Solicitor or recovery firm: who to instruct.

Two professional categories will help a UK creditor recover an unpaid commercial invoice: a solicitor's firm and a commercial debt recovery firm. They overlap on some matters, separate on others, and the cost difference can be material. This guide explains what each does, when each is the right choice, and how a sensible creditor decides.

What a recovery firm does

A commercial debt recovery firm specialises in pre‑litigation pursuit of undisputed B2B debts. Its work is procedural rather than advisory: a structured demand sequence on professional letterhead, calculated invocation of the Late Payment Act, escalation through statutory demand or county court claim where required, and management of the recovered funds through a designated client account. Recovery firms are not law firms. They do not appear in court. They do not advise on disputed merits. Their value is the discipline of the demand sequence and the leverage of professional letterhead.

The fee model is the distinguishing feature. Most recovery firms operate on a "no recovery, no fee" basis or charge a fee that is recoverable from the debtor under Regulation 5A of the Late Payment of Commercial Debts Regulations 2002. The creditor is generally not out of pocket. Our fee, for example, is recovered as part of the sum demanded from the debtor.

What a solicitor does

A solicitor's firm with a commercial litigation practice provides a wider service. They advise on the merits of the claim, draft pleadings, conduct correspondence under privilege where relevant, represent the creditor in court proceedings, advise on disclosure and witness evidence, and pursue enforcement after judgment. They can act on disputed matters where the recovery firm cannot.

The fee model is hourly billing or fixed‑fee project work. Hourly rates for commercial litigation in the UK range from £200 per hour at small firms outside London to £800 or more at central London firms. A defended county court claim through to trial typically costs the instructing party £5,000 to £25,000 in legal fees. Costs are recoverable from the losing party on the fast track and multi‑track, but the recovery is at the court‑assessed level rather than the actual fees incurred.

The cost comparison on a typical undisputed debt

For a typical undisputed commercial debt of £5,000:

• Recovery firm: fee of approximately £750 (15 percent), recovered from the debtor under the Late Payment Act. Net cost to the creditor on a successful collection: zero. Time to recovery, typical: four to eight weeks.
• Solicitor: pre‑action correspondence and a money claim issuance, billed at hourly rates, typically £500 to £1,500 in fees. The court fee adds £205. On a successful default judgment, the court fee and fixed‑cost component are recoverable from the debtor; the rest of the solicitor's bill comes out of the recovery. Net cost to the creditor on a successful collection: typically £300 to £1,000 absorbed. Time to recovery, typical: six to twelve weeks for an undefended claim.

For undisputed matters, recovery firms are economically dominant. The arithmetic is simple: the recovery firm's fee is paid by the debtor, the solicitor's fee comes out of the creditor's pocket on the margin not recovered.

When the recovery firm is the right choice

The recovery firm is the right choice when:

• The debt is genuinely undisputed.
• The debtor is a UK limited company or LLP.
• The debt is between £1,000 and approximately £100,000 (smaller debts are uneconomic for any professional intervention; larger ones may justify direct solicitor instruction).
• The creditor wants to minimise out‑of‑pocket cost on the matter.
• The earlier informal chasing has not worked and a procedural escalation is the right next step.

When the solicitor is the right choice

The solicitor is the right choice when:

• The debt is disputed on substantial grounds and the dispute requires legal advice on the merits.
• The matter involves complex contractual interpretation, expert evidence, or adjudication.
• The debtor is overseas or based in a jurisdiction requiring foreign court proceedings.
• The matter is high‑value (typically £100,000 or above), where the cost of the solicitor's input is justified by the recovery potential.
• The creditor needs ongoing legal advice on the relationship beyond the debt itself (for example, where there is a continuing supply contract that may need to be terminated as part of the dispute).
• Insolvency or other regulated procedures are required.

The hybrid pattern (the most common in practice)

For most UK creditors with an undisputed commercial debt, the optimal sequence is recovery firm first, solicitor referral if necessary. The recovery firm runs the demand sequence on its letterhead. Most matters settle within Letter II without any solicitor involvement. For the small minority that proceed to litigation, the recovery firm refers the matter to a panel solicitor with the documentary trail already prepared.

This is how we operate. Our panel solicitor takes Letter III referrals where the matter has not settled within the demand sequence. The creditor has the leverage of the demand sequence (which costs them nothing) plus the pathway to litigation (which is referred only if needed). The efficiency advantage compounds across a portfolio of matters.

The questions a creditor should ask

Is the debt disputed?

If the debtor has, in writing and before the due date, raised a substantive objection to the work or to the contract, the matter may be disputed and a solicitor's input is appropriate. If the debtor has been silent or has merely delayed, the matter is undisputed and the recovery firm is the proportionate route.

Is the debtor an incorporated entity in the UK?

If yes, recovery procedure is straightforward. If no (a sole trader, a partnership of individuals, a foreign company), the recovery firm's standard process may not apply. Most recovery firms decline these matters; solicitors handle them as bespoke instructions.

What is the value of the matter?

Below £1,000, no professional intervention is economic; chase yourself. £1,000 to £100,000, the recovery firm is dominant on cost. Above £100,000, the solicitor's fixed‑fee project work becomes competitive, particularly if the creditor wants more strategic input than a procedural sequence.

Is there a continuing relationship to preserve?

The recovery firm's letterhead is somewhat impersonal; the demand sequence is procedural rather than negotiated. A solicitor can be instructed to handle the matter with more nuance where the relationship matters. In practice, solvent debtors who pay under demand pressure rarely sustain the underlying relationship; the relationship is usually over by the time professional recovery is contemplated.