Dealing with "friend" who won't pay after delivery despite signed contracts

Question

I need help dealing with this situation.

I have a (person who claims to be my) "friend" who did not pay upon completion and delivery of project, despite a signed contract last May.

• The project was delivered in completion to spec, above and beyond. [Despite the client not providing all the required assets (with last minute deadlines), with me working overtime. It also won a few industry awards.]

• It seems this "friend" hasn't figured his business out, unfortunately - nearly a year later. He's coming back to me, asking to waste my time with coffee, "to get to know me better".

My freelancer's thought goes like: friend or not, this is a client who didn't pay.

My response:

You know - it would be really nice if you'd pay up from last time. Let's talk after... whenever that happens.

Oh yeah, I threw in for free the graphics conversion and stuff you were supposed to get done - and got pissed you didn't do your work. Scrappy startup issues, but not paying people for doing work is not cool.

His response:

Ugh, [name]! Why are you so snappy?! I consider you a friend (even if you don't). You believed in me from the very beginning and I will never forget that. We got in a fight, that happens. We've helped each other many times over the years. I just want to work on us getting to know each other as people better, because bottom line - we both have the same passions and are not giving up on them. I think you know this. ...and your next move might be defensive/smart response, but [Your Name] - I'm not trying to fight with you. I'm trying to be your friend. A better friend. Get some coffee. Talk our shit out like normal adults. I think it's worth a shot, a REAL try.

My reply:

Let's start with understanding our different perspectives. Can you try to understand where I'm coming from?

We had a client-contractor relationship with a written contract that was broken. I did the work; it was a total hit, but I wasn't paid. Friend or not, to me, you're a client who didn't pay.

But hey! Were you even a friend? I'm a contractor, and you know that contracts pay my bills. Friends don't leave friends out in the cold.

I've done all I can to help you for free. But, take it as honest advice, you really need to figure your business out. People need to be paid. Like I said - figure that out - and then, maybe, let's talk.

His reply:

Ya, I see what your saying, and there is more to that that I want to talk about. So yes, I'm sorry. But you're talking to me like I'm just some random dude/company. You always have. There have been glimmers of "friendship" from you I've seen, but for some reason you are so defensive ALL THE TIME and switch back to me just being some dude/company... Look, I think there is a reason why we ran into each other. I don't know what it is yet. But I think we owe it to at least work on being friends better, getting to know each other. Why do you think I keep coming back to you?! It's not because your the only AR genius in the Bay. It's because I get you, and I think you get me (like 40%). Dude, put you ego aside, I'll do the same. I don't think this really has anything to do about $.

---

My spidey-sense from having spent the last 20 years of my life doing contract work summarizes this "friend" as:

• Undermining my skills and achievements as "dime a dozen" in order to get "free work". Obviously, he could just find another developer in the bay to scam.

My final response:

Hmm, this reads like a defensive email. I think I'm the only person nice enough to help you out for free - but there's a limit to that. Please figure out your business. My venmo is [ ] I'm blocking you until then!

---

"Friendship" Should I have dealt with this differently? As a contractor-friend, I think I'm already doing him a favor by not taking him to small claims or demanding a late fee.

(In regards to small claims court, I don't have the time, though it's a "friend startup service I'll build your entire app for ridiculous discount" $5k contract. :()

---

I recently found out that this person has won a contest to pitch the product on TV. As I understand, financially, the client was previous unable to pay (and probably has horrible credit, so that if I sued in court, he wouldn't mind having his permanent record messed up by legal unable to pay).

• Should I inform the contest that he has an unpaid contract?
• Or, should I wait until after he actually seems like he can pay? I assume that this TV show will at least get this product some customers so he can pay his bills.

Just sent him this email:

Congrats on winning the Home Shopping Network.

Now that you're a rich gazillionaire, I hope that you can pay for the app I built for you way back then. I am attaching the invoice again for your convenience.

Answer 1

Is this a script from a soap opera?

There's far too much discussion taking place.

Business is business and not friendship. Ignore anything not directly related to the business. All the back and forth trying to get the other to "understand" your position is, frankly silly.

All you should be stating.. "We have a contract. Pay me." When he/she replies.. reply with, "We have a contract. Pay me." When he/she asks to go to coffee... reply with "Okay, will you have a check for me?" When asked to complete more work, reply with "I'd be happy to after I'm paid for previous work."

Just stop trying to plea with him/her to understand. He/she FULLY understands, they just don't want to or can't afford to pay you.

