Client Who Won't Pay
Client Who Won't Pay
(OP)
I recently did some work as an expert witness. The lawyer hired a search firm that found me. I signed a contract with the search firm that said in effect I would submit invoices and they would pay them within 60 days of the invoice date. The contract says NOTHING about the law firm paying the search firm or the defendant (in this case) paying the law firm. Just that the search firm would pay me. I have two invoices that have both gone over 90 days old. I (long since) contacted the search firm and was told "we know that your contract does not specify that you have to wait until we get paid, but we don't have the money to pay you so forget it." The snotty, cavalier response set me off, but I decided to wait until the first of December (when one invoice will be 150 days and the other will be 120 days old) before doing anything like visiting my lawyer (which I'd rather avoid paying for).
I've been in business for 12 years and this is the very very first time that I've ever had an invoice pass 90 days unpaid. I know, I have been outrageously lucky (or really good at not working for deadbeats). The norm seems to be some percentage of invoices that never get paid. How do you guys go after deadbeat clients? Combined, these guys are into me for nearly $100k so small claims is out of the question. I have written very strongly worded e-mails to all of the officers of the company. All I can think of remaining is to sue them, but I'm in New Mexico and the contract says that the court of jurisdiction is New York so suing them gets pricey (although the contract does allow prevailing party to collect legal fees, it may be a while before I see any of it and I don't want to be out of pocket any more than I already am).
I've been in business for 12 years and this is the very very first time that I've ever had an invoice pass 90 days unpaid. I know, I have been outrageously lucky (or really good at not working for deadbeats). The norm seems to be some percentage of invoices that never get paid. How do you guys go after deadbeat clients? Combined, these guys are into me for nearly $100k so small claims is out of the question. I have written very strongly worded e-mails to all of the officers of the company. All I can think of remaining is to sue them, but I'm in New Mexico and the contract says that the court of jurisdiction is New York so suing them gets pricey (although the contract does allow prevailing party to collect legal fees, it may be a while before I see any of it and I don't want to be out of pocket any more than I already am).
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist





RE: Client Who Won't Pay
Though the horse is out of the barn, signing a contract with a jurisdiction outside your general locale is always difficult. You might be able to get that part of the contract set aside though, particularly if you did services in your own state of residence and primary practice. You might have some luck with going back to the law firm for which you provided services. They might be willing to pay you or help you get paid, particularly if your service was beneficial to their outcome. Chances are they have a client with a deep pocket or good insurance, so maybe you'll find something there.
Search and referral firms are often low on assets and can disappear quickly. If you can trace the ownership, you might have some recourse legally, but it will cost you. Also, many attorneys who specialize in collections often work on a contingency, though it is usually high (40-50 percent).....but then 50 percent of something is better than nothing. Ideally you could prove this is a pattern of action by the company and their practice could be fraudulent. That might get some punitive damages in there! Your lawyer will be amazingly valuable in the contractual advice, assuming he/she is contact savvy.
Their attitude would piss anyone off. They have no sense of ethics.
Good luck. This one might have been an expensive lesson in contract review and client vetting.
Ron
RE: Client Who Won't Pay
I've had such a run of good luck with search firms that I never even asked myself the question "what do I do if they don't pay?". I have talked to the lawyer I was working with and the ultimate client is in to them for a bunch of money (3 partners in the firm and a bunch of associates full time for over a year and no payment since February) so he's not going to be a lot of help.
I get cold calls for expert witness stuff several times a month, I always look at the complaint and see if I can support the position they want me to support (mostly I can't and walk away), but next time even before reviewing the complaint I'm going to vet the firm. Live and learn.
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
Judges generally will get really pissed off if an expert witness is not paid. Just a hint...
Mike McCann, PE, SE (WA)
RE: Client Who Won't Pay
RE: Client Who Won't Pay
I took a few beatings when I ran my one-man office. I walked away from trying to collect because of the anger it caused in me. I never did get rich but I survived. It happens to all of us.
