In Collections litigation there is one client communication dreaded above all others: “We’re coming next week, be ready for an audit.”  This simple sentence creates a knot in the pit of most collection attorney’s stomachs.  It turns a good day into a bad one and before you know it your lead staff is in an uproar: pulling reports and files and trying to locate the most current Standard Operating Procedure (SOP).  To some, the stress may be unbearable.  To others, this call induces no stress at all.  Why? Because these attorneys know the key to surviving an audit is knowing and understanding the relationship with the client.

 

By knowing your relationship with your client, you can figure out how to prepare for the audit so it is as stress free as possible.    Each Client fits into one of three categories:  New Clients, Older Clients where there exists a good relationship, and Older Clients where the relationship is rocky.  Before you even reach for the SOP, in order to survive the audit, you must figure out who this client is to you.

 

New Clients: Odds are if this is the first visit, the New Client is coming to verify that everything is working properly. After all, the client would lose money by switching firms frequently. To prepare for this audit, look at your SOP and compare it to your daily routine; look for ways you can improve.  If for some reason your firm has not been doing something in strict compliance (which is bound to happen when servicing multiple clients) don’t try to cover it up- this will only reflect poorly on your integrity.  Rather, investigate the problem and take corrective measures.  When the issues you have anticipated arise, tell the auditor that you realize this is a problem and it has been corrected; show examples.  Take detailed notes of suggestions made by the Auditor.  Work with the Auditor to find a solution to anything you have not anticipated.  By approaching the audit this way, rather than trying to cover up compliance variations, you not only show your client that you are aware of their concerns, but you show them your integrity which will allow your relationship to grow further and stronger.

 

Older Clients/Strong Relationships: Collections litigators often get complacent when they have a good relationship with a client and everything seems to be operating smoothly.   When your relationship was new, you may have taken the time to periodically check compliance issues.  However, as you have become more comfortable working the business, these routine maintenance checks often lapse.  As a result when the dreaded ‘audit’ phone call comes, there is more worry than when the client was new, because you haven’t run routine compliance checks and the amount of accounts placed with you significantly grown. The worry sets in: if there is a problem how wide spread is it?

 

In order to survive this audit, it is important to remember your client relationship.  Odds are that you reached this point with your client by being honest and forthright.  For this audit when you go through your SOP, you should spot check a variety of accounts which were placed at multiple time frames.  If for some reason you find that somewhere along the line, a process got off course, you need to pinpoint when the deviation occurred and how.  Once you pinpoint this, you should be able to correct it immediately. People make human errors, processes get skewed, and so long as you have a course of action to fix them, this client, with whom you have strong ties with, should be fine.  Do not try to cover up the problem.  These are Auditors!  They will find out, and rather than fess up to an error, by implementing a cover up you run the risk of jeopardizing the strength of your relationship.  Rather, be open, be honest, and come up with a plan of action as to how to fix any problems.  If you do that, you will survive this audit.

 

Old Client/ Rocky Relationship: The biggest fear producing audit is with a client who you have a rocky relationship with.  Always remember, it’s costly for clients who place in bulk to conform their systems to another law firm.  In most situations the client would rather mend an existing relationship than forge a new one.  As such, to survive this audit, always assume that the client is there to mend the relationship.  Use this audit to try to save your relationship.  When you go through the SOP, investigate where problems arose and why the client might not be happy with your performance.  Look at numbers, I.T. communication issues, and litigation performance.  Take the time to speak with your team and find out any specific issues they may have encountered while working the client’s business which have caused problems with compliance.  Use this information to formulate the time line of events as to when and why these problems cropped up.  Figure out how these problems broke your relationship. Once you figure this out, come forward with a plan of action.  Figure out precisely and specifically how to fix the problems.  Once you have figured this out, be honest with the client and present this to them in a logical fashion.  Show them that despite the fact that you may have had problems, they should keep their business with you because you are familiar with their processes.  Do not try to think of ways to cover up problems, this will only create mistrust and most likely cause the client to terminate your relationship.   
 

At the end of the day, the most important thing you can do to survive an audit is to prepare, be honest, and come up with plans of action to correct errors.  If you do this, regardless of the stage of your relationship, you should be able to survive the audit.  Remember our clients wouldn’t spend the money to send auditors if they weren’t interested in growing and fixing our relationships.

 

 

Melissa Meggison is an Associate in the firm of Pollack & Rosen, P.A. in their Georgia Office.   Pollack & Rosen, P.A. is a regional law firm with offices in Florida and Georgia. Pollack & Rosen, P.A. with is a full service law firm that specializes in liquidation of accounts receivable. Our firm has received an AV rating from Martindale-Hubbell. Pollack & Rosen, P.A. was established August 1, 1995.  Our Clients include major hospital corporations, not for profit healthcare facilities, hospital based physician groups, banks, major corporations, credit card issuers and debt purchasers.  Contact melissam@pollackrosenpc.com.