Every single thing you state should be asking for payment or facilitating delivery of payment. Who you are, what your "Dreams" or "goals" are, how much "alike" you may be, etc. are all completely 100% irrelevant and stalling tactics.

Stop being a "friend" or former friend and start running a business. If you had a boss... and this client wasn't paying, what would the boss do?

Simply put.. file suit, small claims or otherwise... or, write off the money as lost. And if it were me... I'd write off the person who refused to pay me as well.

"Friends" don't stiff "friends" out of paying for agreed upon work when a contract made it clear there was payment due. This person is not your friend.

Relevant link: Mike Monteiro: F' You Pay me! WARNING: it does contain adult language. (It's a conference where Mr. Moneiro speaks, discussing issues with payments, contracts, those that won't pay, how to handle it, etc.)

Answer 2

Your chain of emails is unprofessional, you fail yourself by dropping to your client's argumentative level. As well as this, instead of getting to the point you make jabs and petty points informally, that seem very emotionally attached trying to play the guilt card and shame him.

This is no way to follow up proceedings of a broken contract. Instead of continuing this chain of emails, which is clearly heading nowhere, create a new email or physical letter for your client. This email should be as formal as possible, with clear intent. The intent being that you expect payment as per the written contract and failure of said payment will lead to further legal action.

Attach an Invoice to this email, covering all breakdowns of costs, as well as means of payment. Finally, you should provide a reasonable deadline of when this payment should be made (or a reasonable response addressing why he believes the claim is unjust) before you begin legal proceedings.

Note: If his response is along the lines of "I see you as a friend . . .", keep your response professional or send a reminder when the time comes.

If he still refuses to pay, or sends a lengthy letter about you letting it go, send a reminder. Within this reminder, you should also include anything necessary or recommended when notifying the client of legal action (dependent upon the country in which you're taking the action). For example, within the UK it is recommended you list the documents you have within your possession to back the claim.

Finally, after this has been fully exhausted, take legal action. In the UK, the online fee of taking someone to small claims court for up to £300 is £25 (for a 5k contract it can be £205 - £455 which is minuscule compared to profit). It'd be a lot easier and somewhat cheaper to receive the payment before legal action, but the action is likely worth it.

If however the legal action isn't worth it, I'd cut your losses and move on as threatening legal action without going through with your decision may be bad for reputation and mark you as a pushover. (Go for it if you're ok with that, or you know this client will have no influence over future clients' decisions.)

I also refuse to believe that you don't have time for small claims court but have time to work for free on a contract valued at 5k.

P.S - Next time don't provide the content without payment, if a client has the work and you have no way of shutting it off, the client then has no interest in your payment. The interest in your payment should be mutual, as it ensures timely and dependable payment.

Answer 3

You are falling into his trap. You are picking up his leads. They don't lead anywhere.

If there would be any interest in friendship rather than extortion, the solution would be to take him to court, have him default on his payment, enter private insolvency and pay what he actually can in the light of him bungling his business, with you as a prime-line creditor.

That's not what he is proposing. Instead he is trying to salvage himself (assuming he actually is strapped of cash rather than straight-out fleecing you) with smarmy words.

He is in your debt and want to talk you into giving him still more credit (what point would there otherwise in stressing how you are on one page with regard to work?).

If he were serious about getting out of the debt to you rather than into more of it, he would be talking about going into insolvency and getting your debts paid eventually under the oversight of a court.

What he offers to you is fleecing you more. Even if he is deluding himself as much as you, nothing good can come of that.

Enter your claim at the court or write it off. Don't enter into any further business with this person as it is a losing proposition. This is the least hopeless route to actually retain any actual friendship if you are out for that: otherwise the debt will keep standing between you.

If you are interested at all in what amounts to friendship, be prepared to draw this line. It will lose you money you are owed, make no mistake. If you leave the choice of how much it is to the courts, both of you can put it behind you then. Either with or without friendship.

Letting yourself be fleeced on a continuing basis will not be a one-time hard toll but constant poison to your relation.

Answer 4

A friend doesn't put you in a compromise where you can't pay your bills on time or put food on your table. This is no friend of yours.

