Getting it in writing??
We just had a client from "you know where" and for various reasons we have learned, finally, to get things in writing. The show was a 30 minute broadcast piece and although it turned out great, we took too much verbal agreement for changes and got resistance when it came to pay the bill. We had to "meet the producer half-way" on a lot of the aspects of this project. We were paid way less than what the producer recv'd.
We are a small post-house and run a pretty tight bottom line. In the 30 years of combined experience, we've hardly ever had this problem.
This is the 2nd time in the last few years. I wonder if any of you guys have a template "contract" or "agreement" or "change order" form(s) you could forward to me in Word or PDF. Maybe direct me to where I could find would be great.
A guy I respect says:
"With the right people, a written contract is never necessary - with the wrong people, it's never enough".
Obviously, the best policy is to identify the "wrong people" before you get into deep dealings with them, but there's no sure-fire method for this. However, they sometimes do give off clues or warning signs...sometimes. They don't all come in twirling a handlebar moustache and wearing a black cape or a bandit mask, after all. Lots of times they begin things as your bestest buddy ever: kind, cordial, buttering you up about your fabulous skills and all. You are SO much better than that last "loser" they had to work with!
I won't try to write your deal memo for you, but will supply some topic areas you want to cover with some clear, direct language in any such deal memos in the future. You are likely to scare off some business if you address these topics at the beginning, but my opinion is, those that depart in a huff are the very ones you didn't really want, that were going to be "grinders". These are best left to your competition.
Not having a partial down payment or initial payment available, or otherwise not wanting to front any cash at all, is a major warning sign. One of the things that proves a contract legally exists, even if only verbal, is the exchange of money, called "consideration". A judge looks for such tangible proof when determining if a verbal or "handshake deal" was made in good faith. It need not be a huge amount, a token amount will often do, just so you can show a cancelled check labeled "down payment for editing services on xyz project""
Out-of-town addresses and phone numbers on the paperwork, and they make a lot of noise about being on a schedule and having to blow town on time: Alarm bells. Corollary to this is, due to somebody else's mistake or whatever, the entire project is on a very tight deadline to ship a finished master by a close, but workable deadline to a prestigious destination. "This is going to be on the half-time break for the so-and-so bowl this weekend, we're gonna be famous by Monday!" Because you are the kind of guy that always comes thru in a clinch, you WILL have it in the Fedex Guy's hand at 4:30 sharp, but wait... SHOULD you? They want you to ship tape before getting paid, because their accounting paperwork is slow... this statement requires you make a call to their accounting manager.
The client has brought incomplete stuff from another facility to finish with you, and is cagey about why, usually citing "creative differences" or "incompetence". Typically, this is given as the reason why their clearances and permissions paperwork for using coyrighted materials is not available/in order either.
The client saying they need to get an OK for anything from some third party who is not present and not contractually bound. This is often a dodge used to shift blame for non-payment as well as to duck responsibility for creative changes. You want it clear that for change orders that will add costs, you only deal with the guy who actually signs the checks, directly, anybody else doesn't really matter. You can spend a week trying to satisfy the person sitting in the suite with you, only to find out that's not the real client, the real client is somebody up the chain, who never authorized all the changes, and who doesn't approve the finished product. The approvals have to come from TGWSTC. (The Guy Who Signs The Checks) Corollary to this, the actual approval person, who is not on site, needs to see a final master tape before he or she approves the payment, and is not satisfied with seeing a window dub or something with your bug obscuring part of the frame. Or the producer wants to take a sample home overnight to show the spouse, or to re-think and analyze the cut "off the clock".
I hope others here will chime in with their own favorite "warning signs".
Thanks. Many gems in your response and many I've never considered thinking about and implementing a standard around. Thanks again for your input and more are welcomed!
Jeez, my stomach is turning just from reading Mark's post. While I know this is not a viable answer for everyone, what works for me is having a limited number of clients -- people who know me and I know them -- and providing them with a broad and deep array of services.
True, it's taken years to develop this client list but in the last decade I've only been stiffed by one client and that was because a new owner took over mid-stream and decided to kill the company, steal the pension fund and "F" all the suppliers. (I might add that this new owner was one of America's largest banks!!)
In addition to knowing that I'll get paid, the tremendous upside to having deep relationships with clients, and therefore not needing "walk-in" business, is the understanding that develops between you and the clients. You know how they think, what they value, what they don't and are therefore able to deliver it faster, smarter and with less effort.
Yes, we have contracts. But they are either annual or open term agreements that define the rights of ownership that the clients have, in addition to saying that we get paid. The contracts initially make the legal begals in the client companies happy, but they're only there for worst case scenarios and defining who gets what should there be a "divorce."
Yes, I know, at least at this stage in my career, I am extremely lucky to have great group of clients. I'm also exteremly sympathetic to those who have to accept transitory, "walk-in" business from strangers. I recommend shifting your focus from individual projects to larger, long-term relationships. You'll sleep better.
After getting burned a few times myself over the years, I now have a very simple business model. I get paid every Friday at the close of business. This way no bills ever accrue for more than five or possibly six days, and the bad guys show themselves very early on in the process. Adopting this model has cut the BS to a minimum for me, and my cash flow has certainly improved.
I like DRW's model (paid every Friday). Who wouldn't?
