[tptacek]

I don't understand what happened here. The CEO told him to submit his invoice to legal@. Did he do that? What did their legal say? Did the company formally decline to pay the invoice? Or did he just assume he wasn't going to get paid and jump the gun?

But anyways: LESSON LEARNED for startup CEOs. Here it is, it's very simple:

If you want to question or slowroll an invoice, direct it to finance@, not legal@.

You have exactly the same set of options with finance@, and your legal can still review the invoice, ping the vendor, or what-have-you, but you haven't escalated the situation.

[Silhouette]

Surely the lesson for start-up CEOs is even simpler: you are responsible for everything in your organisation.

Like most here, I wouldn't have let myself get into the position of this freelance designer or chosen to air my dirty laundry in public. On the other hand, if I had sent a legitimate invoice and a CEO tried to fob me off with the kind of attitude claimed here (he says, noting that we haven't heard the other side of the story yet) then I would be extremely unsympathetic to flippant comments and requests to mess around with underlings. I imagine my response would be to send the final claim letter by registered post with a note that legal action would follow if the invoice remained unpaid after a reasonable period.

Of course, in this case, it doesn't matter: the Internet hype machine has been started, and if the reported claims are accurate, it is presumably a matter of time before everyone who has anything to do with this start-up starts forgetting to return their calls. Who wants to be associated with someone who thinks it's funny not to pay their bills, particularly when it's a small business working with another small business?

[kika]

Especially you're responsible for what you say in the email.

[damoncali]

I think the legal@ was meant to be equivalent to fuckoff@. That was my reading, at least.

Lesson: Get paid first when working with new clients. There just is no other way.

[tptacek]

fuckoff@ is one interpretation.

how_serious_are_you@ is another one.

[Silhouette]

That may be true, but it's a risky thing to do just to see if someone's serious. The moment you refer me to real laywers, you have probably removed any opportunity for me to be nice to you and settle the disagreement amicably, even if you subsequently realise you've been an ass all along and want to make it all go away quietly. If nothing else, if I think you're asking me to speak to your lawyers, it's probably not me who's calling, it's my lawyers. And now everyone's paying someone's legal fees, and if you were trying to screw me, I'm pretty much going to make sure it's you who pays everything if at all possible. (Clearly this varies somewhat by where you are and how your local legal system works.)

[tptacek]

Are we debating? I don't think we are. I think "send it to legal@" was poor messaging; "send it to finance@" would have accomplished the same thing without escalating the situation.

Having said that: "send it to legal@" is not "breach of contract". Sorry, it just isn't.

[Silhouette]

I think we probably agree here. I was just pointing out that your alternative suggestion (how_serious_are_you@) might not be much of an improvement from a business point of view over the original (fuckoff@). Ultimately, asking someone to contact legal@ is still significantly escalating a situation where there appears to be very little potential upside from doing so, whatever the underlying intent might be.

[tptacek]

Escalating the situation or overtly signaling displeasure is a bad strategy.

Expressing passive skepticism and slow-rolling an invoice you don't believe you should pay is not a bad strategy, at least not always. There is an upside to it.

[miahi]

Usually, startups are small. That means everybody knows everybody, and the CEO should know everyone. Why didn't she just forward the e-mail to their legal department/person internally, with a simple "thank you, your invoice will be reviewed"? Their response sounds like "Oh, you entered the wrong door, this is reserved for important persons. Go to the servant's door, just outside to the left".

[tptacek]

Because they want to slow the process down to figure out what their response should be. Don't like that? Tough shit. Freelancers get Net-15 or Net-30 payment terms if they're lucky. Clients have weeks to honor invoices.

I am speaking here, by the way, as a representative of the "consultant" camp, not of the "client" camp.

[saurik]

I don't even think we have enough context to learn that lesson. I can easily see the email from the CEO having been an apology/prayer (with the understanding that it migh not have worked out), followed by not just a stern "no, seriously" but instead including a threat of legal action.

People throw these threats into all kinds I thins, whether it be something as simple as a request for a refund on a $1 purchase or a thousand dollar consulting bill. People even seem to believe that it helps: that it provides motivation to be heard.

