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Getting Money From Deadbeat Clients

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By Jonathan R. Tung, Esq. on July 06, 2016 3:59 PM

It's the eternal struggle for solos. We've all been there. You render services, and you don't enforce the strict terms of the agreement. The client can't recharge her retainer because her transmission blew out, she had a family emergency -- we get it. She's out of money, or she has money and withholds payment.

No good deed goes unpunished and being the "nice" lawyer can cost you time and faith in humanity. Your lender certainly couldn't care less about your personal problems and negotiating your arrangement with them certainly won't end as favorably for you as it did your client. So, if you end up serving a deadbeat client who won't pay, what do you do?

Prevention

Sometimes you have to get tough with clients. The best medicine is preventative. That is to say: sometimes you should take steps to make sure the cancer doesn't get a start within your revenue stream. Here are two simple methods to consider:

1. Credit Cards

Happily, one of the easiest ways of bypassing the problem of payment these days is accepting credit card payments. Setup with your mobile device is relatively painless. Yes, you have to rearrange affairs with your bookkeeper. Yes, you have to take a fee hit. But you get paid today, and the money is in your account.

2. Take Collateral

Check with your local jurisdiction, but various jurisdictions allow for attorneys to take physical possession of valuable personal property. The most obvious examples are jewelry and precious metals. This is a favorite for attorneys down in Florida.

The Nuclear Option(s)

If preventative measures don't work, the final straw is collecting against a client. Entire practice guides have been dedicated to this exact topic, so take comfort in knowing you're not the only one.

Of course, there are drawbacks to this as well, and you already guessed them: your reputation will inevitably take a hit as your deadbeat client goes around town to friends and family giving her side of the story while conveniently omitting finer details -- like the fact she didn't pay. This, unfortunately, is life.

You can sue to collect, but make it on your own terms. An interesting trick to note is that, sans intentional malpractice, negligence malpractice statute of limitations deadlines are generally shorter than breach of contract deadlines. This means you should forgo a claim as long as you can so that the client can't fight back with a viable malpractice suit against you.

Also, liens can be placed on property through a variety of motions. In California, this is done through the use of Judicial Council Forms. But of course, there's more than one way to skin a cat.

Get Paid, Stay in the Game

Your clients, for the most part, don't want to take you for a ride, but some people really don't have a sense of responsibility. If diplomacy gets you nowhere, don't feel guilty about protecting your business. But don't interpret this to mean all out war: sometimes you should consider lost money the price of learning life's occasional lessons. For example, it's always a good lesson to learn which clients you should simply avoid.

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