RE: Client Who Won't Pay
In this case you need a lawyer who specializes in collections. You may have to bankrupt the search company.
B.E.
You are judged not by what you know, but by what you can do.
RE: Client Who Won't Pay
Mike's right. I had to go to the judge presiding over a case once to get paid by the attorney. He was not happy with the attorney and by the time he was through with him, the only one happy was me!
RE: Client Who Won't Pay
RE: Client Who Won't Pay
RE: Client Who Won't Pay
In our company, we won't (maybe can't) pay our subcontractors until our client ponies up. We can't be loaning money to our clients by paying our subcontractors 60 days before we get the money. I'm not sure how this is spelled out in our contracts, but I'm sure it's clear.
It's kind of apples and oranges, since you had a different arrangement. But I wonder about the business acumen of any entity who would guarantee payment before they get the money.
RE: Client Who Won't Pay
I wouldn't have signed a contract that said "paid when paid". I would not work through your company if that is your contract language. In that situation I would have no influence on how aggressively your company was pursuing payment and I don't do passive very well. In a situation like that I would either walk or I would sign a contract with your client (with the agreement of your firm).
The search firm had two tasks: (1) find someone for the job; and (2) pay them. For that the search firm added 25% to my invoices. Over the whole relationship they've made considerable money for no ongoing work. For that obligation to pay me, they made a bunch of money. They failed to meet even that minimal obligation.
I've worked through third parties before, and this is always the deal. One of them in London (the client was in South Africa) guaranteed payment within 7 days and met it every time--they were averaging 85 days in getting paid by the company that I was working for, but the third party had their business structured to provide the float for a substantial fee, nothing wrong with their business acumen, just a different business model than yours. I though I was getting a deal like I had in London here, but I was wrong.
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
RE: Client Who Won't Pay
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
RE: Client Who Won't Pay
Mike McCann, PE, SE (WA)
RE: Client Who Won't Pay
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
Bankrupt the search firm and get an official receiver appointed.
When a company enters bankruptcy, a trustee is appointed to liquidate the company's assets and use the proceeds to pay the creditors. The money owed them is one of the company’s assets.
If they do not pay the debt, they will face collection efforts. Since the company is going through bankruptcy, it will generally use an outside collection agency or third party collection agency. Once the money is collected, it goes to the trustee who then pays the company's creditors.
B.E.
RE: Client Who Won't Pay
Do you have the part where they admit they owe you the money and not the firm they connected to you, in writing? An email from a company representative or employee? If so it may make your life a little easier later.
Hire a New York lawyer to write a letter outlining your intention to sue them for the amount owed plus damages plus legal fees if they don't pay within 30 days. If they don't respond to a legal threat, they aren't going to pay you the money without being sued, ever. At that point you have to decide if you're willing to pay for lawsuit to try to recover the money, bearing in mind that just because the contract said legal expenses could be covered, that doesn't mean you'll win them nor that the amount you win will cover all of your fees.
RE: Client Who Won't Pay
RE: Client Who Won't Pay
It still is a bit early to take that kind of hit, those guys charge a lot. Taking them to court would probably be around 4% of the total (recoverable by contract), collection would be around 50% (not recoverable).
allgoodnamestaken,
Not my first rodeo. The language on default includes the losing party in the suit being liable for legal fees. I do have their agreement that they are obligated to pay me regardless of who does or does not pay them in writing. Basically they are saying "we don't have the money until we get paid, sucks to be you". The guy has called a couple of times and keeps saying "we don't have it", and when I reply that if someone has to get a bridge loan, it really should be them. To that they reply, "well, it won't be us". When I asked "are you paying your light bill?", they say "yes, those guys will turn off the lights. Your project is over, what are you going to turn off?". The guy I talked to last week said that they intend to pay as soon as they get paid, but not before.