On my end, however, the second there is a threat is the moment I cannot help you any more: I refer you to legal. If you threaten legal action, it is no longer a business decision, it is a legal one. Likewise, of I threaten legal action, it is because I've already given up on business and have already talked to a lawyer, and actually want to talk to yours.

Here, we just don't know. We have some sentences taken out of context that are designed to make this designer seem reasonable. ...but... that "I figured :)" from the CEO is, to me, really telling: it tells me that this person probably thought the designer was "over the top" in their reaction and of course would try to escalate with lynch mob...

So, in that possible context: does "talk to finance help"? If it does, I feel like it would send the wrong message: that you really are now in legal land, not in finance or business land. Again, though: just "possible context", as we don't have the entire email exchange (leading me to be stuck in "people who have reacted like this at me had these associated behaviors" world).

[tptacek]

Yes. It helps. You cannot whip up a storm of angry Redditors when you are told by a client "send this invoice to finance@", because that is where invoices normally go.

From what I've seen so far, this client did two things wrong:

* They scoffed at the invoice

* They told the vendor to send the invoice to legal@

If the client had declined to do EITHER of those things --- not both, just not do one of them --- there wouldn't be even half as much drama as there is now. "Send it to legal@" was just a dumb move.

[saurik]

No: all we have is that they said "please send your claim to our legal team: [e-mail]": key word being "claim". I can easily see the e-mail in the middle from the contractor being one of those massive supposedly-motivating "I will sue you if you don't do what I want, as I believe you did X and Y and Z illegally" e-mails.

If so, it wouldn't make sense to say "send your invoice to finance": the correct response is "send your claim to legal". I really don't think we can claim anyone in this situation can learn any lessons without the complete and full e-mail context, as I honestly have dealt with enough irritating people to not put even a single iota of trust that the contractor is explaining even the sequence of events in a way that isn't designed to make them seem like they didn't send a screaming pile of pain in their side of the conversation.

[sudonim]

Do most YC S12 companies have a legal department? Or a finance department for that matter?

Im sure this particular situation is nuanced, and both parties seem to be unhappy. I haven't worked with many contractors yet, but my 2 rules of thumb are:

Don't ask people to do work for you unless you plan to pay them for it.

Pay promptly and in full.

It's pretty simple. If the CEO was never planning to pay, the conversation shouldn't have gotten that far and the contractor shouldn't have had the idea that they should go and make something.

[tptacek]

Most companies don't have "legal departments"; they have outside counsel they retain for random stuff. Like this.

The onus was on the vendor to actually submit the invoice to the email address the CEO said to send it to. That's not a hardship. Try invoicing a Fortune 500 company for the first time. Goat sacrifice may be involved.

Note that I have no idea at all whether he actually did do that.

In the real world, it is actually allowed to question an invoice. You probably end up paying regardless, but you are in fact allowed to ask the questions.

[dctoedt]

> Goat sacrifice may be involved.

Thomas, this is a fine example of why I've got your comments bookmarked (and Patrick's too): At least every couple of days or so, I can count on you not just for insight but for a laugh too.

[_delirium]

That was my read also, that the CEO realized that she may have screwed up, and therefore the situation called for her to stop talking and let someone more familiar with contract law decide what she had or hadn't already agreed to, before digging more holes. That doesn't necessarily mean that legal@ is actually going to refuse to pay the invoice, though I can see how you could interpret it as an unfriendly hint that they may be looking closely at whether they really have to do so. Forwarding it to something called finance@ instead for the same decision is an interesting PR suggestion, since it suggests merely bureaucracy rather than opposition, even if it amounts to the same.

[brudgers]

I don't see having legal council review the invoice as a cost effective strategy.

At worst the invoice is for less than $2000 (3 days at top rate). No attorney can just make it go away for less than the cost of paying the invoice.

What should happen is that the attorney will say to pay it, and send their own invoice on top of it.

[tptacek]

Of course your counsel is going to tell you to pay it. It's $780. Who gives a shit about $780?

I'm not advocating the "get legal to push back on the invoice" strategy; I'm just saying, you don't have to rule it out to slowroll an invoice.

[qq66]

Yeah, the whole story is missing the part where the legal email address says "we won't pay you." Could be that's the person who is going to pay.