Many people —including yours truly— work as consultants on a contract basis. Typically, this is a straightforward business arrangement. Consultant does the work, client pays as dictated by the signed contract.
But some clients aren’t always so forthcoming, which means it might be time for a visit to small claims court. The filing fee ($15-$150) depends upon your state and the amount you’re claiming in damages. Likewise, the dollar-amount limits for claims range between $2,500 and $25,000 depending upon the state in which you work and reside. Nevertheless, the process is typically the same.
BEFORE STARTING THE LEGAL PROCESS
Before you take someone to small claims court, you need to objectively evaluate the likelihood of winning your case. Do you have a signed, written contract? Did you complete the work on time and within the terms of said contract? Can you prove that your client did not hold up his or her end of the bargain (i.e., are they in “breach of contract”)? And have you suffered economic loss (i.e., not being paid for the work completed) as a result of this breach of contract?
If you can answer —and prove— “yes” to all of these questions, hold your horses for a minute. Take the time to request payment again. Certified letters and emails are good ways to document that you have made a conscious effort to handle this breach of contract on your own.
You can also hire a mediator to help you and your client work through the issue. While this sounds like a hassle that will cost you valuable time and money, the small claims court judge will look favorably upon your efforts to collect the debt.
Additionally, you need to think about the likelihood that you’ll be able to collect the judgment should you win. If your client is broke, you might be better off closing the door on it and writing it off on your taxes as a bad debt. (Talk to your accountant about that.)
PREPARING FOR COURT
If you’ve determined that going to small claims court is likely to be worth your time, you will need to collect documents that support your argument. Typically, because the amount you’re trying to claim would pale in comparison to legal fees, people represent themselves in small claims court.
Items you will need to gather prior to filing suit include:
- Your complete name and address
- The complete name and address of each person/business you’re filing suit against. If the business is a partnership, you should name all individual partners and also the legal name of the company/corporation.
- The amount of damages you intend to claim
- A plainly written statement of your claim, including the relevant dates of your complaint
- A copy of the signed written contract
- Printouts of emails that show you did the work you were contracted to do
- Evidence that you have tried to collect upon your debt5 via request or mediation
It’s helpful to organize these documents in a binder; I suggest putting a table of contents in the front, then your signed contract, and then documentation of your work, status updates, and attempts to collect, in chronological order.
FILING SUIT IN SMALL CLAIMS COURT
Normally, you’ll file suit in the county where 1) the defendant (person being sued) lives, or 2) where the services under dispute were performed. You can often find the small claims court listed in the phone book as “justices of the peace.” If you have questions, or need to know the filing fee required (this typically must be paid in cash, money order, or company check), ask the court clerk. Be polite!
Go to the court personally and ask to see the clerk in charge of filing small claims. Ask this person to prepare a small-claims statement; you will be required to swear under oath as to its veracity. You must file in person. Your filing fees can be added to the judgment amount, should you win your case.
The clerk will tell you how the court sets the trial date. You may be responsible for sending a certified, return-receipt letter to the defendant, giving notice of the trial date. Procedures differ in different courts. Within a couple of weeks, call the clerk to confirm that:
- The defendant has been served
- The date he/she was served
- A trial date and time has been set
- You have a case number
Write down all of this information. On your trial day, show up on time, dressed nicely, with your supporting documents. If the defendant doesn’t show up despite being properly served, you’re likely to win on default.
ONCE YOU’VE WON YOUR CASE
Just because you’ve won a judgment against your deadbeat client doesn’t mean that you’re in the clear. Typically, you must wait until a citation has been served upon the person you sued. You might need to send a letter to the defendant yourself. If this doesn’t result in a check in your mailbox (if it does, be sure to make a photocopy of the check before depositing it), you probably will have to wait between two weeks and 30 days before putting a lien on their property or asking the sheriff to assist you in collecting the judgment from their bank account. Is this a hassle? Sure. But it beats being stiffed.