State Court Collections - South Carolina

I. Learn About Your Client and the Debtor.

Before you accept a collection case, make sure you know your client’s business and the debtor’s business.

Make sure your client has standing to sue in South Carolina. For any creditor, that means that the debt on which it is seeking to collect was properly assigned to it. For a business creditor, that also means that the business has a certificate of authority to transact business in the state of South Carolina. See S.C.Code Ann. § 33-15-102(a), (e); S.C.Code Ann. § 33-15-103; A Fast Photo Exp., Inc. v. First Nat. Bank of Chicago, 369 S.C. 80, 630 S.E.2d 285 (Ct.App. 2006).

Make sure that you have a basis for the exercise of personal jurisdiction over the debtor. See S.C. Code Ann. § 36-2-803 (long arm statute); Cockrell v. Hillerich & Bradsby Co., 363 S.C. 485, 611 S.E.2d 505 (2005).

Make sure your client has realistic expectations and knows the potential costs and potential outcome of the collection case. A client with unrealistic expectations may some day have another name – “legal malpractice plaintiff”.

Always have a written engagement letter that sets forth any fee arrangement and payment terms. You do not want to become a creditor of your client.

It is a rare case where you would accept a collection case on a contingency basis, primarily because of the risk of counter-claims, the exemptions available to an individual debtor in South Carolina and the likelihood that actual payment of any judgment could be several years in the future. Rule 1.5 of the Rules of Professional Conduct, codified at South Carolina Appellate Court Rule 407, requires that all contingent fee agreements be in writing. That would include contingent fee agreements for collection cases.