Legal - When clients don't pay...

2hawks

Greetings.

Recently I performed a large amount of work for a client who recently decided he didn't want to pay for his services. Once it was apparent he wasn't going tp pony up (A mere $500) I placed a notice on his site saying it was temporarily disabled pending payment.

I was soon called by my clients son and then began the harassment.

Does anyone know of any legal assistance or precedents that I might look to in building my case if this should go to court?

Dan.

LordShryku

We seem to be getting a lot of legal questions around here lately...

Have you tried persuading them to pay with the gentle suggestion that only a baseball bat can make?

Anyway, do you have a contract? -Key-
If not, who's the web space belong to? Is it under their name or yours? If theirs, and you don't have a contract, you could have some trouble.

2hawks

It was mostly negotiated via email, but the project kept morphing during it's course.

It was turning into a project that was just never going to end. there was no contract. I pressed the issue when it became apparent he never intended to pay me for my services.

I am trying to debate whether or not I can take him to court and win or not. He has an independant ISP in control of the website.

Dan.

LordShryku

Do you still have all of the emails and is there a clear negotiated price in there?

2hawks

I do have all the emails, and the price in the emails is double that which I ultimatly accepted. Unfortunatly, other work was requested outside of what was mentioned in the emails, and since these other projects took precedence, what was in the emails barely got touched.

There was a young woman he had brought on to help, but she was dismissed by the client very quickly. I hardly met with her about 3 times.

I think the only major thing going on my side is he has several previous cases with the dept of labor for not paying his employee's, and some prioro conviction for fraud or some other. the later still needs confirmation.

Dan.

LordShryku

Well, you got a tough one here. From the sounds of it, the final agreement about what was to be done and what was to be paid is not written down anywhere. So if it does go to court, it will be another your word vs his case. With all of his priors, you'll have some leverage against his character. Though, with those, I don't think he'll even try taking you to court. Doesn't sound like he has a lot of luck there. Plus, for $500, it'll probably be bumped down to a small claims court.

2hawks

It seems everyone else I have spoken with would agree with you here.

Other than sending out a few thousand emails soliciting disgusting personal favors on his behalf I doubt it woudl be worth my time to persue either.

I hate looking over my shoulder though. anyhow, thanks for the feedback.

Dan.

drawmack

next time do the development on your own server and don't provide the files until they pay in full, and make them pay half before you even let them see the development area. That's what I started about a year ago and it works great. This way the deadbeats don't even get the program started.

2hawks

Thanks for the input.

I would so love to rid myself of the chaff that does come my way.

Thanks again.

Dan.

vaaaska

If the site is his, I would recommend taking down that note ASAP. An attorney will look very disfavorably towards that.

$500? Let it go, you've wasted enough energy already. You'll get it back on the next project. If you have no contract you won't have anything in court.

But, this brings up something I've done some writing about in the past - project management. It's the difference between being an amateur and a pro; keeping a client comfortable or not. Email, being the first thing you should avoid when discussing money details and agreements. If you have to you have to, but otherwise, get in the car and look the person in the eye - you will likely know if they are worthy.

Also, retainer fees. Minimum retainer for somebody you've never worked with is $500 from now own, plain and simple. Billing happens at least every two weeks and every week on larger projects.

It's a good lesson to learn and everybody does; just be glad it wasn't $50,000 (which happened to a friend of mine).

Good luck...v

Elizabeth

You wouldn't happen to have a lawyer buddy, would you? One that could write a letter on their law firm's letterhead... one that would outline your case and notify your client that if you don't receive payment for services rendered then you will be taking them to court (whether you actually are or not is irrelevant). We've used this in the past, and it seems to light a fire. Again, most times we hadn't intended to pursue it in court, but to the client it looks like we're not messing around.

We've usually paid our firm's lawyer for their time in writing the letter - a lot cheaper than actually going to court 🙂

I'm sure you've learned your lesson with this one, but just for future reference:
-always have a contract
-document everything(even phone conversations)
-always get partial payment upfront, especially from new clients

Even if you take all the necessary precautions, you will get some bad debt- the trick is to try and minimize those experiences 🙂

Sorry it happened to you though!!

