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  1. #1
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    When is it worth it to go after a client legally?

    So in my 10+ years as a graphic designer, I've taken a total loss of roughly $10k USD. Now, this isn't terrible by any means, but losing money still hurts as a freelancer. I've had contracts, but at the low amounts (roughly 2.5k/job), I would typically be stuck with having to go to the client's state to file a small claims case. Even if you win, there's still no guarantee you'd get the payment even though they'd be legally obligated to pay. Now you factor in the time required to file paperwork, make court appearances, (usually twice, since the real d-bags will file an appeal)expenses for the flight and housing, and it becomes readily apparent that I can't justify chasing down these clients.

    So I guess my question to the community is: When is it worth it? Is there a monetary amount where having a lawyer makes more sense (quotes I've received were $1500 retainer to get started, and roughly $125/hr after). Even if I have a clause that the client pays my legal fees, I feel like it's simply not worth putting forth that capital up front just to win $2k.

    However, I did have one client locally that I took to small claims and won the judgement (in-house contract job). It took almost two years from the day I filed paperwork to the day I received the check (But in that case, it was worth the annoyance for the principal of the matter ).
    Please PM me if you'd like an individual crit.

    idrawyouonthesubway
    huxleycreative


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  3. #2
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    I will ask the recommended lawyers to come in and answer some of the questions in here as this is a very good one.

    To answer your question...you need to weigh the costs of doing so, along with the time involved, against what you could be making if you were to simply move on and let it go. Once you establish a relationship with a good lawyer you should be able to get letters sent for an hour of time or so in my experience. Filing a suit on the other hand...if not in small claims court...can cost you upwards of 15-25k just to get the suit filed in my experience. In the US small claims court is your easiest route for smaller issues under 5k or so. The lawyers can clarify that better. For larger amounts you are best sending letters from lawyers and applying pressure, which can be quite affordable.

    In other words...only you can really answer that I think. If the company has no money and is going under, and it is not a lot of money you might not see any results, but if it is a stable company or individual then you may have better luck having a lawyer send the letters and attempt to shake them into paying what is owed. You have to weight each situation on its own and decide. A good attorney with a good heart will tell you the truth. The gents that have the firms I mentioned are all of that integrity level. They always tell me if something is not worth it.

    Lawsuits in general are a major challenge to deal with. They take a lot of time and a massive amount of energy. However if you have a contract and negotiate that if they fail to pay and require legal steps to secure payment that legal fees and court costs will be covered, that can help discourage non-payment and also make it easier to cover the costs of having to collect. The nasty letters from legal are affordable and do not take a lot of time. You just have to be willing to accept that 350 dollars or 1k worth of letters may not get you results...but in my experience they have been worth it.

    There may be circumstances where they will help you for the hourly costs of doing so btw...each attorney will make up their own minds on that. Sending letters are often enough to get a client to pay. I have never had to take a client to court for non-payment but I have had to have an attorney send letters and negotiate on behalf of my company on multiple occasions. In each instance he was able to secure more funds than I would have been able to without his help. Once a lawyer is involved then you can see results a bit easier, in my experience. People tend to take you seriously when you speak to them through legal counsel. As one of my favorite attorneys says...let me be the bad cop. He is right in that regard and it saves your face by doing so.

    There are some things that will make it easier for the lawyer. Being sure to use a contract is a great place to start, even if it's a simple one. It gives them something to argue about. Even email agreements will suffice in some jurisdictions I believe.

    a. Be organized and communicate clearly.
    b. Keep good email records of client communications and approvals.
    c. Be sure that rights do not transfer until payment is received. That way you can at least keep them from using the work.
    d. Write the letter yourself and have the lawyer put it in his own words. This will often save him or her time and you money. The same applies to creating contracts. A document in your own words can help speed up the process and save funds.
    f. create a timeline that outlines the evidence and situation in a nice clear document. Avoid rambling on and on. The simpler you can make things the easier they are to understand. As I am told repeatedly...less is more.

    If you can go to a lawyer with your thoughts organized it will make them happy and help you to keep the process moving quickly.


    I am not a lawyer...so this is not legal advice in that sense...just my thoughts from my own experiences. I will see if Mr. Rose or Mr. Rentea or Mr. Wright or Mr. Makoff wants to chime in. I would be very curious what they have to say.


    Jason

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  5. #3
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    Thanks Jason,

    You bring up several good points that I will relate back to my own experience (hopefully for the benefit of everyone). Even the judgement I won in small claims, I was only able to secure about 70% of the judgement amount. In retrospect, I think getting a lawyer to try and secure the payment may have been more beneficial in terms of the time I had to spend preparing the paperwork, court docs, filing fees, etc... (I think this particular client would have likely folded and just paid - had they gotten a letter from a lawyer). I probably spent about 20+ hours putting everything together - Time I could have spent on other work.

    However, I think what won the judgement for me was my 1/5" binder filled with all the evidence relating to the case. I had a timeline of events, all relevant email communications, evidence of the work completed with timestamps, copies of all the certified collection letters, and sworn statements from people I had worked with at the company. Being organized, and keeping all communication is essential for anyone freelancing. My jobs typically would never justify a full on lawsuit (except once, and I wasn't as nearly as organized, or financially able to take on that particular case), and I've since adjusted my payment schedule to prevent myself from taking too great a loss on jobs.

    If any lawyers do reply: If I hire you to represent me, and the case is outside of your licensed state, would you still be able to represent me, or would it require hiring another lawyer licensed in that state?
    Last edited by prepsage; November 30th, 2013 at 01:04 AM.
    Please PM me if you'd like an individual crit.

    idrawyouonthesubway
    huxleycreative

  6. #4
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    According to Texas law, attorney fees are recoverable. I have pasted below the relevant section.

    Sec. 38.001 : Recovery of Attorney'S Fees
    A person may recover reasonable attorney's fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for:

    (1) rendered services;

    (2) performed labor;

    (3) furnished material;

    (4) freight or express overcharges;

    (5) lost or damaged freight or express;

    (6) killed or injured stock;

    (7) a sworn account; or

    (8) an oral or written contract.


    Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985.

    Therefore, whether or not you provide for them in a contract with your clients, they are recoverable if you need to sue to collect.

    However, as you both stated and recognized, the amount in question matters a lot, as does the issue of collectibility.

    You can always pursue your client in small claims court, however, if you want representation, again, the amount and collectibility are the driving factors in whether an attorney would be interested.

    Bogdan Rentea
    www.rentealaw.com
    www.rentealaw.com

  7. #5
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    I know this might be a bit off topic, but have you thought about changing your method of collecting the money? So for your final proof, only give them low quality images and expect payment before you give them all the files? I know that is the wedding video/photo business almost all require full payment 30 day inadvance. I know this is different, but that might be a way to help defer problems.

    ~ larissa pozner

  8. #6
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    my two cents... I had an issue with a client and it was worth about $5,000. I went to an attorney which cost me $400 and filed a claim against him (a 10-page long paper that was going to go to the court) and sent it the client before filing the actual claim. the court would have cost me a couple more $Ks. we had lots of conversations before that that ended up nothing. silence. black pitch.
    after that paper he returned most of the money in couple days. so it was totally worth the price of an attorney and saved me a lot of time, headaches and self-humiliating thoughts.

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