Collecting on a Debt
August 21, 2010 9:45 AM Subscribe
Collecting money from a rogue client. Trying to be specific with information but vague with details. Desperately seeking advice. Let's get this out of the way: you are not my lawyer.
My small design company (I do not own it) did a significant amount of work for a new client. Tens of thousands of dollars worth. Long story short, the client is using the new material - package design, branding, and website design - but has not paid for it. It has been about two years.
We have employed numerous avenues: a collections agency recommended by a lawyer and an accountant, obviously several invoices. Direct calls. The collections agency just got back to us with "we have exhausted available resources...please pay us". Are you kidding?
There must be something we can do.
The Big Unfortunate is that our work is not explicitly drawn out with approved estimates - there were some handshake deals done by a person who's no longer with the company. The fact remains, though, it is our work: we did it, we can prove it.
Is it remotely legal to use materials you haven't paid for, if no initial paperwork exists? They have paid for some work, but definitely not all of it.
I'm thinking of documenting our work history with the client and threatening to go to their ISP with proof of using stolen materials. But I don't know if there's any way that would encourage her to pay us, or if it would just rattle a bee hive.
Any ideas?
My small design company (I do not own it) did a significant amount of work for a new client. Tens of thousands of dollars worth. Long story short, the client is using the new material - package design, branding, and website design - but has not paid for it. It has been about two years.
We have employed numerous avenues: a collections agency recommended by a lawyer and an accountant, obviously several invoices. Direct calls. The collections agency just got back to us with "we have exhausted available resources...please pay us". Are you kidding?
There must be something we can do.
The Big Unfortunate is that our work is not explicitly drawn out with approved estimates - there were some handshake deals done by a person who's no longer with the company. The fact remains, though, it is our work: we did it, we can prove it.
Is it remotely legal to use materials you haven't paid for, if no initial paperwork exists? They have paid for some work, but definitely not all of it.
I'm thinking of documenting our work history with the client and threatening to go to their ISP with proof of using stolen materials. But I don't know if there's any way that would encourage her to pay us, or if it would just rattle a bee hive.
Any ideas?
Is it remotely legal to use materials you haven't paid for, if no initial paperwork exists? They have paid for some work, but definitely not all of it.
I'm thinking of documenting our work history with the client and threatening to go to their ISP with proof of using stolen materials.
I'm pretty sure that use of work that someone contracted for, but did not pay for, is a civil breach of contract matter, not theft.
The ham-handed plan to contact their ISP with an accusation of use of stolen materials is yet another example of why it's worth letting an attorney handle legal matters.
And since you don't own the company, I would urge you to be careful in your efforts. It seems really unprofessional for your company to take advice from a horde of anonymous internet users rather than hiring an attorney to collect this debt. In all sincerity, perhaps your problem with accounts payable, and this really odd scheming to collect the debt, reflect a lack of discipline or professionalism in the company that ought to be looked at.
posted by jayder at 9:53 AM on August 21, 2010
I'm thinking of documenting our work history with the client and threatening to go to their ISP with proof of using stolen materials.
I'm pretty sure that use of work that someone contracted for, but did not pay for, is a civil breach of contract matter, not theft.
The ham-handed plan to contact their ISP with an accusation of use of stolen materials is yet another example of why it's worth letting an attorney handle legal matters.
And since you don't own the company, I would urge you to be careful in your efforts. It seems really unprofessional for your company to take advice from a horde of anonymous internet users rather than hiring an attorney to collect this debt. In all sincerity, perhaps your problem with accounts payable, and this really odd scheming to collect the debt, reflect a lack of discipline or professionalism in the company that ought to be looked at.
posted by jayder at 9:53 AM on August 21, 2010
I assume you're talking about the US legal system.
I am not your lawyer and you are not my client.
Remember, in order to get to the point where an ISP takes action against allegedly infringing work, the copyright holder has to file a statement under oath ("penalty of perjury") that they are, in fact, the copyright owner. There could be pretty severe consequences for getting that wrong, which is why you should definitely consult with a lawyer.
Even though someone creates a work, it doesn't necessarily mean that they're the copyright owner. If an employee creates something as part of the scope of their employment, copyright generally belongs to the employer. Sometimes work can be characterized as done as an independent contractor, in which case the "work for hire" doctrine comes into play. (See generally, CCNV v. Reid from 1989).
The non-payment makes things even trickier.
Also, if this has been dragging on for two years, you will definitely want to talk to your lawyer about statute of limitation issues. Do not delay.
posted by QuantumMeruit at 10:00 AM on August 21, 2010
I am not your lawyer and you are not my client.
Remember, in order to get to the point where an ISP takes action against allegedly infringing work, the copyright holder has to file a statement under oath ("penalty of perjury") that they are, in fact, the copyright owner. There could be pretty severe consequences for getting that wrong, which is why you should definitely consult with a lawyer.
