What If My Client Sues Me?

Tuesday, November 29, 2016
By Phil Elmore

As a working writer, sooner or later, somebody is going to threaten to sue you. This isn’t because you’re a bad person. It isn’t even because you did something wrong. You can do everything right and still end up with an unhappy client. This doesn’t just apply to writers, either. It can affect any small business, whose relationships with legal firms tend to be fleeting and far between.

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You may recall that I wrote in No, You Won’t Be Suing Anybody that it is actually quite difficult to sue someone for libel or slander because you got into a disagreement on the Internet. I am not, however, talking about that kind of dispute. To sue for libel, slander, or some other aspect of, “That guy said something mean to me online” requires that you prove damages, which is nearly impossible. The type of lawsuit I’m referring to now, by contrast, has to do with services that have been rendered for money.

When the client is unhappy and asks for his money back, there is a specific amount involved — often one that is low enough that it can be hashed out in small claims court. It’s relatively easy to take someone to court for an amount of a few hundred or even a few thousand dollars. In other words, for the amounts that a working writer is paid for most of his projects, it’s not difficult at all for an angry client to sue to get the money back.

Typically how this works is that you agree to provide some work for somebody else. You provide all or part of that work. The client decides he or she is unhappy and asks for a refund of some or all of the fee paid. If you at any time have told them they get a refund if they’re not satisfied, you have no choice; you must refund the fee. If you’ve not said that, you have some options:

  1. You can refund the money, which you probably don’t have because you spent it already.
  2. You can offer a partial refund and negotiate this with the client.
  3. You can refuse the refund on the grounds that you are out your time and effort, which you can’t get back.

The goal here is not simply to prevent money from flowing in the wrong direction (out of your bank account and back into a client’s wallet). You must, if you value your business, make a good faith effort to salvage the relationship. Businesses don’t thrive by creating enemies. You will only succeed when you develop a constantly rotating stable of clients who send work your way on a repeat basis. This is because…

Work that comes knocking at your door is worth two to three times as much as work you have to pursue.

If you want the work to come find you, you have to develop clients. You can’t develop clients if you lose them and make no attempt to bring them back. I once did some editing work for a third-party client whose project partner kept changing the parameters of the job. I found these conditions untenable and was forced to forfeit my completion payment in exchange for ceasing work on the project.

I was worried I had lost that client, but I was diligent in my efforts and made every effort to be reasonable about it. They remembered that and came to me with different writing work in the future — work that was lucrative and led to more work. You must never burn bridges if you can prevent it. (This is true not just of clients you like, but even of those clients whom you find objectionable. Their money spends as well as anyone else’s.)

So what do you do when a client expresses dissatisfaction and hints they might be willing to sue to get their money back? There are a few things to keep in mind.

1. Offer to Work with Them at a Discount

In my opinion, the first rule of dealing with an unhappy client is always to offer them a discount in order to repair the relationship. I once edited a fantasy novel for an aspiring author. It was a big job and I did more work than I thought I would need to do. In other words, I lost money on the job. But I made every effort to do what was asked of me. Everything was fine until I made the mistake of offering that author some suggestions for how he might improve his work in the future (which I thought was one of the things I was being paid to do for him). He became offended and demanded all of his money back, saying he was not satisfied with the quality of the edit.

I told him that while I was not in a position to offer him his money back, given that I was out my time and effort, I would be happy to take another edit pass at the work for free. I also offered to do additional work on the structure of the book if he was willing to pay to have more work done. I would do so at a significant discount, I promised, up to and including rewriting the entire book.

Some clients will take you up on this offer simply because they want their project to be completed to their satisfaction. That is their primary motivator; they just want the work to be done. When a dissatisfied client accepts this option, and you can work diligently to prove to them you have their best interests in mind, things usually work out for the best. The client is satisfied, your honor is intact, and your reputation is protected.

2. Negotiate a Partial Refund

Sometimes, no matter what you offer, the client is having none of it. He’s lost faith in you, rightly or wrongly, and he just wants to cut his losses and get out. You may choose, for the sake of honor and to prevent making an enemy who’ll badmouth you to other potential clients, to give a partial refund. Choose an amount you can live with that will also satisfy the client, but which leaves you some amount of money for your time and effort. Of course, you can also just give in and return all the money, which means you did all that work for nothing. This is a highly dissatisfying “solution” for you, the writer, because again it is sending money in the wrong direction — out of your account and into your client’s wallet. That’s the opposite of how things are supposed to work, but sometimes it is necessary to salvage a business relationship or to prevent creating enmity.

3. If He Threatens to Sue, STOP TALKING TO HIM

This part is important. If none of your offers make any headway and the client threatens to sue you for the refund, you must stop talking to him directly. Nothing you say at that point will help. If he’s going to sue, you need to communicate with his lawyers through your lawyer. More importantly, making the threat indicates he’s not willing to work things out with you personally.

If a client threatens a lawsuit, I stop talking to that client. Then I wait for a letter to arrive. In most cases, that letter never comes. People threaten to sue all the time and, if they get to the point of actually talking to a lawyer, they realize it will cost as much or more to sue as the amount they hope to recover. Most people will simply let the matter drop.

4. Examine the Demand Letter Carefully

If your client takes the next step, he’ll pay a law firm to put a demand letter on legal letterhead. This will take the form of a letter telling you, “So and so says you owe him money. Pay him money or else.” The or else is the threat of an actual lawsuit filed against you. If the letter says to contact the client directly to pay him, rather than contacting the law firm to arrange for payment, there’s a good chance your client paid a lawyer just enough to get his letter on their letterhead. In other words, he’s hoping the threat of the lawsuit makes you give in and send the money, but he has no real intention to sue (or the firm has told him there isn’t much chance of actually winning in court).

5. The Worst That Can Happen is You Owe the Money

After you receive the demand letter, there’s a tiny percentage chance that you might get served papers. If you do, don’t panic. People have a phobia about lawsuits, generally. The idea of being sued fills most people with terror. Once you have some understanding of the legal system, a lawsuit should annoy you, not scare you. It’s a huge hassle, but the absolute worst that can happen is that you end up owing the client the money he asked you to refund.

Chances are good that you won’t end up owing it, too. If you’ve done diligent work and kept good records of your correspondence with the client, you can establish that you did, in good faith, the work for which you were paid. That will go a long way towards winning a small claims case if it does come to that… which it most likely won’t.

The goal of a working writer, and of any small business, is to develop clients and expand one’s client base. Leaving a trail of dissatisfied clients behind you, especially clients who threaten to sue, is no way to run a business. Despite your best efforts, however, it could happen to you. If it does, keep these guidelines in mind and proceed accordingly. You’ll be surprised how often things work out in your favor.

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