“The company that I thought was reputable and trustworthy took several months to pay me. What can I do?”

Dear Expert,

Last year I encountered a situation that brought a different kind of light to my career. I worked for a company that I have known very well over the past decade. The job was out of town and the client was from over seas. The shoot went well, and everybody went home. It wasn’t until after the shoot that my frustrations began. The company that I thought was reputable and trustworthy took several months to pay me.

As a hard working and dedicated crew member of the Greater Philadelphia Film Market, I have come to understand my relationship with the production companies that hire me. It is a two-way street built on reputation and trust. It is my responsibility to be on time and to do the job that is assigned to me. I expect, in return, that I will be compensated in the traditional 30 days.

Unfortunately, it does not always happen that way.

Yes, many of us start out working in this business for little or no money, but we all know we can’t live that way for long.

Even though I am in a strong position with a variety of clients, it still upsets me that companies can get away without paying me for extended periods of time. I have to pay my electric bill in 30 days. Why doesn’t the same apply when I’m on the receiving end? Hopefully, you can supply me with the answers to the following questions.

1. How can they do this?
2. What are my rights as a freelancer?
3. Can I impose penalties on clients that do not pay for extended periods?

With Regards,
Frustrated Freelancer

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Dear Frustrated Freelancer:

No matter what role you play in the entertainment industry, one thing is certain- if you perform services as a freelance artist, you are guaranteed to experience trouble getting paid. This statement is, unfortunately, something that most freelancers deal with all too frequently. Indeed, because you are not a regularly paid employee, your clients see this as an opportunity to take advantage of and avoid making payments to you on time. Notwithstanding, it is important for you to understand that your rights are the same as any other employee who performs services, and that there are steps that you can take to avoid being taken advantage of and to protect yourself.

First, research and gather as much information as possible on your potential client. Check with your colleagues and, of course, use the internet for quick, easy and free additional intelligence. There are variety of resources available to verify the reputation and decency of your new client and potential business partner, including Google, LinkedIn, Ryze or any other networking website that connects small business owners and entrepreneurs and allows them to share business advice and build connections.

Now that you have passed the initial research phase, it is important for you to establish your “ground rules” and expectations before even beginning to work on a project. In this regard, you should create a “contract,” which is a legally enforceable agreement between the parties. This agreement may be set forth in a formal written document signed by both parties or, as is more frequently the case, in a simple email where you briefly confirm the terms of your engagement. While the form of the “contract” is not critical, what is important is for you to set forth the most basic terms, including the services to be provided and the payment for the work to be performed, including the amount and timing. Anything beyond that only helps your position when trying to collect payment, but is not required to create an enforceable agreement. Such additional terms may include the late fee to be charged if the client fails to pay on time, as well as an offer for your clients to make incremental, progress payments, which are less threatening than a lump sum, and provide you with an incoming cash flow as your work progresses.

Once you have completed the work that you were hired to do, and complied with the terms of your “contract” in a timely and professional manner, it is time for you to ensure that you get paid promptly. Most importantly, it is critical to promptly issue an invoice for the work you have performed. You must make sure that the invoice is clear and easy to process, so that your client has no reason to avoid making payment to you. At a minimum, your invoice should include the following information:

1. Your name
2. The client and project name
3. The date and number of the invoice
4. Your tax identification information
5. The amount that is owed
6. An itemization of the charges set forth in the invoice, if relevant
7. Any job codes for tasks performed, if relevant

When your invoice becomes past due, it is time to implement your collection efforts. In this regard, diligent, professional persistence is the key. Initially, you should send a reminder invoice, perhaps by certified mail, with a return receipt requested, to ensure that the client has actually received your invoice. You may then continue to contact your client, either by written communication or via email, realizing that written communication is easy for the client to avoid and ignore. As such, it is appropriate for you to call your client, or their accounts department, depending on the size of their operation- either way, do not get relegated to someone who has no authority or control to get bills paid.

When initiating in person contact, professionalism is of paramount importance. Avoid the temptation to be nasty, to sound desperate, or to whine about your own bills, your child’s much needed braces, or your need to put food on your table. Simply demand in the most dignified way that your fees be paid. Be prepared and organized. Know exactly what is owed to you, and the number of days that the client is late. Do not expect the client to keep your accounts for you.

You should give the client a brief opportunity to explain the reason for the delay in payment. Remember, tight budgets and cost-overruns are prevalent in the entertainment industry. However, even in the face of the client’s “explanation,” you can be certain that the work that you performed was included on the budget of the project and, as such, do not get caught up in your client’s accounting issues. If the client’s lateness appears to be only a temporary delay, have the client commit to pay you by a date certain; in the alternative, and only as a last resort, offer the client a payment plan with firm payment deadlines.

Finally, if all of your collection efforts fail, and you have done anything and everything possible to secure payment, only then should you consider further legal action. The perils of instituting formal legal action, including the associated legal costs are readily obvious, and need to be balanced against writing off what you are owed. Filing a lawsuit should only be implemented after a careful consideration and analysis.

One last word of advice- do not allow your late paying client get the best of you. Above all else, remain focused on maintaining your good, professional reputation. Understand and build trust with your clients and, once you have performed your duties to the best of your ability, there will be no reason for the client to avoid its payment obligations.

Good luck and happy freelancing!

By: Justin B. Wineburgh, Esquire
Cozen O’Connor
jwineburgh@cozen.com

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