Non-payment over freelance work

Marenghi

I earlier this year got involved with a startup company. I signed a contract to design a website and databases for their product. I was to be paid a salary to be discussed when investment was found and also stock options.
As I worked for them I started to feel they weren't as professional as their contracts let on as they seemed to always have failed investment opportunities that were sure things. And they turned around on the stock options saying that would only be for the directors not the coding team.

Anyway when I had finished the website for them I told them I wished to part ways because I did not feel the company was the best use of my time. There was a verbal agreement made which had written confirmation in emails and text messages.
At first getting payment was delayed because they said they needed the accountants to figure out a way to make payment to a contractor not an employer. Which they said was difficult because I was not a registered company. This was the first I heard the company had accountants.
After a few months and them saying the payment was made I waited but received nothing. The director was becoming harder to contact but eventually he responded and said they will be paying nothing as their lawyers looked over the original contract and see I am owed nothing by the company.
He said I could meet the lawyers but this would cost me personally as I'd have to pay them a consultancy fee. Which sounds rubbish because they are representing him not me, why would I pay them to have them speak on his behalf. After asking him to forward the details he said he will not. He then claimed he doesn't need to pay because they never used the work I was contracted to design and construct.

The lawyers sounds like a scare tactic, I doubt he has any retained. What would be my best option for collecting the payment he owes me for my work done.

Gloomtastic!

They haven't got the money to pay you and are using any excuse they can to avoid payment. If you have invoiced them, they should pay the invoices as they become due. Everything else is just bluff.

You won't be the only person waiting for payment so you need to get to the top of the line before they go bust.

Call round to their offices and have it out with them face to face. Don't get aggressive or make threats. Just don't leave until you have a cheque in your hands. If it bounces call round again and don't leave until you get cash. Make sure you count the cash before you leave (sheisters will always be sheisters!).

Others here may suggest sending a legal letter or get a solicitor to deal with it. Don't waste your time. The surest and quickest way to put this whole thing to bed is to doorstep them.

Good luck!

tricky D

Yup, they're giving you the runaround, pure and simple. The stuff about lawyers and accountants smells like rubbish too. +1 to doorstepping.

Lastly, I'd always advise against putting any value on stock options when considering any job. They are worth nothing until and if they are cashed or otherwise liquidated and that happens very, very rarely. Another poster, The Corinthian, in another recent thread, gave a reckoning that only about 1 in 20 stock options ever results in any income which seems a bit generous imho. The rest are mere mirages.

Marenghi

I've been in touch with the rest of the coding team. I lost contact because a I said I exited early in exchange for payment up to what I've done. Anyway it looks like a few weeks after I left they fired the entire team and are refusing to pay them telling them the contract is void.

However from what I can see they've recently received investment for what appears to be the same app we worked on under a new company name.

I plan to meet them in person but it seems they are trying to scam more than just me.

Gloomtastic!

A new company name. That sounds ominous or it could be another bluff. Others on here will probably know what exactly to ask for to back up their claim.


Personally I'd tell them I don't care about a new company, I want my money now and don't leave regardless.

First thing I would do is prepare a letter to the press, highlighting the deception of this company and how none of the team that helped to build their company have been paid.

Then I'd write an email to the director attaching the letter and tell him this letter is going to be posted to the business editor of every major publication in Ireland, that you will publish it on Linkedin and every social media outlet available to you if you have not received payment within 5 working days lodged in your account. If you have any contacts in the media mention them in the email to him.

Collecting this money is going to be a long hard road if you go the legal route and will probably cost you. I once went after a guy in the small claims court, he never turned up, the judge gave me the decision, but did I ever see the money? No.
If your sure they have the cash this is the way to get it, the damage to their business and reputation especially considering its a startup would cost them a lot more then whatever they owe you I'm sure. And if he is still too stubborn send the letter and see how he likes that.

thecommander

Deleted User wrote: »

First thing I would do is prepare a letter to the press, highlighting the deception of this company and how none of the team that helped to build their company have been paid.

Then I'd write an email to the director attaching the letter and tell him this letter is going to be posted to the business editor of every major publication in Ireland, that you will publish it on Linkedin and every social media outlet available to you if you have not received payment within 5 working days lodged in your account. If you have any contacts in the media mention them in the email to him.

