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A 'Small Claims Court' For the Internet
angry tapir writes "It's not unusual for a freelance Web designer or developer to be burnt when a client refuses to pay up, citing one excuse or another. And what can you do about it? If a contract only amounts to a few thousand dollars, litigation to recover your fee can be far too expensive, and an increasingly vituperative exchange of emails is often not enough for client and contractor to come to agreement over who owes whom what. Into this gap steps judge.me: A start-up founded by Peter-Jan Celis that aims to provide internet-based, legally binding arbitration services — a 'small claims court' for the internet — with a particular eye on settling the conflicts that arise over freelance development and Web design."
which is called bite.me
as per title, if theres a contract in play and a "small" mount of money whats wrong with the real small claims court?
I've been in that situation a few years ago, and one thing that works well, provided the client is reasonably well known, is to threaten to shame the hell out of them on various websites / forums and getting search engines to come up with "these guys don't pay their bills", "thieves" or other such results when someone types their name.
Of course, it's not that easy to do, but it's doable enough (and has been done before) that the client might think again and cough up the money.
As for judge.me, what can I say... As if we didn't have enough lawyers lining their pockets off of conflicting parties in real life. Geez...
"A door is what a dog is perpetually on the wrong side of" - Ogden Nash
Posting this anon for obvious reasons but wouldn't it be more effective to set some traps until it is paid up? In mass market software, this is simply called a trial period running out unless one has a code after payment. Chances are most clients are too technically incompetent to even disable bad crude implementations of this.
A hot or not for coders with a lack of self confidence.
It's great that they're offering a cheap way of pursuing binding arbitration (and as has been mentioned before, there's still small claims for amounts below a given threshold), but the hard part isn't getting a judgment - it's collecting on it. There are plenty of folks out there that are quite comfortable with ignoring a judgment and going out of their way to make collection far more expensive than it's worth, particularly when they don't own any of their equipment or have any other real assets to seize. If it's an overseas client, you're probably better off just writing off the loss from the get-go.
Please stand clear of the doors, por favor mantenganse alejado de las puertas
It is easier to encourage payment beforehand than to get money afterwards.
That is: don't work without a contract, etc.
Offcourse, the type of problems described in TFA will still occur.
I know it is not practical, but change your legal system to a loser pays one like Australia. Then it matters not if the amount owed is a few thousand or even a few hundred.
I sued an ex-client in small claims. One of the defendants had a lawyer for a dad who tried to be as much of a weasel as possible. They moved it to civil court threatening to sue me for 10's of thousands. I handled my own side of it and still won without stepping foot in court. Cost maybe $80 all together for filing fees and postage and got every penny I was owed.
The agreement on who owes who what should be settled before work begins. You're then just going to court to enforce a contract when one side doesn't deliver. For small amounts you're on your own. You'd spend more on lawyers than you're owed and if the client has a lawyer, you just have to deal with it.
If you're lucky, they come to their senses and you can avoid the courtroom. What would really be helpful is simple legal advice. Even arbitration is a little late to the game. You need to know whether you even have a case, what documents you need to win your case, etc, what arguments you need to make, etc.
Showing up to arbitration unprepared is no better than showing up to court unprepared.
The simple solution is to just never leave large sums of money on the table and work with people you trust. I don't like racking up large invoices simply because I'd rather have cash in hand. I can't pay bills with invoices.
Work Safe Porn
What is wrong with it?
A shame that Taiwan is specifically listed as a country where the service isn't legally binding (since we're not party to the Convention of New York). Could have been useful.
I make hardware RNGs, which give 2.5849625 bits of entropy per use in theory (actual performance dependent on usage).
> whats wrong with the real small claims court?
Real small claims court doesn't spend much time on investigating claims. To clear cases quickly the judge quickly weighs up sides and makes a snap decision. Under the adversarial system of justice its not about finding the truth, but about who deciding presents the best arguments. That's easier for the judge, but it shouldn't be confused with justice. In some jurisdictions you can't appeal or even be told the reasons. The judge makes a mistake (they are human so it happens) you won't even know.
Small claims court weren't created because they are better than the bigger courts, but as a way of offering the little people cheaper although less reliable justice. The bigger courts are worse though since they are extremely expensive charging rates that cannot be justified. Whoever has the most money to fund the most appeals and buy the better lawyers wins.
