“No Trace, No Charge” = No Good

What is “No Trace, No Charge”?

This article relates to tracing assignments, primarily those undertaken by tracing agents for law firms and collection companies. No Trace, No Charge is basically an agreement (or an understanding) between the customer (the law firm) and the tracing agent that effectively shifts the entire risk associated with an unsuccessful trace to the tracing agent. In other words, if a trace is not successful then the customer will not be billed at all, and the tracing agent will absorb any and all costs incurred in the process.

There are only two possible outcomes for a trace, a successful trace (where the person being sought has been located) and an unsuccessful trace (where the person’s whereabouts are still unknown or unconfirmed). When a trace is conducted on a “no trace, no charge” basis, the outcomes mentioned are handled as follows:

  • If the trace is successful then the customer will pay the tracing agent the full tracing fee. The tracing agent’s costs will be offset against that fee and any surplus would be the tracing agent’s profit (a deficit would mean a loss)
  • If the trace is unsuccessful then the customer will not be billed, and the tracing agent will be out of pocket for any and all costs incurred in attending to that trace.

Attorneys are the largest consumers of tracing services and, not surprisingly, they also happen to be the main proponents of the “no trace, no charge” concept. Tracing agencies, especially newly established agencies and self-employed tracing agents, have no choice but to accept traces on a “no trace, no charge” basis if they hope to tap into the vast tracing market controlled by the law firms and debt collectors. One medium-sized law firm could keep a startup tracing agency working indefinitely and at full capacity. As such, tracing agencies have had to bite the bullet, and accept “no trace, no charge” just to get a foot in the door. I should know, because that was me 10 years ago when I tried to get into the tracing industry.

Examining “No Trace, No Charge”

No Trace, No Charge is flawed. Its inherently unfair, counterproductive and not in the best interests of any party – with the exception of the person being sought. From the perspective of the tracing agency, it encourages (actually demands) that the bare minimum be done in each case and that a system be developed to identify easy traces for further attention. Any case assessed to be difficult or complex is automatically closed without any significant effort or expense. These “hard” cases are then handed to the next tracing agent who will likely also put it aside the moment it is thought to require more effort or expense than is deemed profitable. Some cases go months, even years without anyone actually lifting a finger.

My first 10 “No Trace, No Charge” cases

Put yourself in the shoes of a tracing agent. Me. You’ve just started out, cash flow is tight, but you’ve just landed a contract with XYZ law firm and have been sent your first 10 tracing assignments to complete within 30 days. Nice. Your fee has been agreed at R500 per successful trace and ZERO for an unsuccessful trace. In your mind your thinking, great, I’ll get R5000 for completing 10 traces – minus whatever expenses I have.

First Case Started

You pick up the first assignment and find that there is very little usable information apart from a person’s identity number, names and last known address. No sweat, you log onto your various tracing services and start searching for new information on that person.

One Hour Later

An hour later you’ve got a couple of leads. You grab the phone, and start calling numbers, making discreet enquiries with past coworkers, neighbours, friends and relatives.

Another Hour Later

Another hour has gone by, but you’ve managed to establish that the target now resides somewhere in Sunnyside, Pretoria and works for a car rental company. You identify all car rental companies in a 50km radius and you start calling.

Yet Another Hour Later

Another hour later and you hit the jackpot. Your target works at ABC car rental company at the Lanseria Airport. The tracing instructions specifically request a place of residence as the attorneys wish to serve a warrant of execution on the target’s property, so you’re not quite done – but you’re pretty close, so you press on. As luck would have it, you stay 20km from Lanseria Airport and so your plan is to first identify the target and then to follow him from his work to his home in order to get the address. You scour your databases, the internet, even Facebook, looking for a photograph of the target but come up empty.

And Another Hour Later

Another hour gone. You come up with an idea to drive down to his place of business, call the target and concoct a plausible story to get him to come outside his office so that you can take a photograph. You find out that the target works until 5pm, but to avoid traffic and to have enough time to identify the target first, you leave at 3pm.

30 Minutes and 20km Later

20km and 30mins later you’re in place. You call ABC car rentals and find out that the target is a maintenance manager. That gives you an idea of how to get him outside. You call up and speak to the target. You tell him that you’re from ACME couriers and that your driver cannot find their company. You ask for a description of the building and pretend to be relaying it to the driver. You ask the target if it wouldn’t be too much trouble for him to meet your driver at the entrance as he’s now way behind schedule and will otherwise need to skip this delivery and come again in 3 days time. The target agrees and comes outside. No driver ever arrives. The target disappears inside again and you wait.

Two Hours Later

2 hours later and the target hasn’t left work. Eventually, at around 6:30pm you spot the target and observe him climbing into the passenger set of a vehicle with someone else driving. You have no choice but to follow them. A 30min stop at the local Dros and then a detour to fill up petrol and buy cigarettes.

