[edw519]

"I have an idea for a website. If you build v1.0 I'll pay you a whole thousand dollars and you might get equity if it works very well."

If only all the assholes were so easily self-identifying.

The real problems are the charming, smooth talking, dream clients offering cool projects, top dollar, and paying on time...until they don't and decide to start making your life hell because you're in so deep already. They're no dummies.

[daeken]

Agreed. I had a project a couple years ago, just like this. Everything started off fine -- solid contract, good communication, etc. Payment was solid for the first few months, then it stopped. I was accused of putting together templates with no functionality behind them, and they demanded their money back. When I informed them where they could put their demands, so to speak, they threatened litigation. I had done the work and knew the contract was solid, but I couldn't have afforded a lawyer. Thankfully, they soon disappeared... But not before stealing their customers' funds. Ugh.

In retrospect, there were a few warning signs fairly early on, but it's hard to see that when you need the money to eat.

[zecho]

How much are we talking here? Many states have to be above $5 to 7.5 thousand to get lawyers involved out of small claims court. Also, many lawyers will do brief consultations on your case without charging you.

For future reference, don't back down when threatened with litigation. If it's actually a bullshit claim, they'll either settle out of court (on their own lawyer's recommendation) or they'll end up paying your lawyer for you when you win your case.

[rmc]

In retrospect, there were a few warning signs fairly early on

Care to elaborate to teach the communtity?

[anthonyb]

Hindsight is 20/20, but typically any sign that they're weird and irrational (trail of angry developers/no business model), or that they'll try and screw you out of a fair payment (won't do commencement payments) are a red flag.

Even if you can't afford a lawyer, I would have something along the lines of terms and conditions, what happens on non-payment (usually work stops), etc. The "Fuck you, pay me" is a pretty good introduction to the field.

For web design you'll have milestone payments on commencement, initial design (with a couple of rounds of changes), conversion to HTML (with no changes) and installation on the site. Payment terms are 7 days, or as short as you can get away with. If they need more changes than agreed, or they change their mind, then they pay the balance and you requote for the new work. If they decide not to use your work, then they pay the balance. If they delay on any part of the work (eg. won't provide content for six months) then they pay the balance and you do the work later on. You get the idea, I'm sure.

If they balk at any of your conditions without a good reason, that's usually a sign that they'll be trouble and that you'll need to keep them on a tight leash and/or handle them with kid gloves.

On the flip side, if they're a good client, good payer and you're happy to work for them, then give them a lot of leeway. But the deadbeats get held to the letter of the agreement.

[rmc]

trail of angry developers

Hehe. Reminds me of a former client (sorta) who would always wind up working for assholes. Everyone he had worked with turned out to be an asshole would couldn't do what he wanted. Turns out he was the asshole.

It's almost impossible for everyone else to be an asshole. It's like the old poker tip. If you look around the table and can't find the sucker, it's you. If you think everyone is an asshole, you're probably an asshole.

[anthonyb]

Bonus points if you find angry rants from the previous developer in PHP comments :)

[knewter]

We invoice weekly. Depending on our terms with the client, if they aren't paying on time we stop work. This results in at-most 2 weeks of unpaid work, and typically they have a lot invested in seeing it through to completion because already have (largeish-n)% of their money. We also send emails EVERY TIME a work unit is created in xrono (our open source app-to-run-a-software-consultancy) showing both the current work and their current uninvoiced total.

Our clients never, ever, ever tell us that they were unaware of how much money they'd agreed for us to spend without us laughing a lot. It typically ends well.

[anthonyb]

I refer to this as a "cash leash", and it's a very good idea, particularly in the early days before you can hire lawyers to create contracts and write letters to non-payers.

[marcomonteiro]

"The real problems are the charming, smooth talking, dream clients offering cool projects, top dollar, and paying on time...until they don't and decide to start making your life hell because you're in so deep already. They're no dummies."

I can completely relate. If only there were a place to keep track of clients and their payment history. Glassdoor meets credit reporting. Clients with no history get charged more and require a higher deposit.

[tomkarlo]

Agree 100%. The follow-on problem is that once you are owed a not-insignificant amount of money by one of these clowns, the temptation is to keep them happy and avoid conflict in the hopes you'll get paid out without having to resort to litigation.

I once worked for a few months with someone before I watched him not pay one of our contractors for no reason. When I raised the issue, he asked me if I'd be willing to take a 50% pay cut - on the work I'd already done for him.

[anthonyb]

Yes, I've seen this happen at a couple of small businesses that I've been involved with. The trick is to have regular milestone payments, and if they miss them, work stops. (It'll annoy idiots like this to the point where they won't hire you, but that's kind of the point...)

[bitops]

Sounds like you have an idea for a startup. :)

[DeusExMachina]

I agree with what you said, even though I luckily still hadn't any client like that.

I think, though, that a good method is to ask for an advance and maybe payments as the work progresses. I guess bad clients never pay advances.

[zizee]

Agreed, one should never start work with a new client without an advance. It doesn't need to be big, but get the client to put some skin in the game.

Also, regular progress payments are essential. You don't want to be in the hole 10k to someone when negotiating further work.

http://jamespmcgrath.com/progress-payments-based-on-mileston...

[gersh]

If they pay on PayPal or via their credit card, they can always do a chargeback.

[zizee]

Then don't take payment via credit card. Only accept cash transfers, cash, or bank cheques.

[nfm]

Fortunately, 90% of bad clients are the former.