Legal Row Over Debt Program
The Age
Monday June 20, 1994
A threat by lawyers to prevent the distribution of debt-collection software unless certain conditions are met is to be considered soon by a court committee. Kester Cranswick reports on the implications.
Victorian Law Institute is attempting to block a software program which could help companies cut their debt-collection costs. The program, called The Debt Collector, is being sold in other states, but the local lawyers' group has warned that unless key elements are removed it may restrain marketing and distribution of it.
The Debt Collector, from the NSW-based Compulaw, is a $1750 application that allows a company to generate correspondence, ranging from polite letters to summonses, for all stages of the debt collection process. It also prompts operators for actions that they need to take.
Compulaw has versions of the program for NSW, Queensland and the ACT, used by several hundred customers. When it decided to launch a Victorian version, it wrote to the Victorian Law Institute.
The institute decreed that companies using The Debt Collector had to use a solicitor for a number of key debt-collection steps, including obtaining a garnishee order. Unless these steps were omitted from the program, the Law Institute would take action to prohibit its distribution.
An incredulous Bob Dean, the managing director of Compulaw, wrote to the Victorian Premier, the Attorney-General and the Minister for Small Business, and contacted `The Age'. He accused the Victorian Law Institute of protecting solicitors and penalising business in its efforts to collect debts.
The Attorney-General has issued a please explain to the rules committee of the Magistrates Court, which is meeting next month to consider a change of rules.
Users of The Debt Collector are not fazed by the kerfuffle. The national credit manager with Allsafe Safety, Jo Lionett, said he had had no difficulties with the program. He issues about 100 complaints a year and doubts that the courts notice they are not issued by a solicitor. Nor have there been any defences on the basis that the complaint was not from a solicitor, he says. Lionett finds The Debt Collector results in substantial savings. Using a mercantile agent costs about $315 per summons; the program costs about $120.
The general manager of finance and administration with Discount Freight Express, Bernie Boniface, uses the program to do the bulk of the company's debt collection, with similar savings. The good thing is it steps you through the debt collection process, he says.
Nor have the legal problems stopped Peter Isaacson Publications from using a rival program from Mercantile Systems to help recover debts.
The company's credit manager, Graham Webster, was unaware of the threats from the Victorian Law Institute.
The executive director of the Law Institute of Victoria, Robert Cornall, argues that the need for solicitors in the debt collection process has to be examined in the light of public policy and for more than just debt collection. This is best served by ensuring litigants are served by solicitors on the basis that they are aware of the rules of court, the relevant law, and the best manner of presenting a case, he says. He also says there are many examples of the law differing from one state to another.
The rules committee will review the law as it affects Compulaw at a meeting next month. Cornall admits that the rules may need to be changed. The fact that the Compulaw program does not go so far as to represent people in court may count in its favor, he says.
As far as taking action against Compulaw, or other sellers of similar software, is concerned, Cornall says he does not think it appropriate given that the matter is before the committee.
The debate coincides with the Melbourne Magistrates Court launching an EDI (electronic data interchange) system that allows solicitors to electronically file documents with the court from their computers.
Complaints, better known as summonses, are filed over an IBM network with the Department of Justice's courts computer centre. The next morning, the solicitor receives an acknowledgement message and a case number, and can then print the complaint for serving on the defendant.
The new system takes 24 hours, compared with the two weeks or so of manual systems. Four Melbourne firms, Corrs Chambers Westgarth, Fijalski and Associates, Fitzgeralds, and Read Kelly and Associates, have been trying out the system and have lodged more than 7000 complaints - 10 per cent of all Victoria's complaints - all to do with debt recovery.
The Victorian Government intends to extend EDI to other documents, such as requests for default orders. A company called Tailored Computing Systems has written some PC software called Litigation Guardian and an EDI translator to work with existing case management systems.
At last week's launch, the Attorney-General, Jan Wade, said that she anticipated that at least 50 per cent of the civil workload in the Magistrates Court would be processed via EDI.
© 1994 The Age
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