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Freelance is Not Free: My Year Long Legal Battle with a Deadbeat Client and the Lessons I Learned

Freelance is Not Free: My Year Long Legal Battle with a Deadbeat Client and the Lessons I Learned

Getting Left High and Dry

About a year ago I left my job in the Financial Industry to pursue a full-time career in photography, styling, and content creation. Everyday I am grateful that I can make a living doing something that I am passionate about and I truly enjoy. I no longer dread waking up in the morning because I’m honestly in love with what I do. However, no matter how much you love what you do there is always going to be tasks that come with the territory that I’ll just say are not exactly as lovable as other aspects. When you own your own business it means you have to take care of it all including administrative tasks, negotiating contracts, and the thing I absolutely dread the most is following up on invoices from clients for payment once the job is complete. Every small business owner/freelancer has probably experienced having to constantly follow up with someone on payment at some point. Majority of time you eventually receive your payout, even if they did take their sweet time getting it to you.

But what if that payment isn’t just taking a long time but is plain just not going to show up? What if that client flat out refuses to pay you despite you already providing goods/rendering services? Well that is exactly what happened to me and let me tell you it more than just sucks. It’s frustrating, infuriating, and just wrong.  Unfortunately I quickly learned that in the cutthroat world of business there are people that will do anything and everything to take advantage of you, especially if they think they can and if it will give them an edge (like receiving free services). Even more unfortunately this means more often than not freelancers are the one who get the most taken advantage of. Because we are often small, or usually the sole, person working on our businesses it leaves us vulnerable in situations like these since we are not large multi-million dollar corporations that have time, money, and resources to take action should something like this occur. Sadly, these unconscionable and dishonorable people know this and exploit it which is why freelancers are often the most likely to be victims.

I had two choices. I could either swallow the loss and consider it as my tuition fee for a lesson in the school of life or I could take legal action against this deadbeat client. I decided to choose the latter, and so I took legal action and sued this person. While I am not a lawyer, nor do I claim to be, here are some lessons that I learned from my year long legal battle which I found helped me in my situation and that you may or may not find useful in your own kickass business running endeavors:

 

The Hard Lessons I Learned

Have a Contract

Well this one might seem pretty obvious but you’d be surprised how often deals go down with out one. And when I say a contract, I mean something that is written down formally in writing and signed by all parties involved. Whether it be electronic or old-school hard copy paper it’s important to have something clearly outlined which states the terms. This includes things like parties involved, deliverables (and which parties are responsible for which deliverables), project timelines and due dates, length of contract, payment amount, and payment schedule (just to name a few). There is probably even more that should be listed depending on the type of work that is going to happen. No matter what I would not recommend you commence any work with out one. Even if the  person may seem nice, kind, and trustworthy. Hell, this person may be even someone you know so you think you can trust them and that it’s ok to just casually agree over email, in person, or text with out a formal contract. Do not do it. Because should things take a turn for the worst (like it did with me) your formal contract will be your best asset and defense should you need to take legal action.

As a small business owner and freelancer the idea of drafting a contract can be downright frightening, especially if you have no legal or business background (like me). It can be easy to brush it off and avoid the whole matter by not having one and just casually agreeing to something in good faith hoping for the best. In the long run doing this will be a disservice not only to your business but to yourself. If you’re unsure as to how to draft a contract you may want to consult with an employment lawyer who may be able to draft one for you. Depending on the type of business you own the lawyer may be able to draft a standard contract that can be used for most jobs and that can be tailored for projects that may have special circumstances beyond your usual. Yes, lawyers cost money and can be expensive but in the long run you are protecting your business that you have invested so much in so it is worth more than it’s weight a million times over. I also feel strongly that having a formal contract speaks volumes about your professionalism and that it may also prevent the person from trying to stiff you if they know that they have signed on the dotted line.