The law firm I've been working with asked me to destroy all information I had received through them from the defendant by December 7 (standard settlement requirement). I replied with "I am unable to put any additional work on this project until I get paid, and [the search] firm has indicated that they have no intention of paying" with copies to all of the corporate officers in the search firm. Apparently several of them had pretty heated conversations with the law firm. If it queers that consent decree then all the better. I have no patience with people who don't pay their bills.
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
Mike McCann, PE, SE (WA)
RE: Client Who Won't Pay
B.E.
You are judged not by what you know, but by what you can do.
RE: Client Who Won't Pay
RE: Client Who Won't Pay
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
RE: Client Who Won't Pay
Mike McCann, PE, SE (WA)
RE: Client Who Won't Pay
Professional and Structural Engineer (ME, NH)
American Concrete Industries
www.americanconcrete.com
RE: Client Who Won't Pay
RE: Client Who Won't Pay
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
If they want, they could also blacklist the other firm under the table and effectively shut them down through a little communication. Not hard to do with the proper network. But I never said that, did I?...
Mike McCann, PE, SE (WA)
RE: Client Who Won't Pay
Dan - Owner
http://www.Hi-TecDesigns.com
RE: Client Who Won't Pay
When your product is services, you have a very hard time repossessing what you've delivered. If a client has no assets we can seize in the case of nonpayment, we handle that by means of an up-front retainer equal to an estimate of the last payment we expect to receive from them. If a payment is overdue, we stop work that day and the retainer covers us against being stiffed. If a client can't or won't pony up the retainer, we don't do the work. I'm sure that turns some potential clients off, but since we're employee owned, bad debts come out of our own pockets. We'd rather turn away business than be stiffed by people.
We honour our payment commitments to our subs based on the payment terms we agree with them before starting work. We negotiate payment terms with our clients separately. If a client is late paying us, we don't use that as an excuse to delay payment to our subs- that's what operating lines of credit are for, and why late payments are assessed interest. The only time we're late paying subs is when somebody screws up, misplaces an invoice etc., or when there's a matter of noncompliance where delayed payment is used as a lever to get the issue resolved. That's how solvent businesses behave in my opinion. I'm sure there are fields of business where "you get paid after we get paid" is the norm, and I'm very glad I don't work in one.
RE: Client Who Won't Pay
Great point about the retainer. In fact, the search firm demanded a retainer before they would commit to telling me about the project. When I asked them about it, they said that they had paid it out to me for earlier invoices that the plaintiff was late paying them. In the future I'm going to look at getting a retainer prior to committing.
I run my business exactly the way that you run yours. I recently had a vessel built for a client and the fab shop wouldn't sign an agreement with the (international) client so I contracted with them. When the fab shop's invoice came due, I paid it and then had to wait another 30 days to get paid for it. No problem, I had added a "carrying cost" to the price I quoted on the vessel to pay for any bridge loans that slow payment might require. In the end everyone lived up to their contracts and life was good. It is when people take contract terms as "guidelines" (like the "Pirate Code" in Pirates of the Caribbean) that things get ugly.
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
Mike McCann, PE, SE (WA)
RE: Client Who Won't Pay
That sounds like good advice. At what point in the process do you start drawing the retainer down? I've been on 7 cases that I thought were about half over when the case settled and my work stopped cold. I suppose I could take the last invoice out of the retainer and refund the rest.
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
I try to get 90% of the time I expect to spend with the 2/3 retainer before any court action. That minimizes any losses to me, and has been workable and reasonable for the client.
If the client proves good over time, as with any client, I will relax that some, but not too much, as with any other type of project. I am still not a bank here, as you well know.
Mike McCann, PE, SE (WA)
RE: Client Who Won't Pay
RE: Client Who Won't Pay
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
Mike McCann, PE, SE (WA)
RE: Client Who Won't Pay
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East - http://www.campbellcivil.com
RE: Client Who Won't Pay
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
RE: Client Who Won't Pay
RE: Client Who Won't Pay
A long time ago, in a galaxy far, far away... I dated a rental property manager for several years. You tend to pick up a few things over such a time period. One of those things was "Do not accept a partial payment for funds owed. It's full payment or nothing." If a renter was being evicted for failure to pay, they had 90 days to (make good faith attempts to) pay their debt. Of course, even a single penny was considered a good faith attempt, so if the penny was accepted, the 90-day clock started fresh. That clock was reset on more than one account because the rental agent didn't look up from their desk before accepting a $10 check.
