Ask HN: Client refused payment, told us to come back with lawyers

https://news.ycombinator.com/item?id=6850068

by onceburnt • 13 years ago

17 14 13 years ago

news.ycombinator.com

My company performed about $12,000 worth of work for a well-known ecommerce company about 6 months ago. They were running late with payment but told us payment was coming.

Then they stopped responding to e-mails, phone calls, you name it they ducked it.

We hired a collections agency and sent them in to pursue the matter. The collections agency came back and said they were told that the company had been sold and the agency would have to pursue the matter with the parent company. They would not name the parent company however and the agency apparently isn't able to figure out who the new parent company is and said they wanted a bunch more money to continue the case as it's gotten very complicated.

Anyone have any experience with this sort of situation? It's very frustrating. My instinct is to go complain about it publicly, but I know intellectually that won't get us our money, plus it will brand our company as whiners and losers who allowed themselves to get dicked over.

Thoughts?

runjake• 13 years ago

Here's the only useful answer you're going to get: "Get a lawyer."

rb2e• 13 years ago

First question is, did you have a Contract? Secondly, surely there is paper trail if the e-commerce company was sold? In the UK for instance, all companies details are on publicly accessible register (Companies House), surely its the same in the USA (not 100% sure how it works in the states)? Either way, sounds like best to speak to a lawyer.

Edited to add: Having a non paying client is a problem that will affect most freelance developers at some point. It won't appear as whining but best not to name and shame. It could prejudice your case if you go to court. Speak to a lawyer.

Patrick_Devine• 13 years ago

I think you meant "Do you have a paper contract?". In the US a verbal contract is perfectly legal, although in court you'll get into more "he said/she said" type situations, so it's always best to get things in writing. Having an attorney is always great advice.

SHOwnsYou• 13 years ago

In the United States, a verbal contract is valid up to a contract value of $500.

If someone tells you they'll give you a $10,000 to do or say something ridiculous (eat a week old pizza, drink milk through your nose, etc), you can't sue them when they don't deliver; They aren't on the hook for $10,000.

falsestprophet• 13 years ago

You client didn't give you bad advice at all. Retain counsel and file a lawsuit if you must.

This is exactly why the judicial system exits -- as alternative to shooting up your enemy's village for example.

27182818284• 13 years ago

Best case: You get a lawyer for something like $250/hr and hopefully your case is clear enough that the lawyer can send a few simple "nastygrams" in a couple hours worth of billings. The company comes back with either full or partial payment and you move on.

davismwfl• 13 years ago

Use an attorney, there is no other viable option. Consider 10-30% of your 12k as a collection fee and pay the attorney. At best they respond to a single letter from the attorney and pay, at worse you wind up paying about 40% of the money owed to the attorney. If the attorney asks for more than that find someone else.

relaunched• 13 years ago

This comes up all the time on HN & I post this link:

http://vimeo.com/22053820 - Mike Monteiro - Fuck you, pay me!

You're probably gonna take it on the chin, but here are a couple options:

You can get around half through small claims courts, which won't cost you a lot.

Find a sole proprietor attorney, preferably a young one, and see if they'll take it on contingency.

Let the company know you'll be hitting their DnB and then do it. Same with the BBB, trade organizations, etc.

amgreg2• 13 years ago

onceburnt: This does not constitute legal advice, I am not representing you, and you are advised to consult a lawyer licensed to practice in your jurisdiction regarding this matter.

However, as a matter of general experience, I can tell you that, generally speaking, a company cannot rid itself of its obligations (liabilities) simply by selling itself to another company. Things like the type of entity of the debtor company (was it a corporation? a partnership? a sole proprietorship?) may determine who ultimately has to foot the bill, as well as the structure of the sale (e.g. the acquiror may have merged the target company into itself, which generally means it assumes the target company's liabilities; or the acquiror may have purchased only the target company's assets, leaving the liabilities behind with the company). These are questions your lawyer can help you figure out.

Independently of the question of liability, however, when a creditor has sufficient evidence to establish that it is owed a debt by someone, the burden generally shifts to that someone (to the alleged debtor) to show that he's free and clear of debt.

Bottomline: I would consult an attorney, and show him your correspondences with the company, including the correspondences with the purported acquiror. He will then decide against whom you should pursue your claim.

grumps• 13 years ago

1. Get a lawyer. 2. Get a lawyer. 3. I'm not a lawyer. 4. Always have a bargaining chip

Unless you have something in place, it's probably not worth much a legal action. Maybe some threatening phone calls, and letters from a lawyer. If they are BIG they will attempt to drive you to the ground.

Watch the video posted from Mule Design and take this as a hard lesson learned.

msantos• 13 years ago

I'm sorry I can't offer you a solution. However, I'd like to suggest you do not do something like this => http://nycfreshmarket.com/

dwd• 13 years ago

As everyone else has said, use your lawyer.

Secondly get on with working with your paying clients and spend the least amount of time as you can in debt recovery. Let your lawyer defend your T's & C's, (hopefully they also wrote them for you) so you don't turn a 12k loss into a 24k loss.

Ask HN: Client refused payment, told us to come back with lawyers

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