

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

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.<p>Then they stopped responding to e-mails, phone calls, you name it they ducked it.<p>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&#x27;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&#x27;s gotten very complicated.<p>Anyone have any experience with this sort of situation?  It&#x27;s very frustrating.  My instinct is to go complain about it publicly, but I know intellectually that won&#x27;t get us our money, plus it will brand our company as whiners and losers who allowed themselves to get dicked over.<p>Thoughts?
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amgreg
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.

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

[http://vimeo.com/22053820](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.

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falsestprophet
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.

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

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rb2e
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
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
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.

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

This depends on both what the payment is for, and which US jurisdiction's law
binds. There are circumstances in California, e.g., for which there is a
$5,000 limit -- and circumstances for which there is a $100,000 limit.

Which is one reason why you should go to a lawyer.

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grumps
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.

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davismwfl
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.

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dwd
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.

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27182818284
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.

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msantos
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/](http://nycfreshmarket.com/)