Like lewis here has stated, you need to get off the "friendly" approach. You need to push toward small claims. NO WHINING about how you don't have time, okay? Now, here's the deal. Small claims court can get you a judgment, but a judgment isn't worth the piece of paper it's printed on if (a) your client is broke and (b) he can prove to the court that he has no assets above the basic means to live on (at a subsistence level). If he's actually derelict, then you're gonna have to chalk this up as "tuition" and write him and the whole thing off. If not, let's proceed (I'm assuming you're in CA, since you mentioned the Bay):

I am not an attorney but I've had to approach doing this enough times with my clients that it's like muscle-memory now.

(a) Send a demand letter, by some method by which you can prove its delivery. You can use postal mail, Fedex, UPS, or if you prefer to do thing online, use RPost. If you've invoiced, include a copy of the invoice. Make sure your letter specifically reads "due on receipt". This step is just a formality, because a judge is going to ask if you sent a demand letter.

(b) Fill out the form. Obviously, this is small claims so you can't involve an attorney. Your post tells me you're a smart guy, so you don't need one. Here's the form, for chrissakes: CA small claims form and instructions

(c) Take a few copies to the courthouse (nearest to where this person resides or works) to file it. If you don't have time, you can send anybody who does. Just make sure the thing is filled out. This will get you a court date.

(d) Have it served immediately, as there's a time limit. You can make use of the sheriffs, which will be the cheapest but you'll have to go to wherever they accept document in person, which could be a pain in the rear getting to. Or you could have anyone over 18 (besides yourself) mail it and fill out a proof of service form for free, or a process server can hand deliver it ($75?) after you send a PDF. Okay, you end up with a proof of service form. It's best if you physically return this to the clerk's office - but as a last resort, mail it in as soon as you get it; either way, keep a copy. Be SURE to take a copy to court with you, along with the demand letter and print-outs of any e-mails you've exchanged.

(e) Show up in court, and let the judge do the work. If you get a judgment and he's still dragging, turn it over to a judgment recovery service and they'll charge you 10% but at least you'll end up with some bucks in your pocket.

If this whole process toward a judgment takes more than eight hours of your time, I'd be highly surprised.

Answer 5

I've experienced this exact scenario. Involving legal assistance will likely eat into any possible gains, and the amount recovered would probably be less than the cost of legal action, not accounting for the time and effort expended - that can vary from country to country, I'm based in Ireland where that's a slow and expensive process. You are being manipulated, and engaging with it (as other posters have identified).

Write it off and have absolutely no further contact with the individual involved: Consider it an expensive course in client relationship management, and that you have learned something (in my case, stay away from freelance work). This is definitively not a friend that you are describing here.

Answer 6

It's pretty obvious that this client/friend is trying to extract free work from you.

Your approach is generally sound; no more work should be performed until payment has been completed.

Having said that, only you know whether you have any sort of remaining leverage. Is there more stuff he needs done, like bugs and extra features?

If you have no leverage at all, I would actually take the coffee and hear him out, hoping that you can position yourself better and actually get paid - unless he is a charismatic sweet-talker who merely will sucker you into more free work.

Answer 7

You could let him know that, as a "friend," you're happy to meet him from time to time (as much as friends are), but if he wants any work, its friend-to-friend until he pays what is needed to restore a working business relationship. Then, as a friend, it might we worth pointing out that you have to run your business, and as a friend he needs to understand that paying customers come first.

Beyond that, it really depends on what you find fun. If you can finish work and still be raring to go doing the same stuff for free on your own time, maybe he's got an argument to be had as friends. Most of us typically don't want to do our work at home, on our own time, so he needs to understand as a "friend" that you don't really want to work through that stuff. If he wants that kind of stuff done, he needs to engage in a business relationship. He can try to be a friend too, but business relationships are not founded on not-geting-paid, so it's pretty much a non-starter if he's not paying.

Of course, the final question is "are you his friend?" Do you really want a friendship with this individual? I can't answer that question because I haven't seen how you two interact, but I have a gut feeling the answer is no, you aren't looking for a friend with this kind of personality.

Answer 8

One additional thing for you moving forward: Always (ALWAYS) get a deposit when the initial contract is signed If the project takes a long time, schedule intermediate payments (monthly, at particular milestones, whatever). Final payment to be delivered before handing over final work; or similarly have in the contract that you own all rights to the work until the final payment has been made (and then you will transfer rights or license - whatever you've agreed to - to the client).

This protects you from situations like this. If you had the ownership of the work clause in your contract, you can prohibit him from using your work because he has no rights to it. If it's unspecified, you may still own the work (and can use that for leverage ingetting paid) but it's harder to prove if it's not written explicitly in the contract.