Arbitration is in theory a great idea, but a big problem is that the arbitration system is taken over by judges and lawyers charging the same rates. It's sold as a cheaper alternative, but it has many traps. One problem is a big company who nominates an arbitration company (yes, they are companies) will pick one that gives them favorable results or they won't get repeat business. I loved Erin Brockovich the movie, but the arbitration system they used has been severely critcized by some of their clients. If you loved the movie then don't read this:
http://www.salon.com/2000/04/14/sharp/
http://abcnews.go.com/Business/story?id=8169252&page=1#.T875jlK6SSo
http://www.givemebackmyrights.com/bma-faq.htm
http://www.businessweek.com/news/2012-05-21/consumers-may-see-new-limits-on-mandatory-arbitration
http://www.homeloanbasics.com/articles/FirstTimeHomeBuyers/MandatoryArbitrationClausesStripHomebuyersofSuitableRecourse
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x301912
http://www.independent.ie/business/irish/website-aims-to-boost-50m-arbitration-industry-2351246.html
The justice system badly needs reform, but you have many politicians and lawyers doing very well out of the current system who won't give it up.
A web design could easily be considered a work of art, thus covered by copyright. Normally a designer has no claim to copyright on works created on behalf of an employer/client, but if they fail to pay up, then how could they legally claim to own said copyrighted works? DCMA their asses! Or, if their is any server side coding involved, build in a kill switch which you will only be removed after final payment is received.
Slavery is the legal fiction that a person is property; A Corporation is the legal fiction that property is a person.
What I have never understood, is a person can steal a 2 dollar item at a shopping mall and get caught, they get handed over to the police and charged with theft, and get hit with the long arm of the law. When a client doesn't pay their $5000 bill for service work, I have to pay collectors and jump through hoops to get reimbursed, and the law may never actually touch them.
Some quotes from that Salon article. Highly recommended reading:
"Arbitration is billed as a cheap, quick and private way to resolve civil disputes. The practice gained momentum in the 1980s, when judges, bowing to pressure to alleviate overcrowded courtrooms, began encouraging litigants to resolve their disputes voluntarily. Since then, arbitration has snowballed into an unlicensed industry that’s conservatively estimated at $350 million in annual sales, according to a spokeswoman at the nonprofit American Arbitration Association.
“We hear a lot of complaints about these cases,” said Gerald Uelman, professor of law at the University of Santa Clara. The for-profit arbitration business is booming, especially in California, he added. “It’s upsetting to the extent that it’s a resource used by institutional litigants.”
One big reason for the boom is money. Public judges, who earn about $150,000 a year in the public courts, often retire early to become, in effect, rent-a-judges. By doing so they can earn between $100 and $500 an hour — easily doubling or tripling their salaries. Arbitration firms often have powerful attorneys or corporations as steady clients. They pay monthly retainer fees or get volume discounts. As a result, some for-profit justice firms have a vested interest in keeping their clients happy if they want the return business, which has been the topic of seminars sponsored by the California Judges Association.
The rules that apply in open court often aren’t followed in private court. No laws prevent the hired judges from accepting gifts from attorneys. Another criticism is that the arbitrators and their clients and attorneys often work together regularly. “The same judges are often employed by one side or the other,” said Uelman. As it turned out, Girardi had ties to at least three of the private judges in the PG&E case: Jack Tenner, John Trotter and Jack Goertzen. Had this occurred in public court, judicial rules would have forced the judges to recuse themselves from the case due to a conflict of interest. But no such ethical standards bind participants in private arbitation."
http://www.salon.com/2000/04/14/sharp/
Going to court is the last thing I ever want to do in any way shape or form. For a few thousand dollars, it's not worth all the horrible hassle. But this also means, that this amount may not very much for clients either then, and proper planning and agreements can successfully solve this issue before it starts.
PROBLEMS:
1. New clients (in my 13 years exp.) are the ones that will screw you most likely (if you don't know then and they are devious). Old clients with a history of problems, are the second on the list.
2. Bad communication and unbalanced expectations are the start of most conflicts that end up with you not getting paid.
3. Lack of planning/preparation will always come back to bite you, not the client.
SOLUTION:
1. Document everything you will build. Outlines, descriptions, mockups. The amount documentation depends on the scope and budget of the project. Smaller projects get less specs written, and also have less risk.
2. Write a Cost Proposal that itemizes the costs by feature or whatever can be broken out and separated. This also allows the client to pick and choose which items they don't want. (lowers your bid and makes your project feel more in the clients control)
3. Write a timeline with payment schedule and milestones. This is where you put MONEY UP FRONT, as the first item on the list. Depending on the amount of the total project, I usually ask for 30% to 50% up front. If it's a good client, and not much money, I may ask for 100%.
3b. For each milestone simply include which features will be done, and the dollar amount expected at that point in time.