Collecting this money is going to be a long hard road if you go the legal route and will probably cost you. I once went after a guy in the small claims court, he never turned up, the judge gave me the decision, but did I ever see the money? No.
If your sure they have the cash this is the way to get it, the damage to their business and reputation especially considering its a startup would cost them a lot more then whatever they owe you I'm sure. And if he is still too stubborn send the letter and see how he likes that.

Newspapers and publications won't print stuff like that because you send in a letter. I'd laugh at you if you used something like that as a threat.

Small claims court doesn't deal with debts, so I'm not sure how you even got to see a judge about one.

tricky D

And then there's the problem of defamation and the costs of proving it or more importantly, the costs if you don't.

Atomico

I think I read somewhere that you should be 'politely persistent' - be the biggest thorn in their side but be polite about it at all times. I had an agency owe me money for months and I just kept emailing regularly until they paid up. I am sure plenty of other contractors gave up and they might have been hoping I'd do the same - who knows.

If you feel you delivered what you were asked and there were no issues, you are due the money and you should just keep bugging them (politely) until you get it. They sound like they have some neck on them so good luck with it..

thecommander

thecommander wrote: »

Newspapers and publications won't print stuff like that because you send in a letter. I'd laugh at you if you used something like that as a threat.

Small claims court doesn't deal with debts, so I'm not sure how you even got to see a judge about one.

Your a journalist are you commander? Why are they going to laugh at a letter like that please explain?
Im talking from experience and have used this method when people ripped me off as a young business person. More then once I might add, so you can laugh all you want but its effective and gets results.
Not only that but I have in fact written and published an article on a companies bad practices for a business magazine. Editors welcome this kind of stuff, if your facts are straight you have proof and your not just a whining ex employee.

On the court thing, I worked for a guy years ago who owed me 400 euro. I filed a claim against him for unpaid wages, and received a court date, went to court and received a decision in my favour. Maybe I'm mixing up what kind of court it was, I was only 20 at the time and can't remember it too clearly but that is what happened, I never got the money owed because no one enforced the decision.

EDIT: doing a bit of googling it looks like it was the Labour Court

Atomico

Deleted User wrote: »

Your a journalist are you commander? Why are they going to laugh at a letter like that please explain?
Im talking from experience and have used this method when people ripped me off as a young business person. More then once I might add, so you can laugh all you want but its effective and gets results.
Not only that but I have in fact written and published an article on a companies bad practices for a business magazine. Editors welcome this kind of stuff, if your facts are straight you have proof and your not just a whining ex employee.

On the court thing, I worked for a guy years ago who owed me 400 euro. I filed a claim against him for unpaid wages, and received a court date, went to court and received a decision in my favour. Maybe I'm mixing up what kind of court it was, I was only 20 at the time and can't remember it too clearly but that is what happened, I never got the money owed because no one enforced the decision.

EDIT: doing a bit of googling it looks like it was the Labour Court

Why would an editor publish such a letter in his magazine, paper or website though? I have never heard of that happening in recent times anyway - a publication naming and shaming a company, especially when it has nothing to do with them?

Just wondering as I don't see any business actively wanting to invite defamation proceedings for no good reason!!

Atomico

Atomico wrote: »

Why would an editor publish such a letter in his magazine, paper or website though? I have never heard of that happening in recent times anyway - a publication naming and shaming a company, especially when it has nothing to do with them?

Just wondering as I don't see any business actively wanting to invite defamation proceedings for no good reason!!

Its not about publishing the letter, its getting the media outlets to look into the case, do their own investigation and cover the story. Its about creating bad PR for the company from a number of angles which will eventually add up to a much higher cost then paying the people that did the work for them.

In the case of a startup company that has a number of coders etc that built the foundation of the company but none have been paid, yet this company is still sourcing and actually receiving investment its a good angle. I mean if the company is sourcing capital from VC's there is probably some PR about it somewhere. All it takes is a couple of links online to stories where the directors are burning all of their employees to give cold feet to say potential future investors, other companies looking to partner or or whatever.

If the company had no money it probably wouldn't be an interesting story, just another hard luck case of a startup gone bad, but from the sounds of what the OP is saying they have money, and are pushing forward with their business albeit with another name, which is a standard shady practice used by businesses when they are running away from mistakes, problems and debts

pedronomix

The media would run a mile from such a non-story ( from their perspective) Unless you can find a couple of non-national non white pregnant travelling community people who have been wronged, it is has no legs!!

