GET PAID BY YOUR CUSTOMER – USE AN ATTORNEY’S FEES CLAUSE

If you want to get paid by your customer, one of the first things to do is to look at your invoice and your bill of lading.   Do they have attorneys’ fees clauses?

Attorney's Fees Clause Help You Get Your Invoices Paid

Get Paid By Your Customer

Do you know what an attorney’s fees clause is?      An attorney’s fees clause is a paragraph in your agreement that says that if there is a dispute, the winning party is entitled to be awarded their attorneys’ fees from the losing party.   This is important because normally in the United States, each side is responsible for paying for their own attorneys’ fees.    Here’s an example of what this means and how an  attorney’s fees clause can help you collect from a customer.

Let’s say that your company sells products to a customer for $25,000.   You ship the goods with an invoice of net 30, the customer receives the goods but, after 30 days, your customer does not pay you.   Sixty more days pass.   You begin to worry if you will ever get paid by your customer.   You try the nice way and the not-so-nice way to get paid.   The customer ignores you.   You decide you don’t want this customer anymore and you may want to take legal action against them.   Let’s assume that it will cost you $10,000 in attorney’s fees to file a lawsuit and take it all the way through trial.

If you don’t have the attorneys’ fees clause there, that means that even if you win a lawsuit and the court awards you a judgment for $25,000, you only “net” $15,000 because it will have cost you $10,000 to win the $25,000.   Also, there is no incentive for the defendant to pay you because all they have to lose is the $25,000 (for the sake of this example, we are not including interest calculations.)  On the other hand, if you have the attorney’s fees clause in your bill of lading or your invoice, even if it costs $10,000 to win the judgment for $25,000, the court could award you all of your attorney’s fees — so the court would add the $10,000 to the $25,000 judgment.  Bottom line:  you recover $35,000 less your attorney’s fees — or $25,000.   You are made whole.  The defendant has to pay an extra $10,000.

An attorney’s fees clause will make it easier for you to get paid by your customer.   With an attorneys’ fees clause in your agreements, it will be easier to collect the debt because (a) it will be worthwhile for you to sue because you can also collect your attorneys’ fees if you win and (b) the defendant should realize that if they lose, they will be responsible for your attorneys’ fees.   This should encourage people who owe you the money to pay you before their debt to you gets bigger.

 

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