Do I need a lawyer?

My biggest customer has stopped paying me. They currently owe about $70,000, debts accumulated over the past 18 months. 
 
The customer has given no reason for stopping payments. They do not appear to be in financial trouble themselves. They continue to sell my product. They've paid more than ten times that amount to us over the years, albeit always late. We've point-blank asked them why, but we are either ignored or get nonsensical answers that have nothing to do with the question asked.
 
The only theory I have is that our contract grants them our source code, held in escrow in case we go out of business. If they were to force us into bankruptcy, they'd essentially get our main asset for free. 
 
Of course, that same contract also specifies 30 days to payment, so that document's already void. Regardless of their reasons, I'm confident a court would decide in our favor. That's if we could afford to sue them. They're a bigger company with deeper pockets, so they could drag it out until we ran out of money, which wouldn't take long.
 
So I need to decide if it's worth the gamble to retain a lawyer, if only to credibly threaten a lawsuit. That would force me to spend money I need to make my mortgage payments. I'd like to hear from anyone who's had a similar experience and, most important, how it turned out.
 

Dave, I ran a signmaking company for 23 years. I've been in this situation more than once. Sadly I have to report it never went well.
 
This probably won't help...
 
The worst scenario was a similar amount, £40,000 GBP. Large contract (for us), but handled by a design/advertising agency, not the end user. Same thing, fobbed off for months with excuses, couldn't get the money out of them. Took them to court and applied a Mareva Injuction;
 
http://www.lawteacher.net/free-law-essays/english-legal-system/mareva-injunction.php
 
It's a ferocious (and very costly, to us at the time) process which effectively froze their assets and stopped them trading or making any financial transactions.
 
We were 48 hours too late, they'd drained the bank accounts, spilt into 2 new limited companies and carried right on trading. We were even anonymously sent a parcel containing all their bank statements by a well-wisher in their company, but it didn't help.
 
This is one of the reasons why I'm now a gardener in Scotland.

The amount of money in your bank determines the amount of justice you can buy. Big companies with deep pockets will starve you out. If I was a software developer I would install some sort of kill switch. 
 

Yes you should get an attorney and put a lien on their assets. In the event that they try to sell said assets they'll have to settle with you. You could also send a cease and desist letter on an attorney's letter head that they are violation of the contract. Just my $.02.
 
Rocky

It's a pity the small claims court limit is $10,000 because that road is a lot easier. I had a similar situation albeit nowhere near on the same scale - a customer ran up a bill of $1000 and just refused to pay. No reason, no dispute, just blanked all my invoices and emails and texts and calls. This guy is a very wealthy CEO in a large financial company and had no reason not to pay what to him was peanuts. So I went through the small claims court and it was a breeze - he didn't show up to the hearing, my evidence was beyond dispute and they ruled in my favor. The trouble is not even a judgment against him was enough to induce him to pay, and he held out for another year before cutting me a check - for the amount he owed minus the expenses I was awarded, which I now plan to recover in the same way out of principle.

Some people are just trash, it's as simple as that.

Want me to round up some local muscle and pay them a visit?  I promise not to break any knuckles on their check signing hand. 
 
That said, sorry to hear you have to deal with this!  These situations suck.  Is there anyway that you can talk to someone as high up in the company as possible?  Let them know that you've been good commerce partners for over eight years, but you're simply not big enough to float them their payment for that long (18 months is a hell of a long time - maybe you should have had this question after 90 days?).  A conversation now might save both of you a lot of legal hell where only the sharks, I mean lawyers, seem to come out well.

Dave,
 
when you have one customer which provides the majority of your income, you are in a precarious position.  I'm in a similar position with one customer providing more than half my income as well.  I have an excellent relationship with them which I do my utmost to maintain.
 
I generally work directly with them but on several occasions, I was asked to work with one of their general contractors on a project. We had done work with this same GC before so that was no problem. We did the project, submitted the bills and heard nothing. At the 90+ days point, not one single phone call was returned and no mail was answered and eventually the phone line was cut off. I asked the guy I normally work with what was going on with "so and so" contracting company... His reply.... Oh no, don't tell me they haven't paid you either....  seems they went bankrupt and didn't pay a single contractor on the job which was several hundred thousand dollars.  My contact person with the company asked me to send him the bill and they paid it. He told me, I was too valuable a resource to have me mad at them and he made sure I got paid properly.  When they have a problem, and need help, they need to know they can call me for assistance or advice. I've had phone calls for help on the side of a mountain while skiing. I took 15 minutes to help them out and resolve the issue before I completed my run to the lodge.

It's a good idea to find other customers who can use your particular skill set to augment your customer base. I know it's easy to keep that one customer and rationalize things.... but eventually it comes back to bite you.

