28 HOW TO AVOID OR RESOLVE DISPUTES WITH CLIENTS
Artist beware! The warning signs that a client will become problematic vary from the obvious to the subtle. How much more pleasant life would be if an artist could interpret even the subtlest of signs and know the best way to respond. Certainly artists want to accept work that a client offers. Recognizing the warning signs discussed in this chapter may enable the artist to explore further, feel reassured that a potential client will be worthwhile, and build the trust that will make for an ongoing relationship. In case the relationship breaks down, this chapter will also investigate mediation, arbitration, small claims court, and how to find a lawyer.
The Semiotics of Clients
One important sign is whether the client has any interest in the success of the artist who will undertake the client’s project. If the client, for whatever reason, does not care whether the artist succeeds, the artist may discover that he or she has been set-up for failure.
The tight-lipped client may be one example of the scenario in which failure is made more likely. If the client is grudging in giving the artist the information needed to evaluate the job, the artistic process may very well be uncomfortable. Who knows why the client can’t be more forthcoming? It may be internal politics within the client corporation or it may be paranoia. In fact, any signs of paranoia about anything should raise the artist’s worry quotient to the point of weighing whether to take the job.
The client who cannot articulate the job at all has to be avoided. A contract is a meeting of the minds, but here one party seems to have no mind to meet. This client may simply accept whatever the artist delivers, but maybe not. It is more likely the artist will never get the job, since the client is on some sort of fishing expedition—perhaps trying to use the artist as a free consultant to flesh out some dimly perceived skeleton of an idea.
The client whose budget is unrealistically low, or who makes other unreasonable demands such as setting impossible schedules, is likely to be impossible to work with. This can be generalized to include clients who don’t seem to understand the artistic process and show no willingness to learn about it.
Minds and Meetings
The client who is reluctant to give an artist a written contract or some assurance that the artist’s interests are protected may have to be avoided. A written contract is a useful tool to achieve understanding, a meeting of the minds, and to avoid conflict later. At the least, however, the artist should have an advance payment or other indications of good faith and the strong likelihood of payment before starting any work.
A minor point, but not an unimportant one, is for the artist to make sure that the person representing the client is in charge of artistic decisions. If this person is not, the artist may be wasting his or her time. Along these lines, the artist should also make certain that anyone signing a commission contract is authorized to do so.
Another sign is whether the potential client has ever worked with artists before. If the client has not, the danger of a misunderstanding increases. The artist should be cautious if he or she does not know any artist or firm with whom the client has worked. In such a case, the artist might want to ask for references, although that can be awkward. Also, references may give assurances that the client will pay promptly, but say nothing about other problems that are likely to be encountered in the process of creating the art.
The client might show the artist work done by other artists. If the artist objectively feels the work does not meet even minimal standards for professional quality, beware. The client who has no aesthetic sensibility may prove difficult to work with, although the artist may be able to educate such a client to some degree.
The client who has a big ego, and no aesthetic sensibility, is likely to be beyond educating. One sign of an enlarged ego is the inability to listen. If the client is too busy massaging his or her ego to hear what the artist has to say, trouble lies ahead.
A related problem is the client who has a low regard for artists. This may be an ego problem, or it may simply be a symptom of mental imbalance. In any case, the artist is likely to be unhappy about being treated like a lowly factotum and so should avoid such personalities and their jobs.
In the obvious category of risks are all clients who tell of the tortuous lawsuit still in progress with the last artist that they hired. In fact, if they mention litigation with anyone, beware. Everyone loses in a lawsuit, including the loss of time and legal fees. Most litigants (unless they are completely immoral) sound as if they were wronged and that justice will be served by their winning the lawsuit. If the artist is in doubt, he or she should not sympathize, but simply wish the potential client a pleasant farewell.
Mediation and Arbitration
Of course, even after reading this chapter, it may not be possible to avoid all litigious and otherwise troublesome clients and situations. If an artist has a dispute with a client, there are several steps short of a lawsuit that can be taken, including mediation or arbitration.
In a mediation, parties seek the help of a neutral party to resolve disputes. They are not bound, however, by what the mediator proposes. Arbitration requires that the parties agree to be bound legally by the decision of the arbitration panel. If someone who has lost an arbitration refuses to pay, the arbitration award can be entered in a court for purposes of enforcement.
In New York City the Joint Ethics Committee (JEC) used to offer mediation and arbitration services. The advantage of the JEC was that its mediators and arbitrators were familiar with the practices of the art world.
The best resource currently available is Arts Resolution Services, a national collaborative project funded by the National Endowment for the Arts and several foundations to coordinate alternative dispute resolution and negotiation services for artists around the country. This project, which was started by California Lawyers for the Arts in 1989, works with lawyers for the arts organizations in several states, including New York, Texas, Missouri, and Illinois. The participating organizations provide dispute resolution services for artists and arts organizations. (A complete list of the participating organizations can be obtained from the volunteer lawyers groups listed on page 260.)
The organizations participating in Arts Resolution Services assist in resolving interstate as well as local disputes. “Through the cooperation of the participating organizations, we are now able to help an artist who lives in one state and has a problem with a publisher, gallery, or collaborator in another state,” says Alma Robinson, Executive Director of California Lawyers for the Arts. For example, a California photographer who received damaged slides back from a New York publisher worked with the mediation staff at Volunteer Lawyers for the Arts in New York and at California Lawyers for the Arts to resolve the problem. Through their joint conciliation efforts, she received a satisfactory settlement from the publisher.