4. Have the client AGREE to the payment schedule, the specs documents IN AN EMAIL. I have had a hand full of times where verbal agreements bit me in the ass because the client was slightly manipulative. This is NOT a contract signing thing, just written proof that the client agrees to start work that is documented.
5. Do NOT start the work until the first payment is recieved. This can be flexible depending on the trust you have with your client.
RESOLUTIONS
1. Now, when/if your client balks at a payment, a) you've already gotten some money, so the stress is greatly reduced, and you have documentation detailing everything you agreed to do.
2. If client complains that feature X is NOT THERE, you can simply refer to your documentation saying what you agreed to build, and that feature X is NOT in the documentation, and that you can put a proposal together for the client for feature X.
3. When a client complains "I told you on the phone" (happens FREQUENTLY) you state, that you only do work that is documented or the request is done in writing. (ie, email) BE SURE to state this UP FRONT when you send the specs documenation, and even include this in the specs. Just doing this has SAVED MY ASS.
4. Follow rules for work, not memory. I had a client say that a missing feature was a "bug". He said I told him on the phone that I would "fix" it. I was lucky to remember this issue from a few months ago (very lucky) but also explained that we had to use a "rule" to distiguish between bugs/flaws (my responsibility) and feature requests (clients financial responsibility)
5. Don't start on the next milestone, until payment is recieved. This again is flexible based on your relationship with the client.
6. Take care of your client, they often shoot themselves in the foot. They don't always understand technology, the internet, or design. Education and patience will pay off big time.
7. Take the blame readily when something is your fault, and fix it. That way, when the client is pulling something, you have no qualms about putting your foot down. (make negotiating infinitely more benefitial to you)
There's much more that can be said, but for another day...
The logo looks like a stick-figure Madonna with giant conical red boobs.
Now you can't unsee it.
I would never agree to a contract with a judge.me arbitration clause if there were any real money at stake. There is a very serious difference between their arbitration process and almost all others: they attempt to completely replace all statutory and case law with "principles of fairness". There are two problems with this: First, statutes and case law exist because they are helpful in resolving cases. Without them to control the outcome, there is no way to accurately analyze the dispute in advance (or even the original contract itself) to determine the probable outcome. You have no way of knowing what whim the arbitrator will use to guide the decision, and no right to complain even if it's unpredictable or contrary to the real law. Make no mistake, the ambiguity is huge - thus so is the risk. This vast unpredictability defeats the entire purpose of having a dispute resolution process.
The second problem is even bigger: Not all law is waivable. Many procedural protections, consumer protection laws, and some case law cannot be waived by contract. Although the judge.me arbitration clause purports to waive all law in favor of their own ideas of equity, this is not legally possible. This creates a total mess. If the arbitrator fails to correctly consider and apply non-waivable law, the losing party could sue in real court to overturn the arbitration award.
I am a geek attorney, but not your geek attorney unless you've already retained me. This is not legal advice.
If you cant enforce your web design contract and collect your payment, arbitration will make.no difference. Arbitration just results in a contract about who owes what. You'll still need to go to the small claims to enforce it.
> whats wrong with the real small claims court?
Real small claims court doesn't spend much time on investigating claims. To clear cases quickly the judge quickly weighs up sides and makes a snap decision.
Considering the fees charged by judge.me, and the description on their web site, they are no different than a small claims court in that respect.
A court or someone trying to provide "binding arbitration" without legal authority makes no sense. If I were a client and some web developer didn't finish a job, for instance, and tried to insist I pay him, I'd refer him to the new website blow.me.
If you supposedly owe someone money, and don't want to pay, and they can't force you because it would cost them more money than they'd likely get out of it, so they try to insist you go with them to arbitration... what do you have to gain? You've already won, why waste a second? It'd be like getting subpoenaed to go before "Judge" Judy. I'd tell them to eat a fat, hairy dick!
My guess is this new business venture is going to FAIL hard.
Why is the website registered in Montinegro?
Judge!
Weaseling out of things is important to learn. It's what separates us from the animals... except the weasel."
We are lost.
TLDR; Arbitration is legally binding across countries, so unless the contract specifies your country as where conflicts will be handled, there are significant risks in terms of fees (in my case $150000) and risk (all my personal assets). The other country may not share your country's view of limited liability, and madman clients may make claims that do not make any sense in your part of the world that you are forced to defend yourself against.