AstroTeg

I'm not a lawyer, but placing a notice up on his site is uber-wrong. You are now directly impacting his business and I've heard these people can sue you for lost revenues (or something like that).

I think the key here is communication. Before you start the project, you really need to outline what the cost is to the client and what work you'll be doing for that price. Then have them agree to the specs before you start. Then there shouldn't be too much fuss at the end of the project.

But life happens and this guy hasn't paid up. Now what? Instead of taking retaliation action of putting a notice on his web site, keep the communication channels open. Why doesn't he want to pay you the $500? Is he just broke? He get ticked off at you? Instead of $500, is there another number he is willing to pay? Sometimes, writing work off isn't too bad (you can claim it on taxes!) and you still get some money - maybe not all $500, but maybe you could get $300 or $250 - its better than nothing.

If you're really hard pressed for the $500, nothing gets their attention like a notice to show up to small claims court. If you want to mess with a lawyer, you can (and might be recommended if you haven't played with small claims). Luckily, my business partner deals with small claims pretty often so we skipped the threatening lawyer letter (and the associated fees) and went directly to small claims. The great part was the letter gets sent to the company owner. The business was headquartered in Florida and they would have had to come up to Ohio. It was cheaper for them to pay up than it was to come up to fight it in court. But to do this, you HAVE to have paperwork showing you were to do work, they signed off and approved the work, and the work was completed. Notice: "completed". If you have a note up on the site or you've taken the site down, this will throw a wrench in things such as the "work completed" (the client didn't ask for that note to be posted).

The key: communication
For next time: get it all in writing
Pay up front: be creative

For paying up front, I like to do 1/3rd up front. Our clients seem to appreciate that too.

Another story about this: Big (for us) e-comm site a client wanted. We came up with a quote. They signed it. We didn't start any work. We hadn't gotten 1/3rd up front. They send us money (about $600), but we still didn't do any work. The money they sent didn't cover the 1/3rd. About 5 months later they call checking in on us (we called them a few times but they hadn't returned any phone calls). They asked, "what's the status of the site?" We said, "Not much, you haven't paid the 1/3rd yet."

Notice here there was failure to pay. Since it had been 5 months, we drafted a new quote. This time, we've set it up with milestones. Each milestone must be paid in full BEFORE we start work on that milestone.

Lesson I learned from here was: 1/3rd up front gives you an idea how willing they are to pay (and timely). I've also learned you have to be flexible and creative with the billing or you screw yourself.

As for your situation here, determine if this fight is worth fighting for. You might chalk this one up to experience and use it with taxes.

Elizabeth

Originally posted by AstroTeg
I'm not a lawyer, but placing a notice up on his site is uber-wrong. You are now directly impacting his business and I've heard these people can sue you for lost revenues (or something like that).

Hmm.. IANAL either, but it seems to me that if you were in the business of TV advertising and a client didn't pay, and so the TV ad didn't run (equivalent to saying "this site temporarily unavailable")... I don't think the client could sue for lost revenues. Or if they didn't pay their phone bill, and the phones were turned off- could they sue for lost revenues for that? Doesn't seem likely. And if they have the money to sue, couldn't 2hawks countersue for his lost income too? That would at least help his case that they had the money and weren't forking it over.

I don't think there's anything wrong with placing a notice on their site - they didn't pay for the service so why should they reap the income from the service?

vaaaska

Originally posted by Elizabeth
I don't think there's anything wrong with placing a notice on their site - they didn't pay for the service so why should they reap the income from the service?

It's a risk not worth taking. And yes, if it's their domain and such, they could potentially sue you for alot more than $500.

Elizabeth

I think of it this way... if I went to a printer and had them print up brochures for my company, then I didn't pay for them, the printer would have every right NOT to release those brochures to me, right? Even though it's all my material, my copyrighted logos and material and such, I would not have the right to take those brochures and pass them out because I haven't paid for the service. In my opinion (again, IANAL) it's a similar thing. 2hawks performed a service, they didn't pay for it, so why should he give them access to the files that he created (the brochures, in my example)? If they want the site fixed, they are more than welcome to either pay for the services he provided and get the site back to where it should be, or find another web consultant to put new files out there (i.e., print new brochures). Perhaps a better solution is to just take all the files off the server, and leave them with a 404 instead of creating a "temporarily unavailable pending payment" page.

