Mon 31 Jan 2022

How a tech company recovered debt owed

The below scenario is fictional and is intended to provide an example of the type of matter where our success fee option, only charging a fee if money is recovered, provides an alternative to funding a commercial litigation claim. A start-up software development company that designs apps for businesses appointed us to act for them. They had delivered an app to a national holiday rental company. The final invoice for £100,000 plus VAT was issued but their client came back to say that there were some glitches with the app, so they'd only be paying £20,000 for it. The software development company was confident that the app was built to a good standard and any glitches with it were only small and capable of resolution. 

  • The start-up company was relying on the money due to them from this app to give them capital to hire new developers and take on more work.  They couldn't afford to accept the £20,000 on offer, but - as a start-up business with no money in the bank - they couldn't afford to pay lawyers to sue their client.
  • Because our commercial litigation team agreed to act on a success fee basis the start-up company were able to recover what was due to them at no financial risk.  Without a success fee, they wouldn't have been able to afford to pay lawyers.
  • The customer knew that the case was funded to conclusion so knew the start-up company would go all the way to a full hearing if they needed to. This resulted in them paying what was due without further delay.

This case demonstrates that Morton Fraser's menu of feeing options allows our clients to proceed with legal action in the way that makes best financial sense for them. In this instance, the client could not afford to pay lawyers on a "pay-as-you-go" basis.  They needed the money they were due from their customer to carry on their business.  Our success fee agreement meant that they recovered payment from their customer at no financial risk. Until lawyers were involved, the customer was not willing to increase their offer. Without a success fee agreement the start-up company would not have been paid what they were due.  

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