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CFMA CEO Stuart Binstock, a lawyer, opened the May/June 2013 issue of the organization’s Building Profits magazine with a message about minimizing legal risk. He quoting French Philospher Voltaire as saying that “he had two terrible experiences in his life – once when he lost a lawsuit and once when he won a lawsuit.”
Litigation is messy. It’s also expensive, frustrating, long, confusing, and typically pointless. You want to avoid litigation.
What does this mean for mechanics lien filings? I believe that filing a mechanics lien is actually a tool to accomplish your company’s goal (i.e. getting paid) without drowning in legal expense (i.e. filing a lawsuit).
Mechanics Lien Claims Have So Many Consequences That They Produce Payment Before Litigation Is Necessary
A mechanics lien claim is as close as you’re going to get to a silver bullet when collecting an unpaid account. The reason is that there are so many effects to a mechanics lien filing that its bound to create a situation to motivate payment.
We previously published an article and presentation about the 17 Ways A Mechanics Lien Works To Get You Paid. This is a great overview of the different consequences caused by a mechanics lien filing that can operate to get a company paid, but it is by no means an exhaustive list. A mechanics lien filing, in other words, actually works in more than 17 ways to get you paid.
The result here is that most mechanics liens get paid quickly and without any further legal or collection effort whatsoever.
As a matter of fact, in a survey we conducted of mechanics lien claims filed by levelset, we found that 65% of lien claims are paid within 90 days without any needed litigation. That’s an extraordinarily high number considering that liens are typically filed as a last effort to collect and otherwise uncollectable debt, and filed when the debt is already quite old.
The fact is that when you file a mechanics lien, you are more likely than not to get paid without needing to enter into litigation. It is a legal tool, but it is a legal tool that helps you avoid litigation.