Discussion and Comparison of Fee Structures
KMK Collections offers three distinct compensation options for our clientele. Although
the contingent fee method is the most often selected by clients (because
payment of fees is primarily generated from collections made), KMK Collections
provides clients maximum flexibility based upon the risk of collection
loss.
The three options are:
- 1. Contingent Fee and Suit Fee Basis: KMK takes the risk of collection.
- 2. Time and Billing Basis: The client creditor takes the risk of collection.
- 3. “50/50” Basis: the risk of collection is split between the creditor client and KMK.
It is mandatory that creditor client fully and clearly communicate to KMK Collections, in writing, which compensation structure is to apply at the time of the placement of the delinquent account for collection. There will be no subsequent opportunity to change the compensation election. Strict adherence to these standards avoids unnecessary misunderstandings and is in the best interests of both KMK and the creditor client.
The following summary illustrates the major differences:
| Option | Description | Risk Allocation | Bottom Line |
|---|---|---|---|
| 1. Contingent Fee Structure | The most common method. Fees are paid primarily from collections made. | KMK assumes the risk of collection. | Clients pay the fees specified in our Contingent Fee Schedule from recoveries made, including a suit fee if court action is recommended by KMK and authorized by you. |
| 2. Time and Billing Fee Structure | Lawyer time as incurred, regardless of success. | Client assumes the risk, but does not incur contingency fees on any recoveries if successful. | Clients pay for all time incurred in the collection process, regardless of success, but there are no contingent fees, or suit fees if court action, assessed on recoveries made. |
| 3. 50/50 Fee Structure | KMK bills 50% of hourly rates for time expended and earns 50% of the usual contingent fees plus 50% of any suit fee assessed if suit started. | The risk is split between Clients and KMK. | Client pays only half the hourly rate for our time expended, but we assess half our standard contingency fee on recoveries made, and half of any suit fee assessed if suit is started. |
