Defaulting on loans - A Solution to lenders' excessive legal fees
A legal tech company, Legal Lens, launched in South Africa to address improper and unethical legal billing.
Legal Lens utilises artificial intelligence, machine learning and experienced attorneys to digitally review companies and individuals’ unpaid legal invoices and reduce their legal fees by up to 60%. Legal Lens handles all discussions with the attorneys to ensure that the relationship between its clients and the attorneys is maintained and strengthened. Where Legal Lens is unable to reduce the legal fees, it will not charge its clients a fee.
Many businesses and individuals in South Africa have been hit hard by the Covid-19 pandemic, resulting in increased defaults on loans. The burden of defaulting on loans carries a devastating consequence. In the lenders pursuit of recovering the debt owed by the customer through the legal system, provision is made for recovering all legal costs incurred in the process. Customers, however, have no way of ensuring that these legal fees are fair and proper. It is no secret to lenders that recovering excessive legal fees from customers affects the relationship going forward and may even result in losing a customer to a competitor. Despite this, lenders have made little effort to protect their clients by ensuring that legal fees which are recovered from defaulting customers are both fair and accurate. Lenders in turn incorrectly assume that attorneys are trustworthy and that fees charged are proper and ethical.
The South African Law Reform Commission recently released a discussion paper on the investigation into legal fees in South Africa. Like many other contributors to the discussion paper, a top law firm and banking institution in South Africa acknowledged that unethical billing practices exist in South Africa. Without an effective solution, unethical and improper legal billing will continue to be a reality for South Africa.
When lenders receive their legal invoices from their attorneys for the recovery of debts owed by customers, lenders should send their unpaid legal invoices to Legal Lens for a digital review. Once the customer is ordered by the court to make payment of the debt and the associated legal fees, the customer would then have peace-of mind knowing that the legal invoices have been subjected to independent review and that any inflated legal fees have been reduced. Legal Lens protects the relationship between the customer and the lender, as the customer is able to appreciate that the lender has made all attempts to safeguard the customer from further debt resulting from inflated legal fees. For lenders who are unable to recover the legal fees owed by customers, Legal Lens’ reduction of the lender’s legal fees assists in reducing bad debt.
At a time when cost saving is paramount, Legal Lens’ solution has the benefit of reducing inflated legal fees for both customers and lenders, and just as important, protecting their relationship.