And even Later Still

At 7:30pm the car pulls up alongside a gated community and the target gets out and waves goodbye. You can’t see which house he enters. No problem, you approach the security guard and tell him that the target is a colleague from work and that you need to give him something. The guard says he’ll call the target and let him know. Lucky for you, the target thinks that you’re his coworker – the one that dropped him off – and he instructs the security guard to let you in. You ask the guard which number the target stays at and he gives you the details without hesitation. With that you pretend you’re receiving a phone call and tell the guard you’ll be back later. Its after 8pm and you’ve still got a 30min drive home, another 30mins to write up a report and send it to the attorneys.

Finally, First Case Complete

You’re excited. Your first trace and it was successful.

You decide to make a note of your time and expenses and arrive at this:

TIMECOSTSTRAVEL
Initial Research1 hourR45.00
Initial Telephone1 hourR38.00
Calling Car Rental Companies1 hour R32.00
Searching for photo1 hourR10.00
Travel to ABC car rentals30 minsR60.0020km
Time spent waiting at ABC3 hours
Calls to get target outsideR8.00
Following target home90 minsR90.0030km
Return trip home30 minsR75.0025km
Time to compile report30 minsR5.00
TOTALS10 hoursR353.0075km
PROFITR147.00

Eish. R147.00 for 10 hours work. Maybe it was a particularly costly trace, so you press on. Here’s how you do with the remaining nine cases:

  • Case 2 wasn’t as difficult. but it cost you more in expenses so your profit was only R102 (for 4 hours work). Haibo.
  • The next three cases were unsolvable. You spent a total of R225 in search fees and telephone calls and 7 hours of your time.
  • You succeeded with trace number 6, and did so with little work and little expense. Profit of R435.00 (1 hour worked). Yes.
  • Another successful trace, but not very profitable. R110 (8 hours worked). Mmmm
  • Two more unsuccessful traces at a cost of R180 and 4 hours of your time. Ek sê maar niks.
  • The last one was a difficult one but thankfully you made a profit of R224 even though you spent 8 hours on it.
Income ReceivedR2,500.005 successful traces R500.00
Direct ExpensesR1,887.00R1,482.00/successful R405.00/unsuccessful
Time Spent42 hours31 hours/successful 11 hours/unsuccessful
Gross Profit R613Income Received Direct Expenses
EarningsR14.60 per hourGross Profit Time Spent

How did “No Trace, No Charge” come about?

Back in the day (that is, before the web was around) tracing someone that did not wish to be found required some unique skills and an effort. There were no easy-to-access databases that one could search for a person’s current address or contact numbers. Records that were readily available, like property records from the Deeds Office or records of the Master of the Supreme Court, seldom contained any information useful in locating the current whereabouts of a person.

This meant that a tracing agent would need to develop leads by canvassing areas in which the target was known to have lived, worked or visited, and questioning people that might have any information related to the target and his or her current whereabouts. This type of boots-on-the-ground detective work was both time-consuming and expensive, and “no trace, no charge” was simply not an option.

In the early nineties, around the time that the Internet was being adopted by big business and academic institutions (in South Africa at least), companies like TransUnion ITC and Experien had already began digitizing credit-related information about consumers and developing new information products that were available to businesses for a fee. As time went by, more and more companies and organizations became connected, and the amount of information available to a tracing agent meant that in most cases they could locate a person without leaving their office. There were still costs, for example, subscription fees for access to data, telephone calls and general business running costs, but on a whole, the cost to trace a person had come down significantly.

Seeing an opportunity for easy money, the tracing industry went from a handful of experts to a crowd of database searchers. The resulting competition drove prices right down, and shifted the center of gravity over to the customer who no longer had to accept the terms of the tracing agent, but could now dictate the terms. If you don’t like it, then so be it. There are a dozen other tracing agents waiting to do the work.

In a way, it is understandable why “no trace, no charge” exists. An attorney firm, for example, might have 100 or even 1000 debtors on their books. To incur costs continuously as tracing agents try and fail to locate each debtor would place a huge financial burden on their client and might cause people to question whether or not handing debtors over to an attorney was the smart thing to do.

At the same time, those same attorneys who bill their client for every paper clip and comma and who itemize their billable time down to the minute, seem not to care that a tracing agent undertaking work in good faith will foot the bill alone if the trace isn’t successful. The reality is that unsuccessful traces are not necessarily unsuccessful because the tracing agent has failed – more often than not, circumstances (not the tracing agent) have dictated the outcome. To those honest, hardworking tracing agents, the message received is that their time and effort isn’t worth jack. With that sort of relationship being the norm, it is no wonder that attorneys are forever looking for new tracing agents. Agencies sprout up, are full of enthusiasm to begin with, and as the reality sets in, the enthusiasm wears off and the agency needs to change modus operandi to survive.

This article is a work in progress and is to be completed in early April.

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