So many clients have asked me the same question over the years. “Can I recover my collection costs and attorney’s fees? This customer really wronged us and they should have to pay every dime we are owed!” they say. As much as I wish I could tell these clients that we can and will recover all of their collection costs and attorney’s fees, the law in the Commonwealth of Pennsylvania simply isn’t as helpful in this regard.
The Commonwealth of Pennsylvania generally follows the American Rule. That means that all of the parties to any given lawsuit are generally required to pay for their own attorney’s fees. The exception to that general rule is that the law allows a party to recover their attorney’s fees if there is a statute permitting recovery of the same or if the underlying contract between the parties to the lawsuit calls for the prevailing party to recover their attorney’s fees.
Collection costs are similar, but generally, they must be found within the parties’ agreement. I’m not familiar with a statute that calls for a party to be able to recover collection costs, but maybe someday we will.
So what does this mean for you? Put a clause in your contracts, invoices, terms and conditions, and anywhere else you have contractual language that calls for you to recover attorney’s fees and collection costs in the event of a default under your agreement! Otherwise, you will be left hoping a statute exists that allows you to recover them, and for most collection clients, that statute simply doesn’t exist.
If you have a contract that you would like to revise to include a clause to permit you to recover your attorney’s fees and collection costs, or if you are wondering if a statute exists that might let you collect them, please give Bernstein-Burkley a call so we can talk through your concerns and set you up for future success.