[OT] Dealing with deadbeat clients/getting paid

Apologies if this is the wrong forum, but since all the work in question was done on an FCP system (OS X, 10.4.11, FCP 6.0.3, for the record), I figured this would be a good place to start. If there's a more appropriate forum, please let me know.

However, since this might not be an uncommon problem, and in my case, since all the work was done in Los Angeles, I'm hoping that the brain trust here might have some strategies or advice.

I haven't been paid for work done in a stretch between May through mid-July of 2008. I'm owed a substantial amount of money by a company in the Los Angeles area (in the low five figures.... and yes, I'm a little embarrassed that I let it get so high, but I'll save the lessons learned for another thread). I've gotten a couple of partial payments and a lot of hot air.

What's the best course of action? I've got my invoices, a record of what's been paid, and a log of all the communications we've had since July of last year, including numerous offers to negotiate a settlement that have been turned down.

It's well into the point of needing to get legal, but do I hire a collection agency or a labor lawyer? If I want to write a letter threatening legal action, what do I need to line up to make the threat a valid one? Or do I just write the amount off as bad debt somehow?

If there's any good, California-specific web resources to help figure this out, that'd be appreciated. So would any advice -- I know I'm not the only person who's been stuck like this. What did you do to get paid from a flaky client?

Jeff

I'm no lawyer but unless we're talking millions chances are whatever you're owed will be eaten up by the lawyer fees. You can always hire a collection agency to annoyingly call them everyday but they won't get the money if there's nothing to get. Why haven't they paid you? Do they know they owe you? Do they not value your services or have they simply got no money? If it's the latter you might be out of luck, especially in this economy.

Noah

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IMHO, the last place I would go to ask for legal advice is a forum full of strangers. If you have let it get into the 5 - figure neighborhood (yikes), a lawyer is in order. You had better have all your ducks in a row though...contracts / signed agreements / storyboards / anything relating to $$$ for services rendered.

When life gives you dilemmas...make dilemmanade.

God this sounds eerily familiar. Same thing happened to me. Bankruptcy was declared...that was the end of that. Lesson learned, never turn over th master tapes until you are paid in full.

Small claims won't cover this, and lawyer fees can get high. But, a lawyer is in order here.


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Lordy yes, same same but different ... freelanced for a startup once upon a time for about 3 months and let the payments ride ... went on vacation with the family (spent the money that I hadn't got yet) and when I got back I discovered they'd declared bankruptcy and had gone into liquidation. I never got paid a penny ... but at least I wasn't as badly stung as the full time guys and gals who it turned out also hadn't been paid. Tales of woe, eh? Not very helpful Jeff, but at least some consolation in knowing you're not the only one who's ever been in the boat.

I caught a deadbeat on my second professional project and nipped that in the bud right then. After that, I get half up front and the other half upon approval of a compressed proof...then I deliver the deliverables. Revisions are limited to 2 for free...then another fee is negotiated.

Hey...clients aren't the only ones with bills / kids / homes, right?

When life gives you dilemmas...make dilemmanade.

Even though it's a high amount, have you considered trying to put a face on it?

My husband once was owed money for over a year by a client. He decided that it wasn't going to to go over into the next year, so on New Year's Eve, he trucked down to the office of the company in question and basically sat in their office for the entire day. He told the owner of the company that he couldn't let the debt roll over into the next year, and he couldn't leave until they made good on what they owed him. (It was only a few grand, however.)

Eventually, after nearly all day, in order to get him to leave, the guy wrote a check, mumbled something about, "I guess I won't get paid this week", to which my response would have been, "That's they way it's supposed to be, Mr. Cheats-His-Contractors Man. You pay the people who do the work first when you own a company."...but my husband is much more diplomatic than I am....so he kept mum.

It might be harder since it's such a large amount that you are owed, but before you get into legal action (about which I agree with most of what's been said here...it's only really a good deal for the lawyer, but it may be your only option if they really are deadbeats...), you might want to get some face time with the people holding the purse strings and see if there isn't a way to work this out. In person. Emails are easy to set aside and forget about. A person who just wants to get what they are reasonably owed with a mien of giving them another chance to do the right thing by making good on their debt, not one of contempt, goes quite a ways. Unless they really are bad people who have no intention of making good on their debts. Then you're out of luck.

It's good that you have all the paperwork and the money trail, and don't be afraid to brandish copies while you're there to the right people, but asking them eye-to-eye what they intend to do about the debt is a good place to start, in my book.

And other than time, it really doesn't cost you anything to try it out.

Oh, by the way, my husband told the story to another guy that same company owed even more money than they did my husband this past year. That guy did the same thing, and after several attempts to make him go away with a bad check, he did finally get a real check with the amount he was owed.