I hate to say it but the OP did business with a company, gave them credit with no proper security/scrutiny in place for ensuring payment..... happens every day. Nobody with any business nous would give a start-up credit unless they fancy the risk!! and had 50/50 expectation of actually getting paid!!

pedronomix

pedronomix wrote: »

The media would run a mile from such a non-story ( from their perspective) Unless you can find a couple of non-national non white pregnant travelling community people who have been wronged, it is has no legs!!

I hate to say it but the OP did business with a company, gave them credit with no proper security/scrutiny in place for ensuring payment..... happens every day. Nobody with any business nous would give a start-up credit unless they fancy the risk!! and had 50/50 expectation of actually getting paid!!

Depends who the company is Pedro, if they are going places its a story!

thecommander

Deleted User wrote: »

Your a journalist are you commander? Why are they going to laugh at a letter like that please explain?

No I'm not, but I have the cop to know a non story when I see one.

thecommander

thecommander wrote: »

No I'm not, but I have the cop to know a non story when I see one.

Yeah I'd say your a regular genius alright

pedroeibar1

Haven’t read such a load of s#1tE in a long time. Pedronomix is on the money in his second paragraph here

@OP – are you serious? You write

Marenghi wrote: »

I earlier this year got involved with a startup company. I signed a contract to design a website and databases for their product. I was to be paid a salary….. .

Total conflict – you are either an employee or a supplier, unless your contract of employment stipulated that you were an employee with a description of what you were supposed to design. What about PAYE/PRSI??
Then we get more conflicting comment

Marenghi wrote: »

Anyway when I had finished the website for them I told them I wished to part ways because I did not feel the company was the best use of my time. There was a verbal agreement made which had written confirmation in emails and text messages[/B]….

So, you finish what you were employed / contracted to do (your opinion, BTW, not theirs!), have that 'verbally confirmed in writing' (??) and then you start giving your employer/customer (which?) snooty advice and telling them you are not impressed by their performance. Cool, way to go!! So in response they tell you to PFO, and you wonder why?

Marenghi wrote: »

This was the first I heard the company had accountants.

Duh!!! Have you not heard before that accountants are funny people, they have a habit of working alongside companies and being involved in doing things like annual accounts, payroll, tax advice, finding investors, etc.

I could go on through the rest of it and pick holes, but what is the point??
You either have a contract or you don’t. If it is ‘verbal’ accept that you don’t. First line of defense for them should you be stupid enough to sue is to say ‘Marenghi was asked to do X, he did Y, he did not perform, he was most difficult and started to comment on / try to get involved in other areas outside his remit and we had to break the relationship.’ Now, you go prove otherwise.

Should Marenghi be stupid enough to threaten them that he will go to the Meeja he will quickly find his a$$ in a sling, with a letter threatening to rain organic fertilizer on his head for evermore, and a bill for legal costs and damages that would make his outstanding debt look like petty cash.
Have not read such a stupid thread since the Canuck ..........

beauf

First lesson in IT. Get staged payments and walk away if any payments are missed.

Everyone has an IT project that will make them rich. Few want to pay what it costs though.

beauf

You'll never chase these people though the courts. They are simply know that game better than you do. Being a pain in the butt might get you some money. But I doubt it will be worth all the hassle and stress.

No I'm not. Journalist won't risk a deformation suit over a letter being sent in. And to think they'll do some investigate journalism over one man not being paid, when there was no contract in place is foolish. I'm sure if it the done thing then you'll have links to loads of articles.

To quote the bit you deleted commander.

Firstly its not one man being paid he said the other guys weren't paid either, and the story is not about a guy not getting paid, its about a company not paying its staff who help to build it, yet taking on investment and still operating under another name.
McAnthony Realty ring any bells? Or maybe you remember it as McAnthony International Property, or MRI, or McCanthony Real Estate.

Ever heard of Joe Duffy? The highest paid radio guy in Ireland, who basically handles the cases of the downtrodden?

Maybe the business post, the irish times are not going to consider such a story unless its a particularly big company screwing its staff but lets not pretend the Evening Herald, the Sun and Star balk at anything.

