Since you normally do due-diligence: at what level of information about the project would you be willing to enter into a no-cure, no-pay contract?
That seems like an insanely risky proposition on top of the risk you already assume through consulting, failing company, hiring colleagues as temp workers etc.
This was one on one three hour interview + some email follow up. Having done a lot of DD really helps though, it makes it easier to get the bigger picture clear in a hurry.
That said, there were quite a few details that made this project harder than it should have been.
Given that they were pretty desperate and had been referred to you on personal references, why did you agree to no-cure, no-pay?
Is it something they proposed or you? Seems like you could lose a lot and win little - and for them, the biggest risk was not your fee, but whether or not the system got up and running, so why bother?
It's a point of honour with me. Why send an invoice if it doesn't save their bacon? Better to align my goals with theirs. Make money with the customer, not off the customer is one of my mottos and that has worked well for me over the years.
Depending on the perceived risks and the degree to which things have gone to pot already, how realistic the deadline is and so on I'll be happy to adjust (both ways). In the end what matters is that they get value for their money and that I am compensated relative to value created (or saved).
Given that he works off reputation and recommendation, he probably won't want the reputation of getting paid for not fixing a system. The odd loss on a project now and then is probably worth less than the loss of recommendation, it creates a good feeling with the client, and I'm sure his risk analysis / due diligence before a project minimises the risk.
How detailed do you have to be on the 'cure' part? I can easily imagine some previous clients arguing the toss on something not being "fixed" to their satisfaction, and refusing to pay.
That's a really good question. If I feel that there may be a dispute over this then I'll ask for an escrow and detailed release instructions.
In all the years that I've been doing stuff like this professionally I've had one customer that didn't want to pay the full amount (they asked for a discount after the work was already done) and I told them to tear up the invoice but never call again. Everybody else was more than happy to pay. Maybe I've been lucky in that respect but I think that it's more of a way business is conducted here than anything else. You stand by your agreements, it's a small scene and word really does get around.
Personally, I want to do more stuff like this - I thrive in these sorts of projects, but haven't been able to find too many. How did you get connected in that 'small scene' to start with?
