Need Help Getting Paid? Here’s How to Navigate the Kafkaesque World of Small Claims CourtBy Speider Schneider September 3rd, 2014
As someone once said to me, “Thirty days is a jail sentence and not a term of payment.”
When I was co-chairperson for the Graphic Artists Guild Professional Practices Committee (GAGPPC), we would meet once a month to handle dozens of pleas from freelance designers, illustrators, and other creatives who were having problems getting paid. Most of those problems came down to a few common issues:
1. The client decided not to use the work after it was delivered and felt there was no need to pay for it.
2. The client was unhappy about the final total of the invoice for hourly work and wouldn’t pay the full amount.
3. The client just didn’t want to pay because freelancers are “helpless” against a “real” business.
Overcoming these issues is possible, as long as you know how to climb the tower of bureaucracy that is the American legal system. For those who have been shorted on cash and need to solve payment problems, I’m here to help.
Do you have a contract?
Whether it’s called a contract, purchase order, or work order, having something in writing is extremely important. Emails can also help if the vendor and client have discussed payments, amounts, delivery, and other particulars. And even with a contract in place, if you have to go to court, emails can show a judge intent and veracity for the parties involved.
Free contacts for freelance work can be downloaded at Docracy.com. Use them, rely on them, worship them.
Try to resolve the situation first
If the check doesn’t arrive after 30 days—and you should always require a 50 percent down payment after approval of sketches—wait seven more business days, since most accounts payable departments think “payment within 30 days” means mail the check on the 30th day. If it doesn’t arrive, send a nice reminder that payment is overdue.
When the 60th day arrives, re-issue the invoice with an added invoicing fee; many contracts call for a $25–$100 re-invoicing fee. Call your client and leave a message explaining payment is overdue. Give your contact the option of paying via PayPal or credit card, and say you’ll drop the re-invoicing fee if compensation is resolved. Often, this tactic will lead to action, although you should not expect them to add in the re-invoicing fee anyway.
When the 90th day arrives, send another invoice with the re-invoicing fee added in. You will also need to call and ask your contact if there’s a cash flow problem. If so, try then to work out a payment plan. If the client is unresponsive, try calling the accounts payable department (if there is one) and ask them why the invoice hasn’t been paid.
You can try to negotiate or attempt to explain that contractual terms call for payment once the project is delivered, but in reality, if the client felt the work wasn’t what they asked for, they likely won’t be swayed.
If the client hasn’t paid because of the amount of hours listed on the invoice, there’s more of a chance for negotiation. And in the end, the costs and effort you will incur for collection or legal action may justify lowering your fee for immediate payment.
When push comes to shove
The GAGPPC would usually write letters to stubborn clients on behalf of members who brought their problems to the committee. Partnering with an organization can occasionally lead to an immediate resolution. In my experience, it sometimes took a little back-and-forth to reach an agreement.
Giving a delinquent client 10 business days notice to remit payment before legal action is taken, when all other avenues have been exhausted, may bring swift justice. Usually, it brings an answer of “Sue me!” and pipe dreams of John Grisham plots.
If the situation gets ugly and you aren’t sure about taking the leap to court, you can also inform the client that the debt will be put in for collection, which could hurt their credit rating.
The threat of using a collection agency is, at least for a smart client, enough to get paid quickly. No one wants a collection showing up on their business credit line, nor do they want the unending calls. Some collection agencies will buy the debt from you for 25 percent of the entire fee (if it’s deliciously large) and go after the client mercilessly.
You still own the copyright!
Don’t forget the power you retain when a client has published or used your work without paying; you still own the copyright. Not paying can be considered infringement, which gives you leverage in any negotiations or legal action.
In Legal Guide for the Visual Artist, Tad Crawford, attorney and former general counsel to the Graphic Artists Guild, says: “An infringer can be sued for the artist’s actual damages, plus any profits made by the infringer that aren’t included in the computation of actual damages.”
Crawford points out it can be complicated to show actual damages or client profits, but the court can also award statutory damages if the work was registered prior to the infringement: “Statutory damages are an amount between $750 and $30,000 awarded in the court’s discretion for each work infringed.” And an added bonus of registration prior to infringement is that the artist is eligible to ask the court for attorney’s fees. The court, at its discretion, can award attorney’s fees, award court costs, and issue injunctions to prevent additional infringements.
Small claims court
Sometimes, after you exhaust all resources, you need a judge to decide if the client must pay. If you have to go this route, it is up to you to have the ”burden of proof” to show the client is wrong.
The first thing you must determine is the limits of a small claims in your state. Some are as low as $2,000, while others are a bit higher. If you are suing for multiple jobs, with each one under the maximum limit, then you can file several suits at once.
Here’s the biggest drawback to this method: Even if you are in the right, you will have to spend many hours in a court awaiting your turn.
The client may not show up, and while you can ask for the hearing to be in absentia, the judge might choose to reset the date so the client can be subpoenaed, which will eat up more of your time and money. If both parties are present, your turn will eventually come… if the court docket isn’t overloaded.
While you don’t need an attorney for small claims court, you can improve your chances with an “expert witness.” In the case of freelance creatives, this would be a respected member of the creative community. As the co-chair of the GAGPPC, I had the pleasure of being that expert witness on many occasions. While it was considered a free service to GAG members, you will probably have to pay for an expert witness to sit in court with you. Their fee can be added to the suit amount, but be careful the fee doesn’t push you over the maximum limit for small claims in your state.
If you win the judgement, either through this arbitration or in front of the judge, collecting the money is another story. You may have a court order, but the client may choose to ignore it. Eventually, you may need to have the local sheriff serve the client with an order to pay. I’m not making that up, but at least there’s a good chance you’ll finally get what you deserve.
Note: The information in this article is not intended to constitute legal advice and should not be relied upon in lieu of consultation with appropriate legal advisors.Image by Randy Snyder