Talk to that lawyer...
Dan - Owner
http://www.Hi-TecDesigns.com
RE: Client Who Won't Pay
That story is true, but it is based on contract language and rental law. The local government has an interest in people not being evicted, so they tend to write in that good-faith stuff in regulations about renting. They don't have that interest in business to business contracts.
When I was with Amoco, their policy was that every single penny that came in was immediately deposited. It didn't matter if it was an over-payment, an under-payment, or a payment in dispute (we would often get letters saying "by accepting the enclosed check, you are agreeing to ...", and we would deposit the check and when the party tried to enforce what they claimed we were agreeing to we would just say "the only mechanism we have to handle checks is to deposit them, we deposit them without prejudice or committment") and it held up in court every time).
I'm not going to cash the check until I confirm with a lawyer, but I'm pretty sure that this is just an excess of caution.
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
RE: Client Who Won't Pay
I do not know what the law is in your state, but in some states, if you have a bill due and payable for services rendered, and you accept partial payment, you have just extended credit to that person or entity.
B.E.
You are judged not by what you know, but by what you can do.
RE: Client Who Won't Pay
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
See if the terms of the contract address late payment. One would hope and think that late payment constitutes breach of contract.
RE: Client Who Won't Pay
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
RE: Client Who Won't Pay
If you are able to legally, without jeopardizing your position, can you let us know the name of the search firm?
Mike McCann, PE, SE (WA)
RE: Client Who Won't Pay
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
Mike McCann, PE, SE (WA)
RE: Client Who Won't Pay
B.E.
You are judged not by what you know, but by what you can do.
RE: Client Who Won't Pay
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: Client Who Won't Pay
Congratulations again.
B.E.
You are judged not by what you know, but by what you can do.
RE: Client Who Won't Pay
RE: Client Who Won't Pay
I do get the nature of the gesture, but it's still a bad signal, congratulating someone for getting paid 90 days past due..
Nevertheless, zdas, good for you for taking the necessary actions without doing stupid things.
RE: Client Who Won't Pay
Better that than 180 days past due with still no payment in sight...
TTFN
I can do absolutely anything. I'm an expert!
homework forum: //www.engineering.com/AskForum/aff/32.aspx
FAQ731-376: Eng-Tips.com Forum Policies forum1529: Translation Assistance for Engineers
RE: Client Who Won't Pay
Hey, dude, Congrats for breaking your arm!
(Breaking both legs would be worse)
See my point?
RE: Client Who Won't Pay
RE: Client Who Won't Pay
just one more try to get my point across, and then I'll go annoy someone else:
premium option would be: getting paid immediately.
second would be: getting paid on or just before due date.
from here on, it's only going downhill.
#3 : getting paid 90 days past due
#4: 180 days past
...
# last: not getting paid, and deep into the red because of all legal actions you've been forced to take.
Getting paid according to option number 1 or 2 should be considered the standard option, and about the only reasonable option.
Congratulating someone for arriving at option #3 is not a logic thing to do,
You'll always find worse options, so I din't think it's valid point to say that it's better than 180 days...
Having an office of my own, I fully understand the misery that comes with this situation, the time you put into this and the time you worry about it. And the money it costs you. aso.
I'd certainly not be happy with someone congratulating me with option #3; I'd much rather he'd go cursing the client (figure of speech, off course).
RE: Client Who Won't Pay
So, congrats on your silver medal, Zdas!
STF
RE: Client Who Won't Pay
That about explains my feelings. I got what they owed me. You can have good, cheep, or quick, pick one, but it wasn't cheep or quick.
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist