debt and, in certain cases, compensation under the Late Payment of Commercial Debts (Interest) Act 1998 (as amended by the Late Payment of Commercial Debts Regulation 2013).
If the Letter of Claim provokes a response from the debtor and we enter into negotiations / correspondence on your behalf, our hourly charges (above) plus VAT will apply.
Should the debtor not pay despite receiving our Letter of Claim, the next step may be to issue a Money Claim against the debtor. This can be done online via the Court portal system or on paper – the options depend on the complexity of the case.
Typical fee: £1,500 – £2,000
Typical timescale: 1-2 week(s) to draft and file the Claim with the Court
Should it be necessary to instruct counsel to draft the necessary documents, their fee would be in addition to our costs estimated above and would need to be confirmed by counsel’s clerk.
A Court fee will also be payable in order to issue the Claim and will depend on the amount you are looking to recover including interest:-
Paper form fee
Online Claim Form
Up to £300
£300.01 to £500
£500.01 to £1,000
£1,000.01 to £1,500
£1,500.01 to £3,000
£3,000.01 to £5,000
£5,000.01 to £10,000
£10,000.01 to £100,000
5% of the Claim
4.5% of the Claim
Over £200,000 (or not limited)
N/A (claim needs to be on paper)
If the debtor, after being served with the Claim Form, fails to file an Acknowledgment of Service with the Court or a Defence, we will make an application for Default Judgment.
Typical fee: £350
Typical timescale: After service of the Claim Form:
14 days if no Acknowledgment of Service is filed
28 days if an Acknowledgment of Service is filed but no Defence is filed (nor any request / application for an extension of time).
Recovery of legal costs
If Default Judgment is entered against the debtor, the Court will award you fixed costs (which will be added to the Judgment debt). However, these fixed costs are nominal (usually around £130 – however, please note that the amount does depend on a number of factors).
The fixed costs regime applies unless the Court orders otherwise. Accordingly, we may advise that you apply to Court for a different Costs Order. The appropriate Order will then, ultimately, be a matter for the Court’s discretion.
If your Claim is disputed and you are ultimately successful at Trial, then (provided your debt is for more than £10,000), you may be entitled to recover a proportion of legal costs from the debtor. The Court has a broad discretion in relation to what costs order to make (which will depend on several factors). Fixed costs apply to certain parts of the legal proceedings if the debt is for between £10,000 and £25,000.
Disputed / Complex Claims and Claims for more than £100k
If your debt is for more than £100k, is disputed or is complex (i.e. there are legal or factual issues which require a more detailed analysis), our fees would be more than the typical fees stated above and we would be pleased to provide you with a fee estimate for our work and the options available at the outset.
If despite, obtaining Default Judgment, the debtor does not pay, there are several ways to enforce a Judgment including:
Warrant of Execution whereby a High Court Enforcement Officer (previously known as a Bailiff) attends the debtor’s property to seize assets up to the value of the Judgment Debt.
Charging Order whereby the debt is secured as a charge against the debtor’s property.
Third Party Debt Order whereby, should the debt be owed money by a third party, this debt is ordered instead to be paid to you.
Attachment of Earnings Order whereby the debtor pays a proportion of his / her monthly income to you in instalments in satisfaction of the debt.
The method of enforcement and our charges for enforcement action will depend on the debtor’s personal circumstances (e.g. if the debtor owns property or is employed). Should it be necessary to take enforcement action against the debtor, we would be pleased to provide you with a fee estimate for this work.
The timescales for enforcement action will vary depending on the specific facts of a case and the method of enforcement.
NB: the above fees and costs are provided as at July 2020 and may be subject to change. We review our hourly rates annually. The Court and other third parties also regularly review their charges / fees and so are also subject to change.
Dominic Holden and Richard Berry are the partners in the team and each have over 10 and 14 years’ (respectively) experience in debt recovery.
Charlotte Tyrrell is a Senior Associate in the team and has over 7 years’ experience in this area.
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