

Ask HN Taking off a site that I made myself for a deadbeat client LLC - zkhalique
http://pastie.org/private/ezv2gokmti4dui7frhghq

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patio11
You should not use your admin powers to disable deliverables prior to a lawyer
suggesting to you that course of action. That has explosive legal and
reputational risk. The only upside is that you get to squeeze a stone harder
for water. Why would you prefer this over e.g. paying a lawyer ~$300 to send
your client a payment demand letter?

In the future, do not do additional work when clients have tens of thousands
of dollars of outstanding invoices. Favors for clients are wonderful things.
You can do them when you have a contract in place that neither party is
repeatedly breaching.

 _Talk to the board and try to work out a solution where they fire the CEO and
we pursue a plan to actually get this company out of a ditch._

This is very unlikely to work, and the amount of effort is comparable to
starting a new company. Why would you start a new company to collect $X0k in
outstanding invoices? You can collect $X0k in invoices by working two weeks
for someone who is not a bozo, then invoicing them for two weeks worked. It is
faster and carries very limited execution risk.

 _If the above results in very little, I could try to sell the debt to a debt
buyer. Anyone have experience with this? I found one that say they would buy
it for 75 cents on the dollar, which I find to be pretty incredible
considering it 's an LLC and I don't know how to collect from an LLC._

You won't successfully sell this receivable for 75 cents on the dollar, but if
someone actually offered that, why are we even having this conversation? That
implies that you are improved by tens of thousands of dollars for two hours of
work, and then this never troubles you again.

But having some knowledge about debt collection, I predict < 1% chance that
you'd actually sell that receivable for 75 cents on the dollar. Higher quality
receivables -- with known good provenance, against people who have attachable
assets -- routinely are sold for 5~10 cents on the dollar if they're at that
age/maturity. You have an incredibly low-quality receivable. It is _old_ ,
against an entity with no assets, and (I strongly suspect) not supported by
reliable paperwork which would ease the path to a default judgment and
collection.

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dctoedt
Patrick is right about not taking self-help measures such as shutting down
their site.

Check your contract:

\+ The contract might provide that you have the power to terminate the
deadbeat client's rights in the deliverables (presumably, the Web site you
built for them) after sending them notice and giving them an opportunity to
cure their breach of contract.

\+ If you terminate their rights, that might well make them a copyright
infringer if they continue to use the deliverables.

\+ That in turn _might_ give you ammunition to go after the owners personally,
and not just the LLC, for the infringement (although that can be difficult to
prove) [1].

\+ The damages from copyright infringement might include the LLC's profits
arising indirectly from infringement. (Of course, this assumes that the LLC
_has_ profits.)

In a famous case in the 1980s, the MGM Grand Hotel was found to have infringed
the copyright of the musical _Kismet_ by including much of the fourth act in
the hotel's floor show. (MGM had a license, but not for that use.) When the
dust settled, the damage award ended up being 2% of the hotel's overall
profits --- including those from the casino [2].

\+ If you can get, and record, a judgment against the LLC's owners personally,
that might well [foul] up their credit score and make it difficult for them to
borrow money.

\+ Of course, all this requires money, and lots of it, to pay a lawyer and (at
least one) expert witness on damages. If the dollar amount isn't that much,
and if neither the LLC nor the individual owners have much by way of seizable
assets, then it'll be difficult to get a lawyer to take the case on
contingency.

\+ And don't forget that no matter what you say are the facts, your client
will _invariably_ counterclaim that _you_ did _them_ wrong and should be
liable to them. That, too, will cost money to litigate.

\+ If you sue for copyright infringement and lose, you might be liable for the
defendants' attorneys' fees -- while possibly not being able to recover your
own fees even if you win.

Bottom line: Often it's better just to write off the debt, and next time get a
deposit.

[1]
[https://www.whdlaw.com/Publications/WHD_Attorneywritesarticl...](https://www.whdlaw.com/Publications/WHD_Attorneywritesarticle_1407_WTN.pdf)

[2] MGM Grand Hotel v. Frank Music Corp.,
[http://cyber.law.harvard.edu/people/tfisher/IP/1989%20Frank%...](http://cyber.law.harvard.edu/people/tfisher/IP/1989%20Frank%20Abridged.pdf)

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Mz
I kind of do not understand why this is being taken so seriously by the two
previous replies. The person who posted it is not at all anonymous. yet the
piece he linked to apparently is some strange attempt to be anonymous. This
looks a little weird to me.