People are talking about defamation suits, I dont understand where the defamation is - OP has contract, which I assume stipulates being paid, and he has not been. Given that the rest of the team has not been either, the company has changed its name, received investment and so on, this is a pretty black and white case to me. There is no need to trade insults and invite defamation, just state facts.
It just hard to go the legal route for things like this when you have no experience doing that and not being taken advantage of buy lawyers, or simply having the labour court experience I had.

Pedroebeir, I think your being particularly harsh on the OP in this case. Remember you were young once and trusted people too, and probably got screwed a few times. Maybe you had to be to learn what you know now. Sure he ****ed up, but he is not the bad guy here.

thecommander

[Deleted User] wrote: »

Yeah I'd say your a regular genius alright

Not a genius, but do live in the real world. The OP doesn't even know what arrangement he had, so no one is going to jump on this case for him, not even Joe.

thecommander

[Deleted User] wrote: »

To quote the bit you deleted commander.

Deleted after 30 seconds over 10 hours ago, but thank for keeping it. Nice to know someone cares.

Qualitymark

This is ciall ceannaithe. Never, never do freelance work unless it's cash on the table right now. And if the payments slow down, don't continue to work for that person.

The only pressure you can put on the company is by getting together with the other contractors and together contacting the company and demanding immediate payment, and if you are refused, as a last resort going together to the funders to seek to be paid from the funding the company's getting.

Not legal advice. Without prejudice.

thecommander

thecommander wrote: »

Deleted after 30 seconds over 10 hours ago, but thank for keeping it. Nice to know someone cares.

It was there in my email this morning. And Im a regular mother teresa didn't you know?

Anyway, in the case that you are right and nobody wouldn't be interested to listen, it is still an effective strategy and may lead the offending company to pay. In your opinion if you got that threat you might ignore it but thats not to say someone trying to build a startup might have the same opinion as you. And when we are talking about social media like Facebook, linkedin etc these can be very damaging and dont need a specialist journalist to cover it to inflict that damage.

As I said it worked for me twice before - the letters etc never saw the light of day, I got paid before it came to that.
If it was the case that there was even a 10% chance it could get published or written/talked about by a media outlet this is still too high a risk over whats probably a grand or two owed to the OP

dbran

Qualitymark wrote: »

This is ciall ceannaithe. Never, never do freelance work unless it's cash on the table right now. And if the payments slow down, don't continue to work for that person.

The only pressure you can put on the company is by getting together with the other contractors and together contacting the company and demanding immediate payment, and if you are refused, as a last resort going together to the funders to seek to be paid from the funding the company's getting.

Not legal advice. Without prejudice.

+1 (multiplied by 1000)

Providing the best website for the customer is very important but getting paid is even more important.

Never ever ever ever be afraid to have the discussion about being paid with the customer. And you must have that most important of all discussions while you still have some sort of a hold over the person. Never be afraid of alienating the customer by simply asking that you are paid once you have done the work. If the customer is decent and honest there should not be a problem. If they start to say "30 days credit after you give us unfettered access to the product" or something like that, your alarm bells should be ringing.

This is especially true if you are selling a service as there no reason why they require credit. They are not going to be selling it on to someone else. It is therefore simply an excuse to delay payment or not pay you at all. If they are going to pay you, it should not make any difference if they are paying you now or in 6 months time.

Once you have hand over your work and therefore your hold over the customer, your chances of getting paid take a nose dive. Going legal, door stepping etc have only a slight chance of succeeding. And all those methods cost money as well as time and at the end of the day all the guy has to do is just sit tight for long enough. If they are a limited company they are almost unassailable.

If you feel that you must give credit, then you must also build into the price of your service, the percentage of people who will become bad debts. And you must accept the cost of bad debts just like you have to accept the cost of rent or any other cost of business. You identify the guys who are not going to pay you and you stop doing business as soon as possible to reduce that cost. If you cant afford to take the hit of not being paid then don't give credit

Perhaps get a good debt collection agency involved who may be able to persue it for you. Otherwise you will probable need to write it off to experience.

Good luck

dbran

Graham

Marenghi wrote: »

Anyway when I had finished the website for them

Do you still have a full copy of the website? You may have other options to either recoup your losses or to incentivise your clients into settling the outstanding payments.

