Definition
A contingency fee is a collection agency's compensation structured as a percentage of the amounts it recovers, with no fee if nothing is collected. Rates typically range from 20% to 35% for early-stage commercial or consumer accounts, 35% to 50% for charged-off or aged consumer debt, and higher for very old or small-balance portfolios. Legal collection often adds a separate percentage on top.
Contingency pricing aligns the agency's incentive to collect, but it also means agencies focus on the easiest, largest accounts and leave the rest unworked. The true cost is the fee plus the recovery the agency never attempts.
Example
An agency recovers $50,000 on a $400,000 placement at a 35% contingency rate. The creditor receives $32,500 and the agency keeps $17,500. Of the $400,000 placed, $350,000 was effectively never worked.
How HL Hunt handles it
HL Hunt charges a flat subscription plus a commission that runs from 26% on the Free plan down to 3% at Enterprise, far below agency contingency. Because AI works every account, gross recovery is typically 2x to 3x higher, so net recovery to the creditor often more than doubles.