In my situation I did in fact have a formal contract to which both me and the deadbeat both signed. Despite having a signed contract it did not stop this person from trying to skip out on the bill, but having this contract in place was definitely the strongest defense I had during my legal struggle and I can not be more thankful that I had one in place.

Freelance is Not Free: Have a contract, no exceptions!
Freelance is Not Free: Have a contract, no exceptions!

Enforce Your Contract

In my case part of the terms I had in the contract was a payment schedule, payment amount, and penalties for late payments. Our contract was for a nine month period and over the nine months this person was to pay me a set amount every two weeks and should that bi-weekly payment arrive late they would also have to pay a penalty fee equivalent to a certain percentage of the outstanding invoice (which would be cumulative). This was something which was clearly outlined, agreed upon, and signed by both of us in the contract.

During the entire nine month contract this person never once paid me on time and even though it was clearly outlined in the contract that there would be a penalty fee for this I never once enforced this part of the contract. There was always an excuse as to why this person was unable to pay me on time, “The bookkeeper didn’t come in today so you will get it next week!”, ” It’s in the mail it must have gotten lost. Let me ask the bookkeeper to write another one while I cancel the lost one”, pretty much anything and everything under the sun as to why they were incapable of paying me on time. I heard it all and this person had a million reasons and crazy stories as to what could have possibly happened to my money. So naïvely in good faith (but mostly because I was afraid of ruining the business relationship) I let it slide with out charging the late penalty that I should have been charging the entire time.

This was a big mistake on my part. I honestly believe that me not enforcing the late fee penalty during the nine months played a role in this person ultimately deciding that they would try to take advantage of the situation by not paying for the final month of work I had completed. I feel that me not enforcing the late penalty fee probably sent a direct message that I would not actually hold the person to the terms of the contract which would make it easy for them to try to victimize me.

Don’t make the same mistake as me. If someone is not meeting the terms of the contract you need enforce any penalties outlined. Do it in a professional and courteous way, but just do it. Do not be afraid of ruining the relationship as that is why contracts exist to begin with. You will probably be surprised that your cheque no longer gets lost in the mail or whatever BS they come up with once you actually start enforcing the penalties outlined. More importantly it shows that you are not afraid to take action and they will probably think twice on trying to stiff you at all.

Freelance is Not Free: Enforce your contract, especially when they are overdue
Freelance is Not Free: Enforce your contract, especially when they are overdue

Be a Hoarder….Oops I mean Keep Meticulous Records

I like to think that one of my endearing qualities is that I am sentimental. My family, friends, and loved ones would probably say I’m a slight hoarder but I assure you I’m a pack rat at best. What is the point of all this and what does it have to do with no good deadbeat clients? Well my pack rat nature extends to my digital world which means I often neglect to delete old emails, files, etc…

Due to conflicting schedules and the fact that the deadbeat would travel for months at a time this meant that majority of our correspondence was through email, with less than a handful of business interactions being in person. Hell in this day and age most people interact through email even if your offices are just across the room from each other. On a person to person level this is not the greatest way to build relationships (but not the point of this post, so more on that another time).  It does however have it’s advantages especially if it involves legal matters because you now have an electronic trail of everything that has taken place and when.

When I decided to take legal action my lawyer asked me to write out a detailed timeline of the events that took place including dates and times. Because the majority of my interactions with the deadbeat had been through email and given that I keep meticulous records (RE: is a hoarder with clear email management issues) this ended up making this task incredibly easy as everything was documented in my email inbox with all the dates and times to boot. There were emails I had since long about forgotten that were still there and surprisingly some of those emails which seemed trivial at the time ended up becoming instrumental supporting evidence which only strengthened my case (in addition to having the contract). In situations which can easily become a game of “he said, she said” having records of hard evidence can make things very clear very easily.

While it was never my intention to have kept all those emails what I did learn is the importance of keeping meticulous records of all business dealings. Now, whenever I start a new project I create a new folder in my email and externally store all correspondence (no matter how big or small) pertaining to that particular project in the folder. If you have email storage issues most email services offer some sort of archival feature where things can be stored externally and accessed whenever you need it. I keep everything until the project has been closed off and completed before finally discarding it or I just keep it somewhere in storage should I feel the need to. Hopefully all goes well and you will never need to access them again but should things not you have it there to back you up easily.

