The Freelance Isn’t Free law is wonderful and has real teeth, but it would be naïve to think that the Company[1] will roll over and play dead every time a lawsuit is filed. Even when the Company wants to settle at the very beginning, it will expect to settle for less than the agreed upon amount.
TIME OUT – The Fundamental Approach to These Cases Has to Change, and It’s Not Going to Change By Itself – Both the Freelancers and Their Attorneys will Have to Be Willing to Hunker Down and Fight
Initially, the Company will expect to settle at a discount because anything that gets to court is generally viewed as a “disputed claim” by the judges and the defense lawyers – their knee jerk reaction is that some “reasonable compromise” should be made.
A firm stand will have to be taken at the beginning that this mindset should not apply to Freelancer’s earnings. In other words, the Company should not be able to subtract from the agreed amount just for saying “No”. This “reasonable compromise” mindset comes from the fact that everyone has to pay his/her own lawyers in commercial disputes and only a tiny number of cases actually go to trial in the courts. The new law, if asserted aggressively, will fix this, because it provides for double damages and attorney’s fees, which are powerful leverage, but much like your muscles, you must use them or lose them. The judges will still apply a great deal of pressure to settle at a reduced amount, and we all need to push back against the existing paradigm.
Before this law, Freelancers were effectively forced to settle for less than the full value because there was no upside going forward. There was only:
i) more delay to get the amount of money which was agreed to;
ii) minus attorney’s fees;
ii) plus the risk of losing the case on trial.
Now we will be able to insist on the double damages, and if the Company doesn’t want to pay them, it will risk paying the Freelancer’s attorney’s fees. As long as the Freelancer has an attorney who is charging a percentage fee, (as opposed to billing by the hour), and who is willing to go the distance, the Freelancer should always maintain the upper hand.
Where did the Concepts of Double Damages and Attorney’s Fees Come From?
These ideas were borrowed from wage cases. When the boss doesn’t pay workers, employees are entitled to double damages and attorney’s fees. This was the legislature’s way of telling the boss that “We Don’t Want to Hear It.” The idea was that earned wages should not have to be negotiated like the rest of the disputed claims normally seen in the courts. The City Council passed this law to recognize that there are millions of Freelancers who are taken advantage of far too often. This law now puts Freelancer’s Wages on a legal par with Employees’ Wages. As long as your attorney is willing to fight for you under this law, your wages should be safe.
The Company, once it is sued, will very commonly make various claims which are obviously false. As we said in previous blog posts on this topic, the claim that the work was not done properly will be made in virtually 100% of the cases. In the initial “paper discovery” phase, we will be able to ask the Company to i) specify how the work was deficient; ii) to name any witnesses who will testify to this; iii) to give us any photographs supporting this claim; iv) to tell us who else, and how much, they paid to finish the work or to correct any alleged defects; and v) to give us any documents supporting these claims. This will usually show that there is no merit to the claim, but if there is any merit, it’s always best to find out and deal with it from the beginning.
We will also see counterclaims, (claims by the Company against the person who brought the case) falsely accusing the Freelancer of stealing or vandalized property, giving trade secrets to the Company’s competition, or hacking into or damaged its computer system. The claims will be made to try to scare him/her into settling the case cheaply, or in an attempt to remove the case to federal court, particularly if they suspect that the Freelancer’s attorney might not be comfortable practicing there. These tactics are routinely used now against people making unpaid wage and/or commission claims, but experienced employment law attorneys should not be thrown off by them. The Freelance law contains an anti-retaliation provision, § 20-930, so we will have an excellent argument that these counterclaims constitute intimidation and harassment, and were only brought to deter a freelance worker from exercising his/her rights. If the counterclaim results in a transfer of the case to federal court (this is called “removal”) a federal judge will likely be very annoyed with the Company for doing this. If your attorney is comfortable in federal court (which most attorneys are not), and there is really no basis for the claim, this can be exploited to turn a favorable settlement quickly. If the case does proceed to trial, and the counterclaim turns out to be completely baseless, a federal judge will likely make the Company pay additional attorney’s fees for bringing it.
[1] Although we have used the term “Company” here, the actual law uses the term “hiring party”, which can be a corporation, an individual, or any type of organization which is not governmental.