A big lesson learned

H

Huy Vu

Veteran
I just got through my first bad business deal and I thought I post my mistakes here so that people wouldn't fall into the same trap.

The Facts:
  • In August I signed a contract with a local media company to produce a music video for the winner of their singing contest. The company is located in San Jose, but the contest is open nationally (this will become important later).
  • Since my film production group just started out, I agreed to do the music video for free in exchange for promotional considerations (our names and logos on all publications related to the contest). There was, however, a clause in the contract stating that if this company decides to cancel the contract after the production starts, they would pay us $500.
  • Late September, rumors started going around that the CEO of the company wants to pullout of the deal. We've been dealing with her indirectly through a mutual friend. She changed her mind when we reminded her of the $500 payment.
  • In October, the final round of the contest concluded. Imagine my surprise when I looked at the contest poster and found that the name of my production group was MISPELLED. Not only that, our name was not posted on the contest website. So we got zero publicity.
  • A week after the contest (and two weeks before the production was to begin) the CEO changed her mind AGAIN. The winner was from Sacramento, and she didn't want to pay the transportation cost of for them to travel back and forth for an entire month. Again we reminded her of the contract, and she finally agreed to go through with the video. Of course, this wasted several valuable days while she think it over.
  • We immediately requested informations so that we can plan the video. This includes a copy of the song (which was still not chosen or recorded), contact information and traveling arrangements of the winner etc.
  • No response for an entire week, then a sudden bombshell email. She informed us that she will only allow us ONE shooting day, instead of the three days that were agreed on previously (verbally, of course, I'm just that stupid).
  • We contacted her immediately and informed her that one day will result in a substandard video, and that unless she reconsidered we refused to do it. Which of course, is what she wanted all along: to get us to cancel so that she wouldn't have to pay us.
The Mistakes (and some advice)
  • Not including specific penalties for failure to adhere to contractual guarantees. She basically screw us over on the publicity and we can't do a damn thing about it. Yeah, we can sue her but we're students and we can't afford the legal fees (or the bad publicity).
  • Too many of the contract provisions was just vague. For example, we failed to say who is actually responsible for the transportation cost. ALWAYS SPELL OUT EVERYTHING. Including the production schedule.
  • NEVER SOFTEN CONTRACTUAL TERMS BECAUSE YOU KNOW SOMEONE. She was a friend of a friend so we thought the contract was largely a symbolic document (big mistake!). Many of the clauses were left vague because we felt they would never come up.
  • GET A LAWYER to look at the contract first. Probably a good idea not to write your own contract.
But yeah, that's basically it. I really couldn't believe that someone would go to such length just to avoid paying us. Five hundred dollar is a lot of money but the contest they were sponsoring costs hundreds of thousands to set up. I hope that none of you make the same mistakes I did of being too soft and too trusting.
 
jade8472 said:
I really couldn't believe that someone would go to such length just to avoid paying us. Five hundred dollar is a lot of money but the contest they were sponsoring costs hundreds of thousands to set up. I hope that none of you make the same mistakes I did of being too soft and too trusting.
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Yeah, that pretty much blows. But, don't lose hope. That sort of thing happens a lot when you're first starting out because you only attract low quality clients as a beginner. As your skills improve, you will begin to attract better clients.

Good luck in your future business transactions.
 
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I wouldn't sweat the bad publicity, especially with them misspelling your name and all. Take them down if you can.
 
sorry to hear about that, unfortunately this kind of thing happens, also just because you may be new at this, does not mean their isnt anything you can or should to about it, some will try and screw you no matter how many gigs you have done in the past. so what do do ? upfront get something..50% of whatever, so at the very least you walk away with something, few other things.. but i could ramble on about this for ever :)

..also dont fear the legal option if you honestly got cheated, most small claim courts will notice that, especially if u were cheated by a large company..

greg
 
I disagree with the "half down on all video jobs" mentality. That doesn't apply to any of my accounts. I regularly do work for an out-of-state company that has occasional video needs in my area. I do these jobs without contracts and always receive prompt payments. If it's a well known company in a profitable industry, you should treat them very nicely so they'll keep coming back. If you are demanding, they will find another supplier faster than you can blink. This is business 101. Partner with your customers. Nobody likes an adversarial relationship.
 
