The Lawyer's Role in a Debt Collection Case: When Do You Need a Lawyer?
Many debt collection cases can be handled by a debt collection agency or as a small claim without a lawyer. But some cases need legal help. Here is when a lawyer makes sense, and what it costs.
Debt collection agency or lawyer?
When a customer does not pay, both debt collection agencies and lawyers can help you recover the claim. The difference is mainly what they are allowed and able to do:
- Debt collection agencies must be authorised by the Danish National Police (Rigspolitiet) and specialise in out-of-court recovery of many claims: reminders, debt collection notices, payment agreements and often payment orders too.
- Lawyers (advokater) may carry out debt collection without separate authorisation because they are subject to the rules for the legal profession. They can both recover claims and conduct lawsuits, advise on legal questions and represent you in complicated disputes.
Many debt collection agencies work with lawyers when a case needs to go to court, and many law firms have their own debt collection departments.
When you can manage without a lawyer
- Undisputed claims: if the customer is simply passive, an agency or you yourself can use reminders, a debt collection notice and (for claims up to DKK 100,000) a payment order at the bailiff's court.
- Small claims: claims up to DKK 50,000 are as a rule handled under the small claims rules. The judge guides the parties, and you do not need a lawyer.
Expert tip: Advice can pay off even in a small claim
Although you do not need a lawyer in a small claims case, brief advice before you file can help you judge whether your documentation is strong enough and how best to present the case.
When you should use a lawyer
- Disputed claims of some size: if the customer disputes the claim and the amount is above the small claims limit, it becomes an ordinary civil case with written pleadings, evidence and a main hearing.
- Legally complicated cases: for example disputes about defects, construction contracts, counterclaims or the interpretation of agreements.
- Arbitration: cases before, for example, the Danish Building and Construction Arbitration Board.
- Security and charges: when security, charges or retention of title need to be assessed.
- Insolvency: when the debtor is in financial difficulty, in restructuring or bankrupt, or you are considering filing a bankruptcy petition; this has consequences and costs you should know about in advance.
- Foreign debtors: where jurisdiction, governing law and enforcement in another country must be assessed.
What does it cost, and what do you recover?
Lawyers typically charge by time spent, a fixed price or a combination. Always ask for a written estimate before you instruct the lawyer.
If you win a lawsuit, the court will as a rule order the other party to pay your legal costs, including an amount towards your lawyer's fees. The amount is set by the court, and the courts have guideline rates for it. It does not necessarily match your actual bill, so you may be left with part of the costs yourself. And if the other party cannot pay, a judgment does not help much.
Expert tip: Check your insurance
Many business insurance policies include legal expenses cover that can pay part of the costs of a lawsuit. The cover typically has an excess and a maximum, and some types of case are excluded. Check your policy before you file the case, and ask the lawyer to apply for cover.
How to choose the right lawyer
- Choose a lawyer with experience in debt collection and commercial disputes, ideally in your industry
- Ask for an estimate and an assessment of the case's prospects and risks
- Clarify how you will be kept informed
- Ask whether the lawyer will try to settle before the case is filed
If you are unhappy with a lawyer's work or fees, you can complain to the Danish Disciplinary Board of the Bar (Advokatnævnet).
Always assess the economics
Before you go to court, do the maths: what is the claim, how good are your chances, what will the case cost, how much will you recover if you win, and can the other party pay at all? Sometimes a settlement or an instalment plan is the best outcome.
Getting started
Many claims can be recovered without a lawyer, but when the claim is disputed, large or legally complicated, a lawyer is often a good investment. Through InkassoHurtig you can get no-obligation quotes from police-authorised debt collection agencies and lawyers and choose for yourself. This content is general information and not legal advice.