Even though someone creates a work, it doesn't necessarily mean that they're the copyright owner. If an employee creates something as part of the scope of their employment, copyright generally belongs to the employer. Sometimes work can be characterized as done as an independent contractor, in which case the "work for hire" doctrine comes into play. (See generally, CCNV v. Reid from 1989).
The non-payment makes things even trickier.
Also, if this has been dragging on for two years, you will definitely want to talk to your lawyer about statute of limitation issues. Do not delay.
posted by QuantumMeruit at 10:00 AM on August 21, 2010
And since you don't own the company, I would urge you to be careful in your efforts.
To clarify the phrase"since you don't own the company" -- If it's your own company trying to collect the debt, then knock yourself out with comically ineffective efforts to collect the debt; but be careful if you're doing it on someone else's behalf. You could make your boss or your company look bad.
posted by jayder at 10:01 AM on August 21, 2010
To clarify the phrase"since you don't own the company" -- If it's your own company trying to collect the debt, then knock yourself out with comically ineffective efforts to collect the debt; but be careful if you're doing it on someone else's behalf. You could make your boss or your company look bad.
posted by jayder at 10:01 AM on August 21, 2010
This company sounds very poorly run. If you ask for legal advice you should always state your jurisdiction.
posted by KimikoPi at 10:23 AM on August 21, 2010
posted by KimikoPi at 10:23 AM on August 21, 2010
IANAL, but it seems to me that the only way to collect from this client is get a court judgement against them.
I'd bet a dollar that if you made threats about going to their ISP, they'd simply ignore you, and that if you sent a takedown, they'd send a response, and follow up with a lawsuit
posted by tyllwin at 10:31 AM on August 21, 2010
I'd bet a dollar that if you made threats about going to their ISP, they'd simply ignore you, and that if you sent a takedown, they'd send a response, and follow up with a lawsuit
posted by tyllwin at 10:31 AM on August 21, 2010
If you do something, the first thing they'll do is go get a free legal consultation or maybe even spend $300-$500 to get a serious opinion about the validity of your actions. That attorney will either start talking about how to make a serious response, or they'll say, in a legal-sounding way with many caveats, "these guys are jokesters." If you're making this up as you go along, that'll be evident. In fact, for all you know, they consulted someone way back when, and they're not paying because that person outlined for them just what exactly you'd have to do to legally collect, and they haven't seen you take those steps. Under the law, there is a right way to do things (or several), and then there are an infinite number of wrong ways, and you have to take the rules seriously to be taken seriously. Otherwise, you'll just be wasting your time.
posted by slidell at 12:12 PM on August 21, 2010
posted by slidell at 12:12 PM on August 21, 2010
The simple answer is that you hire a lawyer and go get a judgment. If that doesn't shake payment loose, there is then a possibility of eventually doing something to seize cash or property of your debtor, but without a judgment they can pretty much laugh at you as they've been doing. You will find in life that there are those who screw people on a regular basis and you seem to have found one -- or more likely, they found you, as these types will seek out the small and weak and bluff things out as long as they can.
Handshake deal or not, what you have is certainly an oral contract, which is just as legally enforceable as any other; the only problem, as you've found, is documentation and proof. Fix this quickly. It's the type of thing that marks you as inexperienced and naïve to the wolves out there. You don't want anyone else to smell blood in the water.
I really don't know why you've taken so long to get to this point -- even with a lawyer recommending collection -- without getting basic legal advice. You need to know whether you have a cause of action or not. If not, you are probably best advised to write this off as an expensive learning experience.
Maybe you've held of because of perceived legal expenses. I don't know. But they can't be as big as what you're owed, and even if you end up using the entire amount to pay the attorney, you might at least get something on the record against these guys, so another small company like yourselves at least has a chance of looking them up and seeing the kind of business they are.
posted by dhartung at 2:13 PM on August 21, 2010
Handshake deal or not, what you have is certainly an oral contract, which is just as legally enforceable as any other; the only problem, as you've found, is documentation and proof. Fix this quickly. It's the type of thing that marks you as inexperienced and naïve to the wolves out there. You don't want anyone else to smell blood in the water.
I really don't know why you've taken so long to get to this point -- even with a lawyer recommending collection -- without getting basic legal advice. You need to know whether you have a cause of action or not. If not, you are probably best advised to write this off as an expensive learning experience.
Maybe you've held of because of perceived legal expenses. I don't know. But they can't be as big as what you're owed, and even if you end up using the entire amount to pay the attorney, you might at least get something on the record against these guys, so another small company like yourselves at least has a chance of looking them up and seeing the kind of business they are.
posted by dhartung at 2:13 PM on August 21, 2010
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posted by mmf at 9:50 AM on August 21, 2010 [1 favorite]