As a side note, keeping meticulous records may help you should you not have had a contract for some reason (Ummm…but why wouldn’t you? did you not read the first section of this post?). Again, I’m not a lawyer, but if there was some sort of an agreement made through email (but not necessarily a formally written contract) then take your records to your lawyer and see what can be done. They may or may not be able to help you out depending on your situation should you decide you want to take action.

Trust Your Instincts

Freelance is Not Free: Trust Your Instincts
Freelance is Not Free: Trust Your Instincts

To be honest I never should have been involved in a business relationship with this deadbeat to begin with. From our very first interaction when they approached me about working together I found them incredibly unprofessional, childish, and quite frankly they just rubbed me the wrong way. My immediate instinct was to flat out decline their offer but I am also a firm believer of not behaving rashly (or at least I try to not behave rashly), so I decided to sleep on it and decide over the next few days. I began to second guess my gut reaction and brushed it off as me being either paranoid or overly sensitive so against my better judgement I accepted their offer. Had I listened to my initial instincts I never would have been involved with this person to begin with. Plain and simple, if something doesn’t feel right just don’t do it.

 

How it All Ended and Was it Worth it?

So did I ever get my money back? I did, but it took almost an entire year of legal proceedings before I saw a dime of it. Was it worth it? Well the answer depends entirely on you, your situation, and your own personal circumstances and feelings. While I decided to take legal action there is absolutely no shame whatsoever in deciding to just take the loss and move on (hopefully a little wiser even if a bit bruised as a result), because I’m not gonna lie going through legal battles is no easy task. It consumes your time, your resources, and can be emotionally taxing.

For me, it was absolutely worth it because it wasn’t so much about the money (although getting my money back with interest and legal fees certainly felt good). It was about the principle behind it and about taking a stance. I felt that it was important to send a message that just because I am not a large corporation with a team of lawyers behind me that it does not make it ok for someone to take advantage of me and not pay me for services which I had provided according to our agreement. Hopefully because of this experience this person will now no longer try to victimize other freelancers like they did with me (although something tells me they probably have before and gotten away with it which is why they tried it with me).

More importantly for anyone reading this who may have fallen victim to a deadbeat client just know that it is not a reflection on yourself or your business. You may even have options like I did depending on your situation, so be sure to consult a legal professional to explore what might be available to you.

Hopefully one day there will be better measures put into place to protect hardworking freelancers who bring their talents and skills to the workforce. In New York City a policy was recently passed this year which this blog post is named after, Freelance is Not Free,  which puts real consequences to those deadbeats who try to take advantage of hardworking small business owners. One day I hope the rest of the world will follow suit as sitting by and allowing these deadbeats to bully freelancers into working for free against their agreement can only lead to the death of entrepreneurship and growth.

 

 

**All opinions expressed are my own and are in no way to provide any sort of advice on anyone’s own personal circumstances. Please consult a legal professional before acting.

2 comments

  • Taku

    October 11, 2017

    Thanks for sharing your experience with the rest of the world. I had a deadbeat client once myself when I first started as a freelance graphic designer. The only difference was I was working through a third party person that brought us together, so I never had a specific contract with this particular client. The third party individual eventually left the country and I was left without payment for my services rendered. I could have taken this to small claims court, but even then, I was told that they would not be forced to pay. I eventually considered it a loss in my business and learned from this experience. A contract would have definitely been to my advantage that time!

    • allons.y

      October 13, 2017

      Hi Taku,

      Thanks for reading! I’m sorry to hear that you were a victim of a deadbeat client as well. Unfortunately it seems to be a lesson that all small business owners need to learn at some point the hard way. I really hope that one day laws and policies will be put into place like they have in New York

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