Atomico

pedroeibar1 wrote: »

Haven’t read such a load of s#1tE in a long time. Pedronomix is on the money in his second paragraph here

@OP – are you serious? You write

Total conflict – you are either an employee or a supplier, unless your contract of employment stipulated that you were an employee with a description of what you were supposed to design. What about PAYE/PRSI??
Then we get more conflicting comment

So, you finish what you were employed / contracted to do (your opinion, BTW, not theirs!), have that 'verbally confirmed in writing' (??) and then you start giving your employer/customer (which?) snooty advice and telling them you are not impressed by their performance. Cool, way to go!! So in response they tell you to PFO, and you wonder why?

Duh!!! Have you not heard before that accountants are funny people, they have a habit of working alongside companies and being involved in doing things like annual accounts, payroll, tax advice, finding investors, etc.

I could go on through the rest of it and pick holes, but what is the point??
You either have a contract or you don’t. If it is ‘verbal’ accept that you don’t. First line of defense for them should you be stupid enough to sue is to say ‘Marenghi was asked to do X, he did Y, he did not perform, he was most difficult and started to comment on / try to get involved in other areas outside his remit and we had to break the relationship.’ Now, you go prove otherwise.

Should Marenghi be stupid enough to threaten them that he will go to the Meeja he will quickly find his a$$ in a sling, with a letter threatening to rain organic fertilizer on his head for evermore, and a bill for legal costs and damages that would make his outstanding debt look like petty cash.
Have not read such a stupid thread since the Canuck ..........

Cool your jets and give the guy a break will ya - he is obviously not that experienced.

By verbal contract via emails he probably means a casual agreement (albeit over emails) as opposed to signing a formal contract. Either way this company are probably seeing someone without much business savvy who they can take advantage of by not paying up.

Marenghi

Atomico wrote: »

Cool your jets and give the guy a break will ya - he is obviously not that experienced.

By verbal contract via emails he probably means a casual agreement (albeit over emails) as opposed to signing a formal contract. Either way this company are probably seeing someone without much business savvy who they can take advantage of by not paying up.

Yes by verbal agreement I mean we spoke casually at the end and they said they would pay me for the work I did. And by written confirmation I have texts and emails from himself mentioning that conversation and clearly stating he has sent payment.

They aren't exactly a established company, they're just a student startup at a college, which is why I don't believe they had accountants or lawyers. They hadn't money to pay the team where would they have cash for accountants or lawyers.

I have been speaking to the rest of the team. It looks like they have been aggressive towards one of the other coders, making the same legal threats and personal insults they made against myself. I've spoken to the third and final coder who knew them from before their startup and was a friend of theirs. And he didn't realise anything was up, he was expecting to be paid when investment came in but realises now he's left out in the cold too.

We're thinking of all of us meeting them in person to come to some fair agreement. And if that fails, as their startup is associated with the college we were thinking of bringing it to them.

Qualitymark

Marenghi wrote: »

We're thinking of all of us meeting them in person to come to some fair agreement. And if that fails, as their startup is associated with the college we were thinking of bringing it to them.

Sensible.

The Corinthian

I'm afraid pedronomix is essentially correct. The OP went out on a limb creditwise and got burned. He's gotten the runaround and realistically, outside of doorstopping them, any other potential course of action against them (for what, after all, does he even have any contract in writing for the work he did?) will cost more that what's owed to them. On top of everything else, this is a 'student startup' which sounds like they have no money or assets to sue for even if he wanted to and these guys are probably in over their heads, don't have the money to pay you anyway and their demise is simply a question of time.

All commerce is a mixture of negotiation and risk management. If the company is shaky financially, then keep any credit line short. If they won't need you after you finish your current job for them keep it shorter - when they don't need you again is typically when they'll screw you over. look for some money up front and regular payments upon delivery, so as to limit your exposure. And get everything in writing; anything else - promises of share options, bonuses, profit shares, equity or magic beans are all just 'conversation'.

I sympathize with the OP, but it's happened to all of us at some stage and a right of passage of sorts when you think about it.

As the Germans say Vertrauen ist Gut, Kontrolle ist Besser.

Qualitymark

You might say it's a rite of passage; however, it's also a rite of passage for people who don't deal straight to be doorstepped by a group of contractors (preferably with a video camera to record what the crooks have to say)!