Law Talk with the Flock

What To Do When Your Client Or Customer Doesn’t Pay?

August 19, 2020 Jeana Goosmann, Daniel Epstein Season 1 Episode 6
Law Talk with the Flock
What To Do When Your Client Or Customer Doesn’t Pay?
Chapters
Law Talk with the Flock
What To Do When Your Client Or Customer Doesn’t Pay?
Aug 19, 2020 Season 1 Episode 6
Jeana Goosmann, Daniel Epstein

Goosmann Law Firm Omaha Litigation Attorney Dan Epstein and Host Jeana Goosmann talk about what to do when your client or customer doesn't pay. During this episode you will learn: 

  1. Problems that happen in the construction industry?
  2. When to use a demand letter?
  3. What are the dispute options?
  4. How to prevent not getting paid? What to avoid.

Learn more about Goosmann’s litigation practice HERE.

Become a flock fan and subscribe to our Podcast for weekly episodes! Learn more at www.goosmannlaw.com.

DISCLAIMER: The information in this podcast episode “episode” is provided for general informational purposes only and may not reflect the current law in your jurisdiction. By listening to our episode, you understand that there is no attorney client relationship between you and the Goosmann Law Firm “GLF” attorneys and podcast publisher. No information contained in this episode should be construed as legal advice from GLF or the individual author, hosts, or guests, nor is it intended to be a substitute for legal counsel on any subject matter. Please read our full Podcast Disclaimer.

Show Notes Transcript

Goosmann Law Firm Omaha Litigation Attorney Dan Epstein and Host Jeana Goosmann talk about what to do when your client or customer doesn't pay. During this episode you will learn: 

  1. Problems that happen in the construction industry?
  2. When to use a demand letter?
  3. What are the dispute options?
  4. How to prevent not getting paid? What to avoid.

Learn more about Goosmann’s litigation practice HERE.

Become a flock fan and subscribe to our Podcast for weekly episodes! Learn more at www.goosmannlaw.com.

DISCLAIMER: The information in this podcast episode “episode” is provided for general informational purposes only and may not reflect the current law in your jurisdiction. By listening to our episode, you understand that there is no attorney client relationship between you and the Goosmann Law Firm “GLF” attorneys and podcast publisher. No information contained in this episode should be construed as legal advice from GLF or the individual author, hosts, or guests, nor is it intended to be a substitute for legal counsel on any subject matter. Please read our full Podcast Disclaimer.

Speaker 1:

Do complex legal issues hold you back? Let's get energized and bring clarity to your top legal questions. This is Law Talk with the Flock by Goosmann Law Firm.

Jeana Goosmann:

Hello, I'm your host, Jeana Goosmann , CEO and managing partner of the Goosmann Law Firm, author and business leader here to help navigate you through the law, your business, and your life as a leader. With me today on Law Talk with the Flock is attorney Dan Epstein. Dan is an attorney at the Goosmann Law Firm who focuses on litigation as well as the construction industry. Welcome Dan.

Dan Epstein:

Thanks. Thanks for having me. And a excited to be here.

Jeana Goosmann:

Yeah. Excited to have you on Law Talk with the Flock and we're going to be talking on what to do if your customer or your client doesn't pay you. Do you ever see that come up in your practice, Dan?

Dan Epstein:

It does, it comes up probably too frequently for our clients that we have to get involved and help them either file claims make demand letters or worst case scenario file lawsuits on their behalf.

Jeana Goosmann:

So tell me a little bit about the construction industry and why is it fraught with claims for payment?

Dan Epstein:

Well , there's so many contracts from owner to general contractor and general contractor to subcontractor. Sometimes subcontractors have their own subcontractors. It can lead to delays in payment , whether that's delays starting from the owner's end where they're not paying their contractors in a timely fashion or whether it's contractors themselves not getting the documents to the owners in a timely fashion. And it trickles down. So obviously in a profession like construction where you are doing work and not being paid until later and sometimes much later , it can cause a major business problems in some cases. The client might not have the money to pay their actual workers that have actually done work months in the past.

Jeana Goosmann:

And you and I actually met on a construction case, didn't we, about 15 or 16 years ago?