When I'm out as a production services provider I'm most often working for agencies that don't get paid till the end. I don't get paid until they get paid. But these are key client relationships all the way around, and no worries about actually getting paid in 20 - 45 days. Mostly corporate work.
I understand things are a little different in features and entertainment, and crews may evaporate if they're not treated right (somehow there seem to be a lot more scummy practices in these markets).
When I'm producing it will be on the 1/3 - 1/3 - 1/3 plan if I'm developing the creative, or 50-50 plan if creative isn't under my management.
1/3 or 50% on start of project, typically net 10.
1/3 on approval of script or other creative.
Last 1/3 or 50% on approval of final product.
When I'm producing there will be a written agreement that includes payment terms - no signature from the prospect means no work. Miss the first payment - work stops. There will also be specs, a clear statement about elements the client is providing, and a very brief version of the schedule.
Sometimes there won't be clarity about whether I'm providing services or producing. If I have any doubts about this, best to bring out the written agreement (and the higher dayrate!)
I've been a digital editor/shooter for the past eight years and have recently experienced my worst nightmare. After 160+ hours of work, I never received a dime.
I had a contract. I had proof of past performance from this company on DVD. Heck, I even shot an interview with a former baseball player who hit 50 homers in a year on my first day. The show actually aired on local cable. I bought into the whole thing.
The head man was "a great guy", offered an extremely fair wage, greeted you with hugs and hand shakes.
And was a total con-man. In fact, people are still working for him two months later who have yet to receive pay.
Looking back, I missed plenty of signs, starting with the late payment. Not having an office was another big one (he says he worked from home, which I do too so I bought it). 31 hour days were the next (yep, a 31 hour day, non-stop, no breaks, no sleep, no apology, no nothin). It was almost like he was squeezing as many hours out of you before you wised up to his plan. He gave motivational speeches that I (and everyone else) bought into. Note to self: when it's always about the good of the comapny, and said company has yet to provide for you, leave said company immediately.
The last I heard, he's still operating and I'm talking to lawyers. Unfortunately, lawyers believe he probably has no cash (and they're probably right). It appears that all I'll get for my 160 hours is a lesson in hard knocks (but I'll keep on trying to get what he owes!).
Back to working with proven clientele. Nothing more valuable than a good client.
You need to go to the TV station that aired the project and tell them what this guy is doing. They would very much want to know about it. But first, have your lawyer send him a warning letter telling him that you intend to go to the TV station if your dough is not in your hands within a week. That should get him motivated.
I disagree: though it's not very Christian, you only allow one strike per player in this ball game. It's business, and it's pure survival. You have mouths to feed, a company to run. Do not tip him off further, if the money is worth going after in court, strike fast and without further warning. Or turn it over to a collection agency. These bad guys count on their victims being nice people full of understanding and second chances. They also know that just by seeming to be "wanting"to pay, they can run out the clock for a long time. They will push all your buttons, manipulate your good nature, and the only way to beat them is not to play the game at all.
I had a bad client once that was ripping us off on our percentage of each dub order he was getting. We took it to small claims,won, and got the judge to order his bank accounts garnished. We cleaned him out. He was on the phone to us within hours of that, after not returning calls for a month. "You bastards took all my money, I've got nothing for groceries or rent".
"We gave you many chances, (name withheld), we even offered to let you make 20-dollar monthly payments, we didn't even charge you interest for the money you scammed behind our backs. You used up our hospitality long ago, now you can eat the extra dubs you hid from us and didn't sell. Your account was $500 short of what the judge says you owe, be thankful we don't send the Sheriff over to auction off your Advent big-screen TV for the balance."
We let him off on the $500, figuring the time and paperwork to get that final amount was not worth it... but he didn't know that.
[Mark Suszko] "Do not tip him off further, if the money is worth going after in court, strike fast and without further warning."
I disagree for the following reasons:
1. Like any lawyer, one should always attempt to avoid litigation if possible. Its an unpleasant wasteof time, and it can always backfire, simply because judges are human, and humans make mistakes.
2. Judges respond quite favorably in almost every instance if you can show that you've taken the effort to give the bad guy an opportunity to make good. So its in your best interest in case you do ultimately have go to court.
David, in the case of my own such experience, we were able to show the judge plenty of attempts and good-faith efforts. I doubt one can get more generaous than 20 dollars a month with no interest on a 2-thousand-plus-dollar debt. He fought even giving us that much. It was a case of a grifter deliberately gaming the system. Our case was iron-clad, he had such contempt for his victims (us and the post house), he left all kinds of a trail behind his shady dealings. Didn't take a detective to figure it out.
I am willing to give a new client with no history one chance, but even then, I insist on certain guarantees, enumerated earlier. The thing is, it's not just the new, untested client you have to watch out for, lot of these tricks can be served up to you by long-term clients that suddenly undergo a change in management.
Another thing to think about is how these dealings have an impact on your local business reputation. You don't want to get a rep for being an easy mark, to start with. Second, reputation is everything in the local market, and if you don't take action against shady dealers,rightly or wrongly, you risk becoming associated with them in people's minds. Meanwhile, their antics are tearing up your profit margin, perhaps disrupting your production schedule for other clients as well. There's no upside in stringing things out, and every chance your delays allow the crook and your money to escape.
I have to stick with my first reaction, which is, be as fair as you dare, but once you are sure it's a shady client, it's war, Merry Christmas;-)