Just a friendly warning to people throwing out arbitration as the solution to many problems. Sometimes arbitration makes matter worse, because they are legally binding across countries. In my case an idiot client went broke, and when he stopped paying I stopped working. The contract had an arbitration clause in it, which would be handled under US law. My client had various issues and excuses for late payments, and eventually I stopped working. I was willing to take a loss of a hundred thousand USD, but my idiot client had another agenda; he wanted me to work for free, until he managed to make money off my product. So despite the fact that he had stopped paying and breached the contract, he said the only settlement he was willing to enter into to avoid suing me in the arbitration courts was if I was willing to work for free until the product made enough money that he could pay me according to our contract. He was in the US, I was in Norway, and the arbitration clause in the contract was under US law (big mistake). I got a legal opinion in Norway about just ignoring the case (it was ridiculous after all), and then defend me when/if he won a claim and came to collect in the Norway. Well, the legal opinion was "you should win the case in the US". Under arbitration law, if I lost in the US, they could collect in Norway. Even worse, in Norway, the goverment actually go a really long way of enforcing such collections, so I could stand to lose my house, car etc. So risking a default judgement (for not showing up) in the US was out of the question. The idiot client sued me, initially for a million USD, although this was later adjusted down. To have any hope of collecting anything in return, I had to counter sue. After spending $150000 in legal fees, I won and was awarded just below $600000 for his breach of contract. But differently from Norway, the US will not help me collect what I won, so I would have to sue him again in his state to collect. And since my claim is against his company, and the fact that he is a fraud, the odds are he would bankrupt his company, stealing any and all assets, and continue as before. So I would have to sue him again personally (with stricter burdens of proof) to demonstrate actual fraud from his side, and hope he has personal assets I could collect. The fraudsters name is Gregory Spear, and his prime vehicles of fraud are companies named Independent Investor, Spear Financial, Spear Publications and more.
If you want to read the whole sad story, I've put it up on http://aboutspearreport.wordpress.com/ .
judge.me involves people sending some emails, with no real discovery process. It's also a snap-judgment made by somebody who isn't paying much attention.
But with judge.me, you've got the added twist that because everyone involved with it holds extreme political beliefs, contracts aren't going to be interpreted the same as they would otherwise. It's run by hard-core libertarians (the sort who think selling yourself into slavery is legal), so all the sudden their interpretation of a contract can be ridiculous compared to what any normal, sane, non-libertarian person would say.
And the founder is a sufficiently far-gone nut job that he thinks a deeply partisan court with no diversity of viewpoints is a *good* thing... hell, he drank so much kool-aid, he thinks this shitty e-arb company will replace public law altogether, allowing for his company to instead be the decider of all man's fate.
Fuck judge.me... just another shitty idea, run by a horridly shitty person.
Copyright your website work/design and license it to the client (you could provide a lifetime license on payment if you like).
Then if the client refuses to pay and there is no comprimise in sight simply send a DMCA notice and the site will be taken offline by the host. The client will very quickly pay up if their site is taken offline, and heck you can also then sue for much higher damages than just non-payment of contract.
For frags sake, a faceless entity with as much power as the UN and you have to pay for it.
I usually divide the project in three phases: start, beta release and final release. At the start, I require 50% payment. The beta release requires another 25% and the final release requires the rest of the money.
If you're then worried about the payments, I'd use an escrow service such as Elance.
8 of 13 people found this answer helpful. Did you?
They pay monthly retainer fees
Well... there's the solution right there to dirtbag deadbeat clients. Work on retainer. I don't know why more business isn't done this way, as though only attorneys are smart enough to insist upon it so much that it becomes convention. If enough developers begin insisting on retainer before one line of webcode is writen, then it becomes standard.
Another idea would be to insist on using credit card companies for payment... and billing becomes a quick and easy electronic transaction: credit card given, work begins, once code is delivered and approved, put through your transaction and get paid immediately.
The Admin and the Engineer
Ask for payment up front. That is what I have resorted to as a photographer.
Honestly, if they balk at paying up front, even a 50% downpayment then the possibility of them screwing you went up 500%.
Do not look at laser with remaining good eye.
Client has a contract to pay you for work.
You do work, they don't pay.
Why would they bother paying just because someone else agrees they owe you money?
If you don't have a contract stipulating the terms of payment, etc, then you're a stupid web dev.
If you do have a contract, and they won't pay, if it's for less than $5000, take them to small claims court.
I don't see any help for cases in which the client goes out of business. Certainly not this arbitration. I'd win a judgment, no problem. And then the judgment would go unpaid. That's what they always say about court. Winning judgments is easy. It's collecting that's hard. I'm only one of a long list of former employees, contractors, and creditors who are owed money. The chain of claims doesn't stop there either. The primary investor was sued and everything that could be clawed back was clawed back, including the money invested in the company.
The former owner made sure he did well out of the whole thing. He enjoys vacations at his 2nd home in Hawaii.