Dan Epstein:

Yes. It was a grain bin case , up near Oakland, Nebraska.

Jeana Goosmann:

And I think I remember taking some depositions in Sioux city, Iowa, and that's how we first met. And we were actually defending like the same side of the case if I recall.

Dan Epstein:

Yep. The co op had sued, they did the tactic of suing everyone, whether it was the engineer , the architect, the general contractor or some subcontractors. So it was a case with lots of different attorneys in it.

Jeana Goosmann:

And way before that we were both Burke Bulldogs .

Dan Epstein:

Yep . I was class in 93 and -

Jeana Goosmann:

- I followed on your heels.

Dan Epstein:

Yep.

Jeana Goosmann:

So now here we are, many years later is sitting in the Omaha office of the Goosmann Law Firm practicing law together and working on cases.

Dan Epstein:

Exactly.

Jeana Goosmann:

So I'm excited to talk a little bit more about this area of the construction industry because we see it a lot. I mean, so much so that we have you focusing on construction industry as your practice and when you first have a dispute, what are some of the first steps that people take? And I think I heard you mentioned a demand letter. What is a demand letter?

Dan Epstein:

Well, the demand letter is when the client comes in, we first need to ask them some background questions. And one of them is what kind of project is this, is it a public project or is this a private project? Public project. You're going to start to get into requirements of the Miller act, which is a federal statute which would require payment under a federal statute for federal projects. And then there's also a Little Miller acts, which are the state versions of the federal act. For the private ones you would go to the state lien act. And in Nebraska's case they have a Nebraska construction prompt pay act as well. So the first question we're asking everyone is, what kind of project is this and where is it located? Depending upon what they say, we then start asking questions like, well, how far back are you in payment? Where are you in the hierarchy of this lawsuit? Are you a contractor? Are you a sub contractor ? Are you a sub of a sub? How far behind are they? How much money do they owe you? Because eventually, sometimes just writing a demand letter saying we represent the contractor or subcontractor, they haven't been paid in a timely manner. They're owed X dollars. And if you do not make a payment within X days, five, 10 days, they're going to be filing a bond claim or filing a lien on the property depending on what kind of a situation we're in. And sometimes that alone can grease the wheels to get people moving forward, especially if it's also forwarded to the owner and the contractor. You know, you can try to find where the pressure point is on who is not paying.

Jeana Goosmann:

Once they hire Dan Epstein, they know they're serious, right about collecting their money and they get that letter from you and it's like, Oh no, something's really going to happen if I get this letter. And that can shake them up.

Dan Epstein:

It can, you know, we don't like to send out letters and make a idle suggestions. We're going to file a lawsuit if we're not going to follow up on it. So a lot of times that'll get people moving along on the process, but there's plenty of other lawsuits and cases we've been involved in where no matter how many demand letters you send, or no matter how many lien claims you make or bond claims you make you're not going to get paid in a timely manner and you're just going to have to move on to a lawsuit.

Jeana Goosmann:

So talk to me a little bit about the lien claims or filing a mechanics letter. Is there a time limit to doing that?

Dan Epstein:

There is, each state is a little different. In Nebraska you wouldn't have 120 days from your last work or performance on the job.

Jeana Goosmann:

That can be a dispute too, can't it? When was that last worker performance on the job?

Dan Epstein:

Exactly so as far as our clients, we always remind them documentation is key on this to document exactly when you were there last , either supplying materials or actually last worked on the job because that can be an issue because you're gonna want to file your lien if it's a subject to a lien in Nebraska within 120 days thereafter, you have two years to file a lawsuit if need be, to foreclose on that lien.

Jeana Goosmann:

And then you mentioned bond claims too . Are there different types of bonds and all kinds of issues with bond claims I bet as well?

