Small Claims cases are being driven more and more by attorneys which means it now takes more money to settle one. As this article points out, small businesses are now including language that nonpayment will result in litigation and liability for attorney fees. This tells me that small businesses and their consumers are often not dealing with one another in good faith. I know that many small claims cases are referred to mediation at some point during the case; however, for most people, by the time of mediation, they are entrenched, stubborn, and unwilling to settle. This is usually because the involvement of an attorney has ratcheted up the conflict and expense and/or in the case of consumers or neighbors, they feel that they have been treated so poorly they simply want their day in court.
Both situations described above are detrimental to small business, consumers and neighbors trying to live in community. First, if you as a consumer, before work commences ask to see what kind of language is included in the bill and read the entire bill. If the bill or contract or any other paper includes language that nonpayment would result in a lawsuit and liability for attorney fees you need to understand first that by signing you are agreeing to the lawsuit and liability for attorney fees and second you need to understand that the lawyer involved is costly – an average of $300-$400 per hour. Finally you must understand that you most likely will be outmaneuvered by the lawyer because of his/her understanding of the legal system and how it works. Once the attorney becomes involved even going to mediation is hard because the business owner has zero incentive to settle for anything less than the amount owed plus attorney fees.
Being treated poorly or without respect really makes people want their day in court. But as a consumer you have choices. Look for more local providers with whom you can establish a relationship. Talk to your neighbors and find out who they have used. Do your homework by checking with the Better Business Bureau, asking for and calling references, checking certification, etc. This may be time consuming but it is crucial. Perhaps agree to mediate without lawyers if there is a problem with the work or payment and include such a provision in the Agreement for Services. We as mediators always say, if you dont ask you will never know. So ask for a mediation provision instead of the lawyer one. If the business is unwilling, perhaps that is a clue for you to consider.
Finally, for small business owners, getting a deposit may be a good idea, to commit the consumer. Moreover, in your consult make sure clients understand that payment is due at the time services are rendered. Consider using modern technology so that you can take a credit card right at the scene or run a “check” on the check you have just been given. Or else, have a contract that adds late fees to each late payment. Point out how important it is for your business that you are paid timely.
Customers will have payment issues. It is a reality small businesses face. This is why we always recommend including a mandatory mediation clause that requires mediation within a time certain after nonpayment or other type of conflict prior to any party being able to file a lawsuit. What we have seen in our practice is that most conflict in these scenarios comes from a lack of ability to pay or unhappiness with the work. Mediation is a good place to consider creative options to settle the nonpayment, the quality of work issue or other issues that may be at play. Mediation is a far more positive way to settle the conflict, meet needs and bring people together. This will only enhance business, relationships and reputation which benefits all members of the community in the long run.
We here at Sanchez and Baietto, LLC work with people and local businesses or neighbor to neighbor to help them when there is conflict. Our goal is always to have both parties walk away with their needs met and we often accomplish this goal because of our experience and our approach to this process. Cary and I are committed to community mediation to help people within communities work with each other not against each other. After all, better relations among community members means people want to work with one another which translates to better services, better and more understanding clients and a tighter community in general.