Ask HN: Holding on to the source code till you get paid?

[michellejunlee]

happy friday

i was told that it is illegal if you work as a contractor for a company, to withold the source code until you got paid

note: i have been making the requested changes to the source code and submit it to appstore, but i havent been paid fully yet, and it does seems the startup doesnt have money at the moment.

any comments or wisdom are much appreciated

[garethsprice]

No payment = no work, no source code.

As a freelancer, you are primarily a debt collector and secondarily a developer. Get those priorities wrong and you will starve.

Your living is trading time for money. If a client is refusing to pay, you are losing at least triple your hourly rate (the time you worked for free, the time you spend chasing them for payment and the time you could have been working for someone who does pay).

You need to immediately stop work, issue a full invoice and say that no more work (including packaging and sending source code) will be done until the outstanding invoice is paid in full. Then later on, if they hire you for more work, insist on prepayment.

If they flip out, fire them as a client and find a better client. Life is too short and stressful as it is to live with bad clients.

May sound harsh, but 10 months late on an invoice and bullying you with the law sounds like a toxic client relationship where the client has no respect for you. If you continue to be nice to them, they'll continue to walk all over you and leech as much free work as possible before you finally give up and (because you're nice) fade away into the shadows without getting paid.

If it's a large amount (exceeds small claims), see a lawyer. If under, wait for them to send you a lawyer's letter (most bullying clients who threaten legal action won't ever follow through), then file a small claims action for the full value of the invoices plus expenses.

Collecting money from deadbeat freelance clients is one of the few times in this world when being an aggressive a-hole is justified and effective.

[disquorse]

Have a frank conversation with your employer about your concerns. "I've done all this work, I haven't been paid, you don't seem to have any money, can you guarantee that I will be paid when this is all said and done?" If "yes", "Great. I'd like 1/2 or 1/3 or 1/4 now (for however much work you've already done) and the rest on full delivery. If "no", "Ok, well I'm going to have to put this project on hold until your funding comes through. I'll send you a bill for the work I've already done." If it's a lot of money you could immediate file a suit to get a claim on any assets they may have at hand.

I've paid contractors a number of ways: 0 up front, 100% on delivery; 0 up front, 50% at 1/2 way, 50% at final delivery; and 10% up front, 40% at the 1/2 way point, and the other 50% at final delivery.

0 up front, 100% on delivery has been the most common for me because I contract out relatively small projects ($500-$1000 range)

[michellejunlee]

at least in bay area, i never seen any company do any down payment.

except if you are a big design agencies, then yes your client will do that. my projects usually is on going with specs that keep changing on the fly whatever bizdev people decided.

[srcmap]

Maybe write into your contract that you own the copyright of the code until you get paid?

[grej]

I'd also be interested in the legal ramifications of withholding source code. Don't take my advice without consulting legal sources because I'm NOT a lawyer. Still, I don't see how you can be sued for not delivering something for which you were never paid.

If they never pay you, perhaps you could open source the project and use it to advertise yourself.

[michellejunlee]

i wish it was that simple. there are 2 parts website and mobile apps, obviously with just the mobile apps src code, people cant do much with it.

Someone in news.ycombinator here must have dealt with this problem or at least a number of people, I know we usually only read successful stories everywhere but there actually thousands that dont make it

[ScottWhigham]

There's a difference between "i havent been paid fully yet" and "I'm hesitant to give them the source code until I get fully paid. I've already invoiced them and they are late on payment according to the terms of the invoice. They've been late before also so this is new territory. I tried talking to the client but he wouldn't answer my call."

Typically 1099s submit an invoice and are paid according to the terms of the invoice. Saying you haven't been paid yet when you haven't invoiced is a bit dramatic and such anxiety is unlikely to win you any future business/referrals.

Which is it?

[michellejunlee]

invoices are submitted early this year (like january), they paid some, but there are still quite a chunk of money they havent paid yet

like you said, it is "a bit dramatic" and stupid i would think if you havent submitted an invoice(s) and expected to be paid.

and i would think you will agree with me that january 2013 invoice is very late in october 2013.

and also imho, having been living in the valley for 18 years as a developer, sometimes old clients are like leeches, because they keep asking lower and lower prices, and before you know it, they want you to compete in pricing with a guy in india, or they will send out somekind of cease and desist email firing you for being not punctual etc, when all this time you have been helping them and giving them really low price. Trust me that all good things must eventually come to an end.

[ScottWhigham]

No doubt that, if they are 9-10 behind on paying invoices, there's cause to worry. The question is why you are still doing work for them? That makes little sense. I understand having older clients around for years but the combination of slow/late paying and hustling you for lower rates would drive most of us off.

Good luck.

[centdev]

As a subcontractor / freelancer (and I'm not a lawyer), you owe them the code they have actually paid for based on the time you've worked. While it may be illegal to withhold all of the source code, it is not if you retain the code that hasn't been paid for. Also, your contract with them should stipulate the terms.

[segmondy]

I don't agree with this. Take your car to a mechanic, tell them to change your engine and transmission. Pay them for only the engine change after they have changed both. You will not get your par or part of your car. They will obtain a mechanic lein on your car and sell it. If anything is left, after covering their cost, you get that. I don't think he should give them any of the source code, not a line. The company is clearly trying to bully him.

[downrightmike]

http://vimeo.com/22053820

[namuol]

Around the 20 minute mark they talk about an "IP Transfer on Full Payment" stipulation in a contract. The gist of the talk is, "Lawyers are worth it."

[michellejunlee]

i am loving it

[patmcc]

If you're a contractor, you should have a contract - does it not spell this scenario out?

[michellejunlee]

actually i am more or less like an employee with options etc but 1099 instead w2

most of the website work i cant do much since its on the server with login etc for anyone to see and access, but on the mobile apps, its pretty much ipa/apk you upload to the app store.

I believe like there are lots of instances of startup unable to pay etc in bay area, I just need to understand my options.

[segmondy]

who told you that? a lawyer? or someone? where in the law?

[michellejunlee]

its the owner of the company that said that (also the CEO), so i just want to know if anyone else having this issue before.

much appreciate for the help

thanks