In the case of this customer I have.... when I first started with them, we did a several hundred thousand dollar contract right out of the gate. Several others followed through the years and periodic repair, replace and upgrades kept things rolling nicely. We started with their  23 facilities so there was a constant flow of repair work to do. Through the years, they let leases expire and sold those assets to other similar companies.  Some of those retained our services and others did not, opting to do their own "in-house" repairs. I happened to be in one of those places a year or so back and the system we installed had been let go and was in dire need of a complete upgrade at that point.
Our original customer is now down to 8 or so facilities left.  We just submitted 3 proposals for sizable upgrades and one came in on the fax 2 nights ago.  As I get older and closer to retirement.... (I'll be 62 this year) ... I don't mind that things are slower than they were 10 years ago.  My existing residential customers also contribute to the work load.
We also do work directly for the factory that makes the equipment, and they have dumped a really sizable project (45 facilities) in our lap. We still do repairs and service work for them.


 
I work alone, so when I close the doors, the business assets will be sold to the highest bidder. If I had employees, perhaps I would be working to find other customers more aggressively. 

Depending on your situation, spending the time to find and attract other customers so that you don't rely on just one for the majority of your income may make sense. Pushing that thermonuclear button should be done only as a last resort.  Try the negotiation tactic first. That letter you mentioned would be a good start. Always remember to give them an easy to see path out of the situation.  Make it a "WIN/WIN" and hopefully you can continue to do business with them for years to come.  Because, while having one customer provide 50%+ is a precarious position, it's also less of a hassle because you're dealing with fewer people.

jamesg1213
Dave, I ran a signmaking company for 23 years. I've been in this situation more than once. Sadly I have to report it never went well.
 
This probably won't help...
 
The worst scenario was a similar amount, £40,000 GBP. Large contract (for us), but handled by a design/advertising agency, not the end user. Same thing, fobbed off for months with excuses, couldn't get the money out of them. Took them to court and applied a Mareva Injuction;
 
http://www.lawteacher.net/free-law-essays/english-legal-system/mareva-injunction.php
 
It's a ferocious (and very costly, to us at the time) process which effectively froze their assets and stopped them trading or making any financial transactions.
 
We were 48 hours too late, they'd drained the bank accounts, spilt into 2 new limited companies and carried right on trading. We were even anonymously sent a parcel containing all their bank statements by a well-wisher in their company, but it didn't help.
 
This is one of the reasons why I'm now a gardener in Scotland.

I would start a personal lawsuit ... this is intentional fraud. And the courts will ask ... gee ... where did the money go? So you set this up to not pay folks and steal the money? This happened a couple of time to folks I know ... and one of them, this was for a million plus ... and he didn't win ... he's now starting over, and has to have "supervision" and all accounting can not be done "in-house". Any obvious cheating and he goes to jail, and the family assets frozen.
 
Go ahead ... steal ... you'll get caught sooner or later!

Same here. Smaller businesses are generally LLCs, which stands for Limited Liability Corporation, and it's comparable to an LTD in the UK. They don't get many of the perks of a full corporation, but they do get the most important one: individual employees and owners cannot be sued. 

bitflipper
Well said, Herb. I'm in a similar situation. I am theoretically close to retirement (I turn 65 this year) but when you're self-employed there's no gold watch and no retirement account. When I decided to be an entrepreneur 30 years ago, such concerns weren't on my radar. All I knew was I didn't want to die in a cubicle.
 
To that extent, I've been successful. I measure success by what I don't have. I don't have a daily commute, don't have a boss, don't attend meetings, don't have performance reviews, don't deal with office politics. Unfortunately, at the moment it also means I don't have any money.

 
I didn't actually want to go this route. But I was fired by the last corporate entity and decided to do some side work while looking for a new job. In the first few days handing out business cards I ended up in one day, easily making what I made in a week with my former employer.   I'm the kind of person who doesn't abide idiots and suck-ups very well.... so I tended to not play the politics game. After having worked for people who insisted things be done their way when mine was clearly more efficient, and being fired from several jobs, I had an epiphany..... If I start my own business, no one person can ever fire me again and cut off my income completely.  Over the 24 years or so I've been doing this, I've had customers fire me, and I have fired them. But I'm still here and my customers, for the most part, are very loyal to me, and most importantly, they pay their bills on time.

When people say to me, " Man, you're so lucky to be working for yourself".... I just smile to myself and let them believe what they will.  I've said it before..... and I'll say it again.... Being self employed has some advantages and a who list of disadvantages. When the phone is ringing and you're working it's great, but there's a fine line between being self employed and being unemployed.