Intellectual Property is a monopolistic, selfish, and defective concept. It is "tyranny over the mind of man"
Fine, you have your "eVerdict", now send some "eGoons" to collect on it.
Small claims awards are recovered by real bailiffs seizing real property, or by their threat of that happening. Good luck on getting someone who's already welched on a debt to give a damn what some online nerd has declared.
If you were blocking sigs, you wouldn't have to read this.
As someone who was fringe involved in a small claims court case, I know that in my case the judge flat out stated that she had not even read the filled out form/presentation of evidence/reason for case.
Just the one sentence title/summery (X amount for Y).
Troll is not a replacement for I disagree.
If you're a web developer, coder, analyst, designer, whatever, you should NEVER deliver said code, web design, or any other tangible (and deployable) deliverable until the contract is complete and payment is made in full.
There are many ways to do this, but my favorite is to host my own VMWare ESXi server on my Internet connection. When I need to demo a milestone or a concept, I allow my customer to use VPN to connect to a remote desktop running as a VM, and THEN they can interact with the product (running as another VM on my server) in whatever fashion they choose.
The customer gets NO direct access to my work during the "working" phase of my contract. At worst, if the customer intends to stiff me, the most they can get is screen shots of the remote desktop (as I have the remote connection severely locked down to prevent any sort of file transfer).
Using VMWare, I can emulate whatever operational environment the customer requires the end product to support. For those non-standard environments, I simply decline to accept the job (Notes is a common one I have to reject). Most of my customers end up deploying on LAMP or Windoze platforms, though, which are easy enough to replicate as VM's in my environment - even easier if I use VMWare's linked-clone capability with a master set of golden images; I can have a runtime environment deployed in less than a day.
Desktops are the same thing - I provide remote desktops for most variants of Windows and Linux. A co-worker is even working diligently to see if we can build a virtualized Hackintosh as a client (but no Apple servers for me, thank you very much!).
It seems like a lot of work, but once you get used to building working environments from clone images, it goes pretty fast. And for me, its the best way to ensure that my work stays WITH ME until I'm paid. Heck, I even once had a customer demand that I work in their office, just to make sure that my butt was in a chair for the number of hours they were paying me. I simply deployed a complete development workstation as a VM, remoted into it from the customer's network, and voila - instant work environment. I was even able to sell the idea to the customer by saying that it was protection for HIM because I didn't need anything other than a connection to the Internet - no email, no access to databases, nothing that would trouble him from a security standpoint. And yet, he could still look over my shoulder and see every damn thing I was doing.
So, maybe this won't work for everyone, but if you have even a modicum of experience working with virtual environments, then this is a good avenue to pursue. And with all the free hypervisors out there, you can pick something you're comfortable with; ESXi, Hyper-V Server, and Xen are popular choices.
legally binding == men with guns.
Sheriff Dot Com
Don't do any work for someone you don't trust without money up front. If you went to a lawyer for a consult on this very subject, despite what he may or may not advise you, what HE is going to do is tell you up front that he needs a check for $350. Once he's taken that check he'll advise your ear off for an hour or 2. Then he will tell you to send another check, this time $1,500 to be placed in an ACTF. Attorney Client Trust Fund. No reason you can't make a DCTF (developer....) The lawyer will then bill against that $1,500 and as it gets close to 0 will expect the client to pay in more before continuing work.
The big difference is in the final payouts. Lawyers usually don't worry about collecting the final pay out as much, because it's usually fairly small by that point (remember, regular billings against the ACTF), and the client is usually happy. Good lawyers ALWAYS win. Or at least convince their client they did.
As the submitter notes, the defendant knows that suing them over a few thousand dollars probably doesn't make financial sense, so they are free to screw you with no fear of recourse. So why, exactly, would they be interested in participating in this type of service if offers them nothing and potentially opens them up to costs and liability?
I am a lawyer, although IANYL. I've done work in state small claims court, state civil court, federal civil court, and insurance arbitration.
Small claims is good for just that - small claims. If you feel comfortable representing yourself on the matter (i.e., you've done this before and you can afford to lose), it's the way to go.
If you have a choice between state and federal courts (i.e., the underlying law is not disadvantageous, and your attorney knows the ropes), go federal. The feds have more resources (e.g., PACER/ECF), a more streamlined and predictable system, and will get you to trial faster.
Only arbitrate if you have to. It will take just as long, the cards are stacked on the insurance company's side, and not only will you have to pay your attorney, you'll have to pay the arbitrator as well, when you've already paid for a perfectly good civil justice system through your taxes.
And don't take legal advice from strangers on the internet.