Also, if you are getting the feeling that they might declare bankruptcy, make sure you get listed as someone to which they owe a debt. Otherwise you will get nothing. I'm not sure how that works, but you could get something in the bankruptcy proceedings, but only if you are listed as someone with whom they have a debt before they file. That would definitely be a good time to call a lawyer, as well, to make sure you are on that list, and as close to the top of the list as possible.

deb

Andy, was I working for the same company? It wasn't a startup though and I was a senior editor. They owed me 5 figures and they declared bankruptcy. The owner owed so much in back taxes that the gov't got theirs and left nothing for the employees. Generally when a company goes bankrupt employee wages are near the top of creditors to get paid except the IRS.

To me, the solution is quite simple.

You hire a lawyer, and as part of the damages above and beyond what you are owed (+%!), stipulate that you are also suing for all court costs (not insignificant) and your attorney's fees. Suits like these are filed all day long.

Tell the client up front your intentions. In writing, from your attorney, give them 5 business days to resolve ($) it. The letter from the attorney will cost you a couple of hours of professional fees, however, it is a worthwhile investment, and is the catalyst to getting these guys attention, and is a part of the complaint if you move forward.

Once they figure that they will be on the hook for probably 2-3X what they owe you (plus having to spend money to retain counsel to respond to the complaint), they will then be forced to show their hand.

Otherwise, after time has expired, pull the trigger and let them "tell it to the judge"! Also, the results of the complaint will be available online for everyone to see, and they will be categorized as either deadbeat, dumb, disingenuous, or all three to any future vendors doing a background check on them.

To me this is a no brainer! Having been through 4 court cases, and 5 depositions in the past 7 years gives one a new perspective on how" things get done."

If that's allowed in California, more power to him!

In some states (at least mine...) you can't sue for court costs and legal fees until you are in the appeals stages, and that is only for costs moving forward, not the costs you incurred to get to that stage.

deb

Interesting stories, thanks for sharing.

Good advice, JimT. I've already decided to lawyer up, and at this point was just making sure there wasn't some alternative approach to collecting that I'd overlooked.

Got any advice for finding/hiring a lawyer? What to ask/expect? Are there lawyers who specialize in collecting bad debts, or will any entertainment-savvy lawyer be up to the task?

I've got some word-of-mouth feelers out, but I'm not entirely sure that's the best route. Googling lawyers pulls up a bunch of what seem to be collection agencies who only take a fee from what they collect, which obviously sounds attractive but I'm sure there's a catch in there somewhere.

I found mine as a recommendation from my accountant. But by the time I was ready to talk it was too late.


www.shanerosseditor.com

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Shane -

What's funny is that 20 minutes after my post, it hit me to ask my accountant for a recommendation!

I know this company owes a couple of people bigger sums of money than I'm owed, too... yet last I heard they were still drowning in work. How you can't pay bills when your job board is filled with jobs takes a special kind of incompetence and mismanagement, but apparently I'm seeing it happen.

I second Joe's advice above -- you are professional editor/producer/director. You do not run an interest free loan bank.

Suggest in the future

1 - Write agreement that requires 1/2 up front (or a 1/3 if it's a long ongoing project and then a 1/3 at a half way point) (and a time line for completion -or they will let it drag for a while)

2 the other 1/2 upon completion of watermarked comp -- when then clears - they get the originals.

If they say "we don' t work that way" ..find another client. We had a MAJOR national company - tell us they would pay us 90 days after invoice for an ongoing 1/2 year project. Told them - my creditors require payment in 30 days...so that wouldn't work for us. They said they'd find another operation to work for them - but found out the other guys were a 1/3 to twice as expensive -- they came back and agreed to our terms.

Also - get all your expenses up front - planes/lodging/car rental per diem. Even the largest companies are delaying payments and no one is immune to bankruptcy until the economy stops it's slide.

Best Andy

In this economy - cash is kind --

For billing, Joe's got it right. We've gone a step further on our bigger client's and had signed contracts stipulating rates and scope of work, etc, etc. Just to clear the air ahead of time and to protect us later.

Had to get a lawyer friend to write us a few letters and make a few calls to one client, you won't believe how that changes peoples tones. It cost us a couple hundred bucks and we negotiated a slightly smaller settlement with payments over 6 months but we got paid in the end, which was the important part. We also learned our lesson not to let long-standing working relationships change how we do business.

Never happened to me, pick your clients wisely knowing that you can make them stoked
at the same time understand their customer needs, cash up front for the known offenders
yeah they will go elsewhere but who cares.
I turn down 5 jobs a month based on Karma, Feelings and Zen.
I say... Walk away, lessoned learned.
C

"Karma, Feelings and Zen..."

Like OMG! Those guys are such bitches!

I would be careful who you listen to!

They have probably set up their own production company and are taking your ex-clientele to the cleaners!