I think that going to a lawyer would have been a bad idea in this case. I mean if I read your post right you were doing this for free. So it doesn't make sense to pay $500+ to a lawyer in this case...
 
A legal recourse is definitely out of the question in this case because she's fairly well known in the local Vietnamese community and because the stake is so small. Part of the reason we did the video for her in the first place is so that we can approach prominent people that she knows to raise money for another project. That project happens to be a documentary on the Vietnamese community in the Bay Area so the news of us suing her would certainly make some bad headlines for our project. The contract is so full of holes that it probably won't stick in court anyway.

I really should have seen this coming. In September we shot a commercial for her (also for free) to promote the contest and she forced us to go back and reedit it 3 times. And we didn't even get a thank you out of it.
 
Good points, but business 101 dictates that you have contract agreements with everyone, no matter how nice they are, it’s when you try to apply nicey nice concept to a new client that the potential for getting burned arises, I mention the law option for future paying jobs etc

Cheers, my 1 and half cents

Greg
 
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jade8472 said:
I really should have seen this coming. In September we shot a commercial for her (also for free) to promote the contest and she forced us to go back and reedit it 3 times. And we didn't even get a thank you out of it.
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says a lot about her.

anyways, thanks for sharing your experiences to help us take some mental notes.

good luck
 
That does kind of suck...but...you didn't really get screwed too badly...you didn't get publicity, or money, but you also DIDN'T DO A VIDEO.

I think you are kind of lucky you got out of it...it probably would have been a big pain in the ars anyway. Besides...a lot of people get screwed out of money for work they DID do. :)
 
I actually kinda regret that we didn't get to do the video. It would have been a fun and challenging project even with the original three days schedule. Strictly speaking we probably would have been able to come up with something cool even with the one day schedule. We just didn't feel like working our ass off for someone who doesn't appreciate what we're doing.
 
Hi Jade,

Sorry you've got a bad taste in your mouth - thanks for sharing your perspective. Regarding contracts, it always helps to be clear on on deliverables, milestones, dependencies/contingencies, roles/responsibilities, etc. More importantly, it's imperative that the parties have a clear understanding of the opportunities (revenue, future opportunities, learn new skills, etc) and associated liabilities (money, time, reputation/brand, equipment, etc)

For a low billable job like yours, it's probably wise to write it off for a lesson learned (certainly show it as a loss on your taxes). Most clients won't flake out on you but if they want to default, unless you've got far more liabilities than legal fees perhaps it's best to shake hands and be cut your losses early(also avoiding potential bad press with future clients).

But beware of the opposite scenario where the clients demand more than the implicit contract T&Cs, and threaten to sue if their unreasonable demands aren't met (insensitive to your profits/losses). That situation is far more critical than a client who plays games to get of a contract.

As others have said, your experience is the exception instead of the rules and certainly you'll be sensitive to screening clients to avoid the unethical ones (you've learned "friends of friends" don't equate to ethics) . IMHO, knowing the biz ethics demonstrated in prior arrangements are far more important than the mechanics of the future contract.

Best wishes, Michael
 
jade8472 said:
I really should have seen this coming. In September we shot a commercial for her (also for free) to promote the contest and she forced us to go back and reedit it 3 times. And we didn't even get a thank you out of it.
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Stop doing free work for her or anyone else. By doing free work you're turning yourself into a slut. It's a whole lotta fun for the client becuase the work is free, but the client will never repect you because you don't value yourself enough to charge a fee. At least whores get paid.

NEVER work for free.
 
milksac said:
Stop doing free work for her or anyone else. By doing free work you're turning yourself into a slut. It's a whole lotta fun for the client becuase the work is free, but the client will never repect you because you don't value yourself enough to charge a fee. At least whores get paid.

NEVER work for free.
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Well, I wouldn't put it quite that strongly. I believe in working for free at least in the beginning stage to build up a reputation and to hone my own skill. After all when you're just starting out it's a big leap to get people to fork over money for an unknown. But in the future I'll be very selective about who I choose to do free work for and whether the potential gain is worth the work I put into it.
 
Yes, doing work for free to get the exposure seems like a terrific idea, however it's a business strategy that has failed many newcomers to the industry. No one expects a plumber, carpenter or painter to work for free regardless of their age or experience. Why is there an expectation that because someone is new to the craft of film making that they should do work for free? I guess artists are gluttons for punishment.

