Legal Collections SOP

LEGAL COLLECTIONS SOP

This Legal Collections Standard Operating Procedure (the "SOP") is entered into by and between Company Name: , principal address: ("Company"), and Collections Service Provider Name: , principal address: ("Provider"). Effective Date:

RECITALS

WHEREAS, Company engages in the sale of goods and/or services and periodically has accounts receivable that require active collection efforts to protect Company assets and cash flow; and

WHEREAS, Provider possesses the operational, legal and administrative capabilities to perform collections activities and, in certain instances, to refer accounts for legal action consistent with this SOP and applicable law; and

WHEREAS, the parties desire to set forth standardized procedures, responsibilities, escalation criteria and compliance requirements governing the handling of delinquent accounts and collections activities.

NOW, THEREFORE, in consideration of the mutual covenants set forth below and other good and valuable consideration, the parties agree as follows:

1. DEFINITIONS

For purposes of this SOP, the following definitions apply: "Account" means any receivable owing to Company for which Provider has been authorized to undertake collections activities; "Charge-off" means an Account designated by Company as uncollectible for internal accounting purposes; "Legal Referral" means submission of an Account to outside counsel or filing of a lawsuit in a court of competent jurisdiction.

2. SCOPE

This SOP governs all collection activities performed by Provider on Accounts assigned by Company, including pre-legal collections, demand letters, payment negotiations, monitoring of payment plans, reporting, and criteria for legal escalation. This SOP applies to domestic Accounts unless the parties expressly agree otherwise in writing.

3. AUTHORIZATION AND ACCOUNT INTAKE

Company will authorize Provider to act on specified Accounts through written assignment files transmitted to Provider. At intake Provider must verify account data against Company-provided records, document the source of indebtedness, and record the date of placement. Company Representative: . Provider Intake Contact: .

4. AUTHORIZED COLLECTION METHODS

Provider is authorized to use the following methods as appropriate and in compliance with applicable law (select all that apply):

Authorized

Authorized

Authorized

5. INITIAL CONTACT AND DOCUMENTATION

Provider shall make a minimum of three (3) documented contact attempts by phone and one written demand within thirty (30) days of placement, unless Company directs otherwise. All contact attempts, consumer statements, and payment proposals shall be recorded and maintained in Provider's account management system and made available to Company upon request.

6. PAYMENT ARRANGEMENTS AND SETTLEMENTS

Provider may negotiate settlements and installment agreements up to the following thresholds without further Company approval: Settlement authorization up to per Account; Installment plans not exceeding months. Any deviation or non-standard settlement must be submitted to Company in writing for prior approval.

7. ESCALATION TO LEGAL

Accounts shall be escalated to Legal Referral when they meet the escalation criteria: outstanding balance equal to or above , account aged beyond days, or where good faith collection efforts have failed. Prior to referral Provider will prepare a litigation package that includes account history, verification documents, and a statement of amounts due.

8. LITIGATION MANAGEMENT

When authorized by Company, Provider may refer Accounts to outside counsel for legal action. Provider shall coordinate with counsel, supply all necessary documentation, and obtain Company's written approval where the expected litigation costs exceed the litigation cost threshold of .

9. RECORDS, REPORTING AND METRICS

Provider shall deliver to Company written reports at the following frequency: . Reports must include placement listings, status codes, balances recovered, settlements, and accounts referred to counsel. Provider shall retain records in a searchable format for a minimum of months following final disposition.

10. COMPLIANCE WITH LAW AND STANDARDS

Provider shall perform all activities in strict compliance with all applicable federal and state laws and regulations governing debt collection, consumer protection, privacy and data security. Provider will promptly notify Company of any regulatory inquiry, subpoena, or consumer dispute affecting placed Accounts.

11. CONFIDENTIALITY AND DATA SECURITY

Provider shall maintain the confidentiality of Account information and implement administrative, technical and physical safeguards to protect personally identifiable information and sensitive financial data. Provider shall not use Company data for any purpose other than performance under this SOP and shall destroy or return Company data upon termination in accordance with Company's instructions.

12. FEES AND BILLING

Provider's compensation shall be as set forth in separate fee schedules agreed by the parties. Contingency fee percentage for contingency placements: %. Provider will provide detailed remittance reports and remit recovered funds to Company within business days of receipt, less agreed fees and disbursements.

13. NOTICES

Notices required under this SOP shall be sent to the following contacts:

14. AMENDMENTS, WAIVERS AND COUNTERPARTS

No amendment or waiver of any provision of this SOP shall be effective unless in writing and signed by authorized representatives of both parties. A party's failure to enforce any right shall not constitute a waiver. This SOP may be executed in counterparts, each of which together shall constitute one instrument.

15. GOVERNING LAW; SEVERABILITY; ENTIRE AGREEMENT

This SOP shall be governed by and construed in accordance with the laws of the state specified by Company at placement of each Account, without regard to conflict of laws principles. If any provision of this SOP is held invalid or unenforceable, the remaining provisions shall continue in full force and effect. This SOP constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings related to collections procedures.

16. INDEMNIFICATION

Provider shall indemnify, defend and hold harmless Company from and against any and all claims, liabilities, losses, costs and expenses (including reasonable attorneys' fees) arising from Provider's breach of this SOP, willful misconduct, or failure to comply with applicable law. Company shall indemnify Provider for claims arising from Company's breach or misrepresentation of account information.

17. DISPUTE RESOLUTION

The parties shall first attempt in good faith to resolve any dispute arising out of or relating to this SOP through direct negotiation between senior executives. If unresolved within thirty (30) days, disputes may be submitted to mediation, and if mediation fails, to binding arbitration in accordance with mutually agreed arbitration rules.

18. AUDIT RIGHTS

Company reserves the right to audit Provider's records related to placed Accounts upon reasonable prior notice. Provider will cooperate and provide reasonable access to records, personnel and systems necessary to verify compliance with this SOP and applicable law. Any audit shall be conducted during normal business hours and in a manner designed to minimize disruption to Provider's operations.

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