I don’t know if it’s normal but pre-payment of debt collection fees is not demanded by all firms. Colin Grace of Grace Lawyers – one of the biggest players in the field – wrote this:
Debt collection is not dissimilar to any other form of legal process. When we are engaged by an Owners Corporation for our debt recovery services, we will issue our invoices for the work that we undertake and expect to be paid for our work just like any other service provider (eg. plumbers, electricians). If we do our work well (which we do, always!), then we will recover the levies and the costs that the Owners Corporation has incurred as part of the process. The advantage for Owners Corporations is that the legislation allows for them to then legally recover the amounts of our invoices from the owner who failed to pay their levies (in part or whole).
As we have been working in the industry for many years we don’t normally ask for payment before we undertake the work, we undertake the work and then issue our invoices for payment within 30 days. As a favour to some of our clients who are dealing with plans in dire need of funds, we may agree to allow them extended time to pay our invoices (so as to allow for some recovery action to bring in some funds first).