Mark describes how his law firm collected large amounts from consumers using demand letters, draft statements of claim and in-house collectors, and shares stories from the 12 years he spent as a collection agency lawyer.
Transcript
The letters that went out
One day I was driving into work, probably around six a.m., listening to my favorite radio station, and I heard the fellow on the radio making fun of a lawyer who had sent out a demand letter on the lawyer's letterhead to a Hamilton resident for an account where the outstanding balance was under $12. As soon as he read the letter, I knew it was from my law office. So there were a few smiles when I got to the office about that. Subsequently, the individual, an older gentleman who had received the letter, went to his local newspaper, the Hamilton Spectator, and they did a story about it. There was a picture of this gentleman holding up my letter, and it appeared with the story.
My law firm was sending out hundreds of thousands of lawyer's letters, so obviously I wouldn't know the names of the people receiving them. But people would tell me they'd received a letter from my law office, and they were kind of insulted by it. For example, there was a teller at my bank branch who told me, I received a collection letter from you. And who else? A neighbor across the street. One of the parents of the kids in my daughter's class at school. And part of the health care team that looked after my wife for the delivery of one of my daughters had got one of the letters. So there certainly were a lot of people who received these letters, and some of them wanted to let me know.
The draft statement of claim
A draft statement of claim essentially comes in two parts. The first part is a one-page cover letter on the letterhead of the Law Offices of Mark Silverthorn. Essentially the letter would say that I am the lawyer for the particular creditor to whom the recipient owes a certain amount of money on a particular account, and that my instructions are to commence a lawsuit against them unless the account is paid by a particular date. Then I would indicate, please find enclosed a draft statement of claim that has been prepared and is ready to be issued with the court.
The second document was the draft statement of claim. Because we're in Ontario, we typically used a document called the plaintiff's claim, which is what a creditor would use if they were suing someone in small claims court. On the first page it would indicate the name of the creditor as plaintiff and the name of the debtor as defendant, and we'd also put a red seal on it, about an inch and a half in diameter. The one thing we did do, in the top left-hand corner in bold letters, was put the word DRAFT. A lot of people, when they got this document, thought it looked like it came from the court.
So it was very effective, in the sense that a high percentage of people who received the cover letter and the draft statement of claim believed that if they did not pay by such and such a date they were going to be sued, because the paperwork had already been prepared. I subsequently learned that the Richmond Hill small claims court would routinely have people who had received the draft statement of claim come to the court and try to file a defense.
How effective they were
There was one instance where my law firm sent out some draft statements of claim on behalf of a particular creditor. You have to appreciate that when a creditor sends files to a collection agency, they don't send one file. They may send 500 or they may send 10,000. In this particular instance the creditor sent over a whole whack of files, and the only problem was that the outstanding balance on each one of these files was incorrect. My law firm sent out a draft statement of claim on all these unpaid accounts, and then the creditor advised us that they had provided us with the wrong amounts.
Just to give you an idea how effective these draft statements of claim were, a lot of people paid these amounts, and in some instances the amounts I had demanded might have been somewhere between two and ten times what they actually owed. As a result, my firm had to send out a lot of refunds.
Employing collectors in my law firm
I did collection work between 1994 and 2006, and between about 2002 or 2003 and 2006 my law firm employed individuals making collection calls, essentially just like collectors at a collection agency. I do want to point out that it was important for me to make sure these individuals acted in a professional manner. The people who regulate lawyers would never tolerate the kind of rude and unprofessional behavior that is tolerated from collectors working at collection agencies. But I did employ a significant number of people whose job was essentially that of a collector, and many of them had worked at a collection agency as a collector before I hired them. In 2006 I was employing approximately 25 people full time, and their only job was to make collection calls.
My regrets
I do have a number of regrets. I think the biggest is that I was taking advantage of unsophisticated people. There are lots of people out there who are sophisticated and have access to legal advice, and these people would not be paying accounts in circumstances where it wasn't necessary. The people who were unsophisticated or uneducated, or new Canadians, were much more likely to pay accounts in circumstances where they were judgment proof, or where a limitation period had expired and they would have had a good defense.
One of the things I've tried to do is level the playing field between creditors and collection agents and those who are receiving collection calls. In 2010 I wrote a book called The Wolf At The Door: What to Do When Collection Agencies Come Calling, published by the Canadian publisher McClelland & Stewart. It was designed to be a reference guide for people who were receiving collection calls, or who were having problems making the minimum monthly payments on their credit cards and had significant debt problems.
For nine years I worked as a consumer lawyer, representing individuals across Canada who were struggling with debt. One of the things I did was negotiate settlements on their behalf with their creditors and their authorized collection agents, and in many instances the creditors would agree to accept a one-time lump sum payment for substantially less than what the people owed, maybe 15 or 25 cents on the dollar.
I retired from the practice of law in October of 2019, and in 2021 I founded a consulting business called Debt Coach Silverthorn. Our website is chock full of articles that are helpful for people who are struggling with debt, I also offer 30-minute telephone consultations for people who want some one-on-one coaching, and the Debt Coach Silverthorn channel publishes a weekly YouTube video, so there is plenty of content for people who want to know more about how to deal with their debt situation.