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It is more about "performance" under contract law than debt collection. The money owed is just a symptom of a larger core problem.

Furthermore, it is good business practice to have counsel on permanent retainer, as (s)he is just a phone call away when trigger time arrives. Typically $2500 for above average service. Set aside $ for this as its not the case of if a disagreement will occur, but when.

Next time have a very strong and specific contract in hand which incorporates many of the posts that recommend $ in advance, $ for an expenses draw down, TERMS, progress payments, etc. (on other words - no "wiggle room" for the client), and you won't have to use your retainer!

Yeah...I'll second Scott on having a Lawyer make a few phone calls in your behalf. I have done it. Not only does it work, I even got a profuse apology. Sometimes, that's all it takes to "shake the tree" is the smallest bit of official LEGAL PRESENCE. It's a heck of a lot cheaper than court costs too

Can't stress enough how important it is to have some kind of legal knowledge and protection. Clients think they are smarter than us...that Artists are all eccentric wishy-washy folk who bury their $$$ in mason jars in their back yard. I actually heard an Account Executive say something about me in a hallway just after leaving a meeting we just had regarding a project I was working on for him. In the meeting, he told me my work was "GREAT! PERFECT! FABULOUS!"...then as he was leaving with my Supervisor he said "...THAT'S how you talk to THOSE people".

How do you get respect from a bully pushes you around? You smash his knee and show him you are not afraid of him.

When life gives you dilemmas...make dilemmanade.

All very good points!

Perhaps the group could pool their collective experience and knowledge and start a thread that provides an "outline" of a contract containing non-negotiable, must-have deal points for editors, germane to any media development engagement.

Might in the long run benefit more people than you think. Subtle way of circling the wagons...

Just a thought...any legal types here?

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Perhaps the group could pool their collective experience and knowledge and start a thread that provides an "outline" of a contract containing non-negotiable, must-have deal points for editors, germane to any media development engagement.

Nope. Need a Lawyer experienced in Entertainment Business... they'll know what t put in a contract after speaking to you. Lawyers won't dictate policy in an open forum either.

When life gives you dilemmas...make dilemmanade.

Yes, a compendium of legal advice = bad idea.

But jimt is on to something that is worth exploring... instead of discussing the language of contracts, a primer or a FAQ for being a freelancer wouldn't be a bad idea.

There's a big difference between being an individual brought in for a few days or weeks to work at a company, and being the company and bringing in work from clients. The laws differ from place to place, but this being a "Los Angeles" board, a California-centric discussion of rights & remedies wouldn't be out of place. When & where deal memos are appropriate? What are your broad strategies for collecting a bad debt? Are there resources to check out potential employers?

As far as I can tell, this board is a mix of people working in both camps. The issues are too thorny for people who own/operate a company to cover, but a knowledge base for being a freelancer who walks into someone else's shop for a gig wouldn't be a bad idea.

In my own case, I would never have found this...

[www.dir.ca.gov]

...without someone's suggestion of where to begin parsing through the California state bureaucracy. This state in particular is a mixed bag, with a lot of employee and freelancer protections, but very little in the way of road maps to explain what your legal options are.

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The laws differ from place to place, but this being a "Los Angeles" board, a California-centric discussion of rights & remedies wouldn't be out of place.

Nope again... there are many of us not even from the left coast... or any US coast for that matter. LAFCPUG was born in LA...yes, but this is not a "Los Angeles" board. You would have to have a thread covering each state & market (and country) = nightmare.

When life gives you dilemmas...make dilemmanade.

> Need a lawyer experienced in Entertainment Business... they'll know what to put in a contract
> after speaking to you. Lawyers won't dictate policy in an open forum either.

I wholeheartedly agree. Especially since we're talking about situations that may involve litigation. You don't want to speak (or listen) too broadly. Let's say Person X in the forum, eager to help, posts something. Person Y takes that literally, loses money, and decides to hold Person X responsible. We've also talked about the problems with openly discussing our business practices, rates, experiences, and the antitrust issues involved. To say nothing of having our own clients see these.

We hit on money and legal issues from time to time, but they're plainly anecdotal, and I think it'd be detrimental to systematize those discussions. They're simply not what this place is for.

Ask lawyers about law, ask editors about editing.


www.derekmok.com

The only "legal" discussions we should be having here are "Broadcast Legal" (luma / chroma & keeping them "legal" by using the scopes)

When life gives you dilemmas...make dilemmanade.

I had a company that tried to stiff me out of my pay-

I went to the Texas Work Force Commission--
They sued the company and got my money for me-
Cost me Zero $$$ --

When the state gets involved it makes dead beats
shake in there boots --

CA likely has the same type of Commission --Jay--

Good idea Jay

When life gives you dilemmas...make dilemmanade.