We have been pushed around by large companies who think they don't have to pay us because we're small and we can't fight back. We've also been pushed around by small companies who claim they don't have the money to pay us or "the check is in the mail". It's cost us a lot of money, and it sounds like for 2hawks $500 is a big deal. Everyone says 'let it go' but $500 is $500. $500 goes a long way in a small business, and it's not right. Even if it is small potatoes to some, it's more the principal of the thing.

AstroTeg

Originally posted by Elizabeth
Hmm.. IANAL either, but it seems to me that if you were in the business of TV advertising and a client didn't pay, and so the TV ad didn't run (equivalent to saying "this site temporarily unavailable")... I don't think the client could sue for lost revenues.

I don't think its fair to compare a web site with a TV ad. A web site does more than just advertise (e-comm, data communications, etc). Also, you never see a TV ad air with a message saying the company didn't pay their fees/bills. Here, the site is up and running and 2hawks has interrupted the functionality of the site (regardless of how major/minor). Plus 2hawks is performing work on a production web site that was not authorized by the client. There's way too many legal issues here. I am almost positive to say someone has "been there, done that" although I sadly can't produce any references. I do remember reading the web site owner took the developer to court for doing this and won big.

Originally posted by Elizabeth
I don't think there's anything wrong with placing a notice on their site - they didn't pay for the service so why should they reap the income from the service? [/B]

From where I sit, the lack of payment is between the developer and the site owner. Not between the developer, the site owner, and the site owner's customers. Its completely unprofessional to do something like this (although this is my opinion).

I'm not a fan of litigation, but if you're not making any progress AND you have the documents and proof, you take the site owner to court (or small claims court). You give them 2 choices. Pay up or go to court.

To further re-enforce this idea: if you have medical bills but you don't pay, the doctor doesn't come over and "undo" his services or tattoo a note on your forehead to pay up. If you have your car repaired but you don't pay, a mechanic doesn't come back to remove the parts they installed and then promise to reinstall them once you pay up (or paint a note on your car suggesting you pay).

AstroTeg

Originally posted by Elizabeth
... I didn't pay for them, the printer would have every right NOT to release those brochures to me, right?

Right. But there's a couple scenerios here. You pay by invoice. You pick up the material and spread them around. But 30 days later you get the invoice and don't pay. Do you still have the right to pass the material around? Maybe not, but how can the printer control what YOU do with the material they gave you already? Their only course of action is to take you to court over non-payment.

If a client isn't going to pay at the end of a job, then maybe the up front payment wasn't enough. You want to have them pay enough that they not only have a general interest in getting the work done but they actually now have a financial risk (and interest) in making sure the project makes it to completion. Depending on how the up front payment goes can help you determine how much risk you're taking on. A staging server may be a requirement for the large or problem jobs. Otherwise, taking the work done off the web site might be an option. This, to me, would seem more professional. But a lawyer would be able to tell you what risks you'll have by doing this.

vaaaska

Originally posted by AstroTeg
From where I sit, the lack of payment is between the developer and the site owner. Not between the developer, the site owner, and the site owner's customers. Its completely unprofessional to do something like this (although this is my opinion).

Yep. A judge would shoot you down so hard in court for defacing a persons website even under these circumstances. 'Fair' is a relative term and the above explanation describes exactly how a judge would see things.

LordShryku

Bah! You've already done it, might as well go for broke! Just replace the current sign with "This guy's a deadbeat" or something like that 😃

Elizabeth

Ok, so perhaps as I said before, simply removing the files and leaving them with nothing would be better than 'temporarily down due to nonpayment'... but what happens if you don't pay your web host? Your site goes down until you pay. Can they then sue the web host for interrupting their communication?

Heh- I like the analogy about the car mechanic painting a note suggesting you pay. I guarantee that if people did actually do things like that, there would be a hell of a lot less bad debt in the U.S. 🙂