Dan Epstein:

There is. There's usually two types of bonds on a construction project. One of them is a performance bond and one of them is a payment bond. And the performance bond basically goes to the owner's benefit that if the contractor were to not perform, that they have some kind of backing, that they can go to the bond company and get assurances that their portion of the job will be done. As far as the contractor or the subcontractors or the subcontractor, sub subs, they're going to use the payment bond, they're gonna make a claim under the payment bond saying I wasn't paid in a timely manner. Usually those bonds require, like on a federal project, you have to wait at least 90 days from when you completed your work to make your bond claim. With this specific notice requirements that is listed by statute. And it just kind of varies on which position you are in the lawsuit. But you c an do that 90 days from your last work, but you have to do it within a year. And then sometimes the bond on the performance or t he payment bonds, sometimes they pay out, sometimes they think about it and you're go nna w ait a while. And sometimes they'll just refuse to pay you because they've gotten information from the contractor or the subcontractor saying you didn't do your work. You didn't finish your work. It wasn't complete. There was er rors t o it. So it's one of those situations where you do have time on both of them, but, t he sooner you do something, the better because time can get away from you, especially when you're dealing with bond companies an d t heir reviews.

Jeana Goosmann:

So we have a lot of different kinds of legal documents involved here too, don't we? We've got the different contracts you're going to want their invoices for payment, any correspondence that we're going back and forth to see these bonds themselves, insurance policies might come up. Lots of different things that you're taking into account are there.

Dan Epstein:

Exactly. And you know, contractors also work in the real world w here when they're on the job, their main focus isn't documenting for our purposes. So sometimes it's k inda piecemeal going back afterwards, trying to figure out what exactly we have, but the better documentation that they have helps us on the b ack e nd if we're helping them make a demand or a claim or filing a lawsuit.

Jeana Goosmann:

What are some things that can make their claims stronger when they're trying to get paid?

Dan Epstein:

Well , beyond documentation , obviously doing the work correctly and having the correct material supplied , those two things help in , getting paid in a timely manner. But sometimes that's out of their control because the contractor isn't being paid. The owner isn't making payments, but there's certain things that client can do ahead of time when they're entering into the contract.

Jeana Goosmann:

Oh, let's talk about those. What are some things you can do ahead of time?

Dan Epstein:

Well, you can obviously read the provisions in the contract and what it says on how you're going to be paid. Sometimes there's contracts that have pay when paid provisions, which means that the contractor, if you're a subcontractor, won't pay you until they'd been paid.

Jeana Goosmann:

that might be good to know in advance before you're signing up for the job. Right?

Dan Epstein:

It is. It would take care of a lot of heartache. Other times there's going to be payment provisions where you're going to be paid with X days . But in Nebraska they have a relatively new, it's been less than 10 years, a new construction pro pay act. So in that case there is requirements that if you can follow and show that you've done your necessary work, you can actually be paid sooner than maybe the contract allows for. And in that case, the prompt pay act does allow for their potential recovery of attorney's fees as well. So if we need to go down that road and file a lawsuit if recoverable the underlying amount, we might have a chance for attorney's fees as well.

Jeana Goosmann:

Isn't it a good idea to have an attorney review these contracts before you sign them?

Dan Epstein:

Always. We always tell our clients from engineers, architects to contractors, subcontractors have us review these contracts. The small charge that we're going to do in the front end is going to make up for any backend issues because even if they only get in a lawsuit one out of a hundred times the amount of money they're going to be spending on the back end and us defending it or us prosecuting their action is g oing to d warf what they w ould've paid for us to initially review their contract and let them know of the traps out there.

Jeana Goosmann:

Like indemnify and hold harmless clauses.

Dan Epstein:

Exactly.

Jeana Goosmann:

Those are always the hot ones I'm looking for.

Dan Epstein:

Yeah, so it's always beneficial for the client to know what they're getting into ahead of time and then sometimes they're going to make a business decision to say, this is a project I want to be involved in because it's a great project and other ones they're going to say the juice is not worth the squeeze.

Jeana Goosmann:

Well thank you so much Dan for all of your insight on this topic and it really appreciate having you on Law Talk with the Flock. Thanks everybody and have a great day. Go make it worth it.

Speaker 1:

Thanks for joining us for Law Talk with the Flock by Goosmann law firm. We hope you feel energized and ready to soar. Past your goals. Become a flock fan and subscribe to our podcast for weekly episodes. Learn more goosmannlaw .com