For further study on the subject take at look at these links. I think you'll find you're current client described quite accurately as a "Grinder" in Ron Lindebooms article.
http://forums.creativecow.net/cgi-bin/page_wrapper.cgi?forumid=17&page=http://www.creativecow.net/articles/lindeboom_ron/clients_or_grinders/index.html

Here's another one that aimed more at designers, but the poin is the same. Scroll down and take a look at "Painter Creativity - Top Ten Lies".
http://www.no-spec.com/

IMHO the best route to starting your own company is to go to work for an established comapny for a few years. Make mistakes on their nickel, build up your reputation (after you're finished making mistakes), learn a few things about the business side and build up your network. Then go out - do your own thing. Your chances for success will be tenfold that of starting out with no reputation, no network of contacts and giving away the work as a business plan.
 
thisiswells said:
I disagree with the "half down on all video jobs" mentality. That doesn't apply to any of my accounts. I regularly do work for an out-of-state company that has occasional video needs in my area. I do these jobs without contracts and always receive prompt payments. If it's a well known company in a profitable industry, you should treat them very nicely so they'll keep coming back. If you are demanding, they will find another supplier faster than you can blink. This is business 101. Partner with your customers. Nobody likes an adversarial relationship.
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I disagree. While I can understand working before payment, I would never work without a contract. Further, any reputable company should have no problem with having a contract. That's just good business. A contract protects you and the client by stating the terms of your agreement . If I have a client who has a problem signing a contract, I'd have to wonder why...
 
Thanks for the info, but our aim at the moment isn't to go into the profit making business (yet). Currently we're just trying to establish ourselves as a competent group of filmmakers in order to open doors to financial support on our current and future projects. That puts a slightly different spin on the problem. If we're a business and we're actively trying to make money then we would of course not work for free under any circumstance. But at the moment if we approach everyone with our hands out asking for cash then it might give us an undesirable reputation. I've discussed this problem with my group and we've agreed that in the future we will only take on projects that have clear, tangible gains.
 
safarijoe said:
I disagree. While I can understand working before payment, I would never work without a contract. Further, any reputable company should have no problem with having a contract. That's just good business. A contract protects you and the client by stating the terms of your agreement . If I have a client who has a problem signing a contract, I'd have to wonder why...
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I do this for a living and have for years. The only time I was burnt was when I made an untrustworthy person agree to a contract and they re-nigged. The contract didn't help me recover anything, as the person very obviously did not have the funds to pay me, even if I had a lawsuit against them. They were just plain broke.

Just today I did a shoot for another marketing firm that I've never heard of, out of Manhattan. I handed over the tape and was promised a check in the mail. I'll post again in this thread when I receive the check... (NOTE: I did, in fact, receive the check 11 days after I originally made this post) The thing is, several hundred dollars is nothing to a big company in NYC. Why would I want to bother the kind soul who's hiring me by requiring him/her to sign and fax a meaningless contract when they are hiring 25+ other videographers across the US every day? They'll pay me or they won't. It's that simple. All a contract does is provide proof that they agreed to pay, but the legal fees would never be worth it if they didn't... I think it's better to make life easy on the folks who pay my bills and not worry about things like that...

Shady businesses (most small enterprises) will screw you regardless of what they signed in a contract... Basically, only do work for large corporations (or the marketing firms they've hired) and you're OK.
 
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[SIZE=+0]"They'll pay me or they won't. It's that simple. All a contract does is provide proof that they agreed to pay, but the legal fees would never be worth it if they didn't... I think it's better to make life easy on the folks who pay my bills and not worry about things like that... "[/SIZE]
[SIZE=+0]If that works for you, great! IF you are ok with "they'll either pay or they won't" then that's cool too. I personally want to get paid period. As for legal fees, my contract makes the client responsible for them if I have to take him to court. I don't work for big corporations but If I did I'd still want a contract. Perhaps freelance is different but if you are running a company (production or otherwise), you are not going to last long ignoring the legal aspects of your business. Somehow I can't see Sony or Disney doing business on a handshake agreement. At the end of the day, business is business.

[/SIZE]
 
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