Another Guest Post by local Commercial Attorney, Justin Daniels:
I have received several phone calls from upset clients lately who want to sue a delinquent customer back to the stone age over a $5,0000 or $10,000 account. The problem is that after you have hired an attorney and set aside time and effort on this matter, most people walk away feeling very unhappy with the result as most times they will not recover the full amount plus their attorney’s fees.
A practical approach to this problem is the following:
1) Spend additional time doing due diligence (run a credit check) with new accounts to avoid companies with bad payment histories. You may also consider requiring a full or partial retainer upfront for your products or services.
2) Track your A/R more closely and discuss potential issues with companies that are behind in their payments immediately to possibly structure a payment plan as some payment is better than no payment.
This is also a good time to review your contracts/engagement letters to make sure you have the following:
A) a clause that specifically says that if there is a dispute the winner collects its attorney fees. Please understand this is not a panacea as its in the court’s discretion to award what it thinks are reasonable attorney fees and their view can differ from your view. Also, don’t ever sue someone based solely on your conviction the other side’s behavior demands that attorney fees be awarded. After its over, many times you will find yourself disappointed.
B) When you contract with companies from other states include a provision that says that the parties consent to Georgia courts for jurisdiction for any dispute. This helps you overcome the other party’s objection that you should have filed the suit in their state and not Georgia. If this happens to you, after you untangle this legal mess, your attorney’s fees may exceed the amount of the claim and you have no assurance you will collect those fees in total.
As always your trusted resource for practical legal advice. Have a great weekend.
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