I have an hourly-rated contract with a client (small tech company, ~5 people + a few contractors). The first 7 months went well - payments tended to be a week or two late on occasion, which I attributed to disorganization. However, a month ago the accounts receivable reached $25k - at which point I stopped working for the client. Since then, I have a chain of emails and phone calls trying to solicit payment (or partial payment) from the client. I receive responses within 1-3 days - usually a verbal guarantee from the client that I'll receive at least a partial payment within the next week - which has never happened.
I'm now considering taking legal action (a letter from lawyer then sueing). The law firm is willing waive all costs if we do not receive payment, though they will of course take a decent percentage of the payout if we win. This, of course, is all assuming that the client is able to pay (an important variable in this equation).
I'm hoping there is a good rule of thumb out there to determine when its best to begin legal action. My concerns are (1) loss of money and (2) the client becoming uncivil/hostile. Thx.
p.s. - please note this is similar to question 6581 though this addresses a larger outstanding payment ($25,000 vs £100) and, thus, addresses costs of legal action.