Contractor Dilemmas - Moral and Financial Obligations?

An Anonymous Coward asks: "This is a true story, one that I am currently trying to resolve and wondered if the Slashdot community could offer any help. I've been developing a new application for a startup company, contracted on a daily basis for my services. I've been providing services for 5 weeks now, and am still trying to get payment for work completed during week 1. The company is refusing to pay me, stating that they are not happy with progress, however all of the milestones we agreed upon for that week have been met. Now, it gets interesting: I know that this company is seeking startup venture capital, and I know from whom. Yes, it would be malicious to contact this party with the information that I have, but am I morally obliged to? If you were set to pump several million into a company with loose moral fibre would you not appreciate a warning?"

Bitching to VCs about company?

[markwelch]

First, if you call the client and threaten to report the non-payment to the financial backers unless you get paid, you are most likely engaging in extortion, a crime.

Second, if you just go ahead and call and report the non-payment, your goal is clearly to interfere with the existing relationship between the company and its backers. The company might sue you (for interference with contract, interference with prospective economic advantage, defamation, etc.) and of course they have the money to fight and you don't. Can they win? If what you say is truthful, probably not.

Of course, if you file suit against the client, for breach of contract, your filing of a lawsuit will be a matter of public record, and your attorney might find it necessary to schedule depositions or subpoena the financial backers for some reason, in which case the financial backers would find out. It is possible that your filing a lawsuit might trigger a termination clause in the financing arrangement, but the I can't imagine how the mere filing of a legitimate lawsuit to collect money owed, without more, could be actionable under any theories unrelated to the lawsuit (e.g. you could get sued for malicious prosecution or punished under the SLAPP statute or court rules if your lawsuit is thrown out, but you can't be sued for defamation just for filing a lawsuit).

Do you have an obligation to report the non-payment? Absent some additional information, I don't think so. You might have an obligation to speak up, if you have any kind of relationship with the financial backers, or if you made some statements to them, or if you are aware that your name and reputation were represented to the backers in order to get the funding.

It appears that you are, in fact, ending your relationship with the client. If you are not going to sue them for the money owed, then you should probably just move on and learn from the experience. If you are going to sue them, let your lawyer handle the matter, and don't try to take actions that could cause you more problems down the road.

Yeah, you're mad, and the client is scum. You can gain nothing from bitching to the money-guys, period, and you can lose a lot.