Legal Question in Business Law in Wisconsin

I'm a computer programmer/consultant, I'm set up as an LLC in WI. I subcontracted with a company in California to work 400 hours at their client's site in NJ. After I put in the 400 hours, the client said they didn't think they got their monies worth, so the company negotiated a 50% settlement with the client. The company has only paid me 1/2 ($13,000) of our agreed upon price ($26,000) per their PO and now that I turned them over for collections, they are threatening that I need to reimburse them for the additional expenses incurred to "save" their client, 3 additional programmers, 2 unbilled, plus expenses. I don't see how I can be held responsible for these additional costs. Do they have a case and if they proceed what options do I have?


Asked on 3/25/11, 11:01 am

1 Answer from Attorneys
Kevin B. Murphy Franchise Foundations, APC

As a Franchise Attorney I think you need to use this as a business lesson. In the future, never, I repeat, never, spend 400 hours (10 weeks) of time without getting progress payments. Get 50% of the projected amount as a retainer, then the rest as progress payments. If you wait till there's a big invoice at the end, everyone finds an excuse, like they did here. If you did your job adequately, they should not be able to prevail on any counterclaim. Make sure you document everything now, if you haven't already, so there are established records. You probably need to sue them as collections will not likely work. If they counterclaim, you defend. Do you have an attorneys fee to the prevailing party clause in your contract? If you do, great. If not, this is another learning lesson. Unless you go through small claims court, which is only up to a certain amount, you will have to proceed in regular court. That usually entails paying an attorney. Your legal costs will be greater than $13k. Consult with a good business or franchise attorney in your area for specific advice and perhaps to write them a demand letter.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation

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Answered on 3/25/11, 11:53 am


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