You can’t manage what you can’t measure. That’s as true for collections litigation as for any other aspect of business. Yet most creditors farm out their accounts and have little visibility into how their litigation strategy is working.
To ensure that their litigation is producing maximum recoveries with minimum cost, creditors need to track all of their accounts with consistent and timely measures. Thankfully, this is becoming easier now that cloud-based litigation management platforms can collect and standardize information from all of a creditor’s law firms, regardless of the matter management software they use.
Here are the three metrics that give creditors the best control of their collections litigation:
The overall figure is important, but the real power comes from the ability to drill down into the components: how recoveries and expenses vary by location, vendor, product type, and other variables. Lenders can use these insights to optimize the litigation process and also to adjust future lending to tighten standards in areas where net recoveries are low.
The effective return of a litigation program depends as much on the speed of recoveries as the amount. Monitor each step of the process by number of accounts and dollar value:
- Placement Acknowledgment
- Demand letter
- Asset searching
Here, too, drilling down can spot bottlenecks by state, specific product, or vendor.
Collections law firms rely on outside companies to perform many of the functions needed to work accounts, including:
- Process service
- Account scrubbing (to prevent collections for deaths, bankruptcies, and active service members
- Mailing letters
- Appearance counsel
- Asset searching
The creditor often pays the cost of these vendors and is responsible for their actions. So, it’s essential that lenders know which vendors are working on each account.
Collection litigation systems not only deliver the metrics creditors need, they also make the entire litigation process more efficient. Learn more by downloading the Oliver Guide: “High Performance Collections Litigation: Five ways analytics and automation can increase recoveries, improve compliance, and reduce hassle.”