Guitarhacker

bitflipper
Well said, Herb. I'm in a similar situation. I am theoretically close to retirement (I turn 65 this year) but when you're self-employed there's no gold watch and no retirement account. When I decided to be an entrepreneur 30 years ago, such concerns weren't on my radar. All I knew was I didn't want to die in a cubicle.
 
To that extent, I've been successful. I measure success by what I don't have. I don't have a daily commute, don't have a boss, don't attend meetings, don't have performance reviews, don't deal with office politics. Unfortunately, at the moment it also means I don't have any money.

 
I didn't actually want to go this route. But I was fired by the last corporate entity and decided to do some side work while looking for a new job. In the first few days handing out business cards I ended up in one day, easily making what I made in a week with my former employer.   I'm the kind of person who doesn't abide idiots and suck-ups very well.... so I tended to not play the politics game. After having worked for people who insisted things be done their way when mine was clearly more efficient, and being fired from several jobs, I had an epiphany..... If I start my own business, no one person can ever fire me again and cut off my income completely.  Over the 24 years or so I've been doing this, I've had customers fire me, and I have fired them. But I'm still here and my customers, for the most part, are very loyal to me, and most importantly, they pay their bills on time.

When people say to me, " Man, you're so lucky to be working for yourself".... I just smile to myself and let them believe what they will.  I've said it before..... and I'll say it again.... Being self employed has some advantages and a who list of disadvantages. When the phone is ringing and you're working it's great, but there's a fine line between being self employed and being unemployed.

I think the worst part is the lack of time off. There is no law telling your customers you have the right to x number of weeks of per year. If you have no stand-in to take over your duties while you're on vacation, then you ain't taking a vacation! And there are no "sickies" - no "I have the sniffles and feel a little sorry for myself so I think I'll call in sick." I had surgery for skin cancer 7 years ago and 2 hours after waking up I got dressed and to the sound of protests from doctors and nurses who called me crazy, wheeled myself and my drip down the hallway to discharge myself, stepped out onto First Avenue in 100 degree heat, took a taxi home, ate, threw up, went to bed and got up at 6am the next morning to work all day in the searing heat with my arm in a sling, feeling as weak as a kitten. And believe me, that story gets rolled out to every employee since who wants a day off because they have a "sore throat" - lol!

bitflipper
 
I'm thinking now that rather than launch a scorched-earth assault I should just send them a registered letter telling them that our contract is now void due to their noncompliance. Let them read between the lines. 

The problem with voiding the contract is that, once voided, you cannot hold each other to perform on the terms going forward. That would be a scorched earth policy, and then you would need to treat them as a common debtor, or negotiate a new contract. A letter threatening to terminate the contract due to nonpayment would give you more wiggle room. You can withhold a service that you are obligated to provide (support) if the contract makes it clear that the service is contingent on timely payment. If the contract is ambiguous on this issue, then they might still be able to compel performance on your obligation, even though they are in arrears on payment. In that case, your voiding of the contract might become your defense. As a practical matter, if you have not been paid, it is because, they do not value your service, or they estimate that you are powerless to compel payment, or they do not have the money because it is going to something they consider more important. There may be a much squeakier wheel demanding payment out there. 

If the company relies on your product to make money and they aren't paying you that makes me wonder if they're actually making money at all. A customer that doesn't pay ceases being a customer and becomes a liability, and if they're not paying you for services already provided then hanging on hoping they'll pay you for future provision of your services is probably futile.

Personally, for that kind of amount of money combined with the delay in payment I'd be seeking legal advice on (1) recovering the debt and (2) whether the "customer" has defaulted to the point the contract is breached and I can pull whatever support and other facilities the contract commits me to. Going through the courts may or may not be required in the end, but a stiff letter on legal letterhead might focus their attention, as might taking away your services and their access to your product if it will hit their income and your legal adviser's opinion is they are unlikely to win a case if they try to hold you to your side of the contract despite them not paying you.

Above all though, for that much money owed for that long, I'd be looking to recover whatever I can as soon as possible in case the company declares bankruptcy. There are many strategies that might be used, but I'm not a lawyer and my knowledge of the relevant law outside England and Wales is slight. Though if they do go bankrupt the reciever might actually be easier to deal with than the company directors, and may be more inclined to pay you something, even if not the full amount due, to keep the company in business as a going concern.

If the company wants future services I'd also be inclined to start requiring at least part-payment in advance.

So I'd say yes, you need a lawyer. Unfortunately.

It seems like you have a long term relationship with these people. It can be frustrating to expect income and it doesn't arrive. I can certainly understand your concern and even frustration. 
Would a face to face meeting help? 
If they can pay and aren't paying that's one thing, but if they can't pay and you take legal action you might loose a long term business partner who might find a way to eventually pay. JMO.