Possibly, and that's how you should handle it. Better to not get into such situations in the first place, because lawsuits will take forever, cost money, end up in mediation, and damage your reputation.
Lawsuits do not damage your reputation, that's BS made up by people who don't want to pay for services.
If you get into a position where mediation is happening, that means you have a piss poor contract, and you should get a new lawyer. Similar for if lawsuits cost you money: your contract terms should include the client covering all legal costs involved in recovering payment.
If you have a customer bad-mouthing you to other business owners, and online, you have sustained damage to your reputation. Even if no one finds out about the lawsuit from public records. For freelancers, and I speak from long experience, word of mouth and referrals and happy customers who will say good things about you count for everything. One angry customer, even if they were legally or morally wrong, can do a lot of damage.
Contracts by themselves don't force the other party to perform according to the contract. A contract only gives the parties evidence of the agreement, which may or may not stand up when interpreted along with other evidence and arguments in front of a mediator. In other words, a contract can't prevent a lawsuit if one party fails to perform -- that's literally how breach of contract lawsuits happen.
Whether a case goes to mediation or not, and who pays legals fees in case of a dispute, is covered by state law. Any provision of a contract that overrides or contradicts state or federal law is void on its face (that's why contracts have a severability clause). 90% of what appears in contracts usually gets covered by state or federal law, it's just boilerplate and attorneys lining their pockets.
I have served as an expert witness in several of these case, in front of arbitrators. The surprising thing, to me, was how little weight the arbitrators gave to the wording of the contract, and how much weight they gave to what was promised, what got delivered, what payments got made, and the apparent intent and motivation of the parties. The mentality that thinks a perfect contract is the key is the same mentality that thinks "the blockchain" is the place for contracts and enforcing them. In real life the state statutes and the presentation to the arbitrator makes the difference. It's more important to carefully document with emails and so on every exchange with the customer.
If you have a bad feeling about the customer, or they have a questionable reputation (ask around!), or they ask you to do something unrealistic, shady, or illegal -- walk away. No contract will save you from them.
That's why unhappy clients are usually regarded as unreliable reporters. I've heard businessmen complain about IT contractors before and I know well to take it with a huge leeway for the other side.
Maybe, but would you hire those contractors? Do you suppose that kind of bad reputation is a good thing, or something a freelancer should ignore?
Almost every one of my customers tells me about the last people they hired and how they didn’t communicate, didn’t deliver on time, kept increasing the price. Way more incompetent and unethical freelancers out there than fraudulent customers in my experience.
I’ve never had a customer stiff me, but I have said no to customers who seem toxic. No amount of legal help can fix that.
If you get into a position where mediation is happening, that means you have a piss poor contract, and you should get a new lawyer. Similar for if lawsuits cost you money: your contract terms should include the client covering all legal costs involved in recovering payment.