Kudos to Dean Kaplan of the Kaplan Group (@TheKaplanGroup) for putting together an awesome infographic visually guiding folks “through the process of determining if they should file a lawsuit when all other avenues have failed to resolve the collection problem.” I think the infographic is bloody good. In fact, when I recommended it on Google Plus and LinkedIn, I used foul language to express my excitement over how good of a job the Kaplan Group did with this.
A Mechanics Lien May Make This Important Decision Tree Moot
A few weeks ago I published an article title the 17 Ways A Mechanics Lien Works To Get You Paid. Peruse through this article and you’ll find that the vast majority of reasons work without you lifting a legal finger. If you are required to start a legal fight, the mechanics lien will likely put you in an excellent position because of the multitude of parties involved.
Accordingly, the Kaplan Group infographic may be rendered moot by a mechanics lien filing. It does this in two ways.
First, if you have multiple parties on the hook, you may not be limited by the bankruptcy of insolvency of one of the parties. Now, with so many parties involved, you’ll need a perfect storm of insolvency before your claim is hopeless.
Second, the property itself becomes security for your debt, and sometimes you’ll actually acquire priority over other previously filed encumbrances. As a result, you may not have to worry about bankruptcy, insolvency, other debts, etc. The mechanics lien gives you a main line into the payment artery.
In Some Cases You May Still Get Stuck With This Decision
The mechanics lien is an awesome remedy and it usually works. In fact, it works in a vast majority of cases. It would be crazy to claim that it was guaranteed to work every time. In some cases, unfortunately, the stars are just aligned against you.
An example may be when you contracted directly with the property owner and the property owner becomes insolvent. In this case, filing a mechanics lien isn’t going to get any additional parties involved with your claim. Instead, you’ll be stuck with only the claim against the property owner and the property. You’re hopes will cling to whether the state gives your lien or other encumbrances priority, and if the other encumbrances win, you’ll need to think about whether a lawsuit (or a mechanics lien for that matter) is worth it.
In this circumstance, the Kaplan Group decision tree is highly relevant.
Deciding on whether to litigate against a particular party (like your customer) is very important. You don’t want to spend the time and money litigating without even the possibility of recovery. This infographic is a great visual that helps your company understand if the costs of litigation is going to pay off in the end.
Now For The Infographic
I talked about it so much – just let you see the thing already! Here it is:
Source: Should You Sue Your Customer? was produced by the team at The Kaplan Group.
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