So, the job’s been a nightmare and the client has been excruciatingly awkward – and then when you reach the end of the project, they refuse to pay up. What do you do?
Insurance specialists Blyth Valley offer the following advice on how a Professional Indemnity policy can help…
Everyone experiences, at some time, the ‘client from hell’. The client who is never satisfied, demands priority for their job, and imposes impossible deadlines. One small thing after another goes wrong, then, at the end of the project, the client refuses to pay.
They don’t sue you, but it’s quite clear that if you try to claim your outstanding fees they’ll counterclaim against you. The one thing you know is that your client can afford far more expensive lawyers than you can.
Thankfully, your Professional Indemnity policy can help. The policy recognises that it’s in everyone’s interest to avoid litigation if at all possible.
In order to claim on your policy, you need to satisfy the claims underwriter that, on balance, your client was justified in refusing to pay you, and that, if the case did go to court, your client would probably win.
You should therefore go ahead and sue the client for your outstanding fees. If your client then counterclaims against you, the counterclaim effectively triggers the policy. (If your client is just simply trying to avoid paying, you will hopefully recover the debt through the courts, but be aware that debt recovery is not a feature of this policy.)
At this stage we’d discuss the best strategy with you and with the claims underwriter. Quite often we find that the client is open to negotiation, which can take the heat out of the situation. If the negotiations go well, you might be better off accepting an agreed payment from your client, rather than incurring the excess on your policy.
If a negotiated settlement is not possible, however, then you will be covered for your fees, less your profit element and VAT, plus any amounts you may be legally liable to pay sub-contractors
Freelance Advisor has recently teamed up with Blyth Valley, one of the top providers of PI insurance for freelancers and contractors:
More Info: Professional Indemnity insurance
Blyth Valley Ltd is authorised and regulated by the Financial Services Authority (FSA) under firm reference no. 307180. You may check this on the FSA’s register by visiting the FSA’s website or by contacting the FSA on 0845 6061234.
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