Legal Question in Business Law in California
Failure to pay consulting fees
I am a graduate student in Silicon Valley and recently agreed to do some research for another consultant. She gave a very vague outline of what she wanted and asked me to estimate the time it would take. I responded and she agreed, telling me to notify her if it would take longer. I did so and requested up to an additional 4 hours. I spent a total of 13 hours on the work and she responded by telling me the work was too low quality to be paid. When she requested additional work I explained that while I would be willing to do some small amount of additional work out of my own good will, much of what she requested would be too timely and I would need to be paid an additional amount. At that point, she still had not paid me for the 13 hours I spent ($520) and responded by telling me that either I could do all of what she said (without being paid any additional amount) or she would pay me only $16 an hour rather than the agreed upon amount of $40/hour.
I am not really sure how to proceed at this point and would very much appreciate any help.
2 Answers from Attorneys
Re: Failure to pay consulting fees
Consider threatening, and filing if necessary, a small claims action. Talk to a small-claims advisor at your local courthouse and/or buy a self-help book.
If you plan to do much such consulting (for anyone) in the future, you might want to set yourself up as a business, use written contracts, get advances, keep accounts, get business licenses and observe other formalities. Your difficulties are at least in part from a too-informal approach to what is essentially a business.
Re: Failure to pay consulting fees
I would recommend that you write a formal letter to this person outlining the terms of your agreement and the amount owed to date. I would send the letter certified return receipt so you can confirm she received the letter. I would also tell her she has until such and such date to pay the amount due or you will be forced to sue her in small claims court for the amount owed plus costs of filing the suit. You shouldn't give her more than 14 days to pay. In the future you may want to be more formal when doing consulting. You don't necessarily need to get a business license since you are working as an independent contractor, but you should draw up a simple contract that you can use when doing consulting jobs. This contract should state the amount you charge per hour, a time estimate,subject to change with prior approval of both parties, the type of work you will be doing, and that you are an independent contractor. If it is someone you don't know or the first time you are doing a project for them, you may want to get half of the money up front with the other half due and payable upon delivery of the finished product.
You now know what to do in the future, but you haven't lost the money owed you yet. You and the person you did the work for had an oral agreement. You upheld your side of the agreement and they did not. If you do go to small claims court, you should type up a short overview of what the terms of your agreement was and how it was broken to give the judge.
Good luck in small claims court you will most likely win.
Good luck.
John Hayes, Esq.
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