Mediation is especially useful when the participants have an emotional investment in a project, or an interest in maintaining their relationship in the future. The mediators work to help both sides hear each other’s concerns and develop a sense of overall fairness. By improving their communication through the mediation process, the participants are often able to continue to work together for their mutual benefit.
In addition to mediation, arbitration is available through Arts Arbitration and Mediation Services, a program that was started by California Lawyers for the Arts in 1980 and is now available through its Santa Monica, Sacramento, and San Francisco offices, or through other arbitration providers such as the American Arbitration Association or JAMS (www.jamsadr.com). An arbitration award may be enforced by a state court.
One advantage of using the programs affiliated with Arts Resolution Services is that the panels of trained mediators and facilitators include artists and arts administrators, as well as accountants, attorneys, and others. To the extent possible, panelists are matched for the technical knowledge of the artists’ discipline, as well as for the nature of the legal issues. In addition, fees are tailored according to an affordable sliding scale.
California Lawyers for the Arts encourages artists who are negotiating contracts to consider adding a clause calling for alternative dispute resolution methods in the event of a dispute. A contract might include the following provision: “All disputes arising out of this agreement shall be submitted to mediation through a program participating in Arts Resolution Services (or through a mutually selected mediation service).”
If an artist chooses the arbitration route, such language could specify the following:
All disputes arising out of this agreement shall be submitted to final and binding arbitration. The arbitrator shall be selected in accordance with the rules of Arts Arbitration and Mediation Services, a program of California Lawyers for the Arts. If such services are not available, the dispute shall be submitted to arbitration in accordance with the laws of the State of California. The arbitrator’s award shall be final, and judgment may be entered upon it by any court having jurisdiction thereof.
Alternatively, the artist may choose to use the American Arbitration Association, or another arbitration provider. If this is done, the artist might review this specific language to see if the arbitration provider would prefer to use other rules or state laws. For example, if the American Arbitration Association is selected, the language would be changed as follows: “All disputes arising under this Agreement shall be submitted to binding arbitration before the American Arbitration Association in the following location _______________________and settled in accordance with the rules of the American Arbitration Association.” The American Arbitration Association’s Web site (www.adr.org) provides additional information about its services.
Since it might be easier to go to small claims court for amounts within the small claims jurisdictional limit, the following clause might be added at the end of the arbitration provision: “Notwithstanding the foregoing, either party may refuse to arbitrate when the dispute is for a sum of less than $_____.” The amount of the small claims limit in the parties’ local jurisdiction would be inserted as the dollar amount. This should be decided on a case-by-case basis. If the small claims court in the artist’s area is quick and inexpensive, it may be preferable to sue there for any amount up to the maximum claim allowed in small claims court.
In some cases, artists have chosen to use mediation first, and if that is not successful, go to binding arbitration. Through this “med-arb” alternative, there is a remedy available if the problem is not resolved voluntarily through mediation.
Nor should any party fear that they will face a hostile arbitration panel. While arbitration is more like being in court than mediation, most arbitration procedures allow for a method by which both sides can avoid or remove arbitrators who they feel might be biased in some way. The savings on legal fees can be enormous. For amounts above the small claims court limit and less than $10,000, it is very difficult to bring a lawsuit because of the likelihood that lawyers’ fees will devour any damages that are won (or devour the litigants’ savings if the case is lost). An agreement to arbitrate ensures that justice can be pursued in disputes involving amounts in this problematic range.
Collections and Small Claims Court
Sending out an invoice is usually followed by payment. In some cases, however, the client either makes partial payment, places restrictions on the check used for payment, or refuses to pay at all. In such a situation, the artist should first determine whether the client has a legitimate grievance. If the grievance is legitimate, the amount billed in the invoice might be reduced. If the grievance is not legitimate or if the client is simply refusing to pay, the artist will have to take steps to collect the invoiced amount.
A client may sometimes pay a partial amount and mark the check “paid in full.” Or a client may write on the back of a check that the assignment was done as work for hire and signing the check is to serve as a signed contract for copyright purposes. The best course of action in such cases is to return the check and receive a check in full payment without any restrictive statements on it. If the artist is pressed for funds and reluctant to return the check, it would be wise to consult an attorney before crossing out anything or cashing the check. The client’s refusal to pay properly is a breach of contract that can be the basis for a lawsuit.
Before suing, of course, the artist will try to collect the money owed by persuasion and persistence. Suing will involve time, energy, and expense on the artist’s part, not to mention the almost certain loss of the client. Collection procedures begin gently, often by sending a second invoice stamped “Past due” and then sending a pleasant letter directing the attention of the client to the overdue invoice. This may be followed by a phone call asking for an explanation of the failure to pay. If it seems the client does not plan to pay, the artist can build pressure through repeated e-mails, letters, telephone calls, faxes, registered letters, threats to report the client to a credit bureau or to use a collection agency or attorney to collect, and finally turning the claim over to a collection agency or attorney. It is worth noting that a collection agency can do no more than the artist can, so such agencies (which charge 25 to 50 percent of the amount collected) should be used only when the artist is unwilling to devote time and energy to collections.
Instead of turning the claim over to a lawyer, the artist may choose to sue in small claims court. Such courts provide an avenue for the inexpensive resolution of disputes, especially when the artist is only seeking to collect amounts up to several thousand dollars. The amount that can be sued for in small claims court varies from locality to locality in a range of approximately $3,000 to $10,000. Since the maximum limit will often be more than the amount in dispute, small claims courts can be a helpful resource. A call to the local bar association or courthouse will provide the relevant information as to the location of the small claims court, which in turn can advise as to local procedures. Of course, going to small claims court will deprive the artist of the opportunity to be heard by his or her peers.
Retaining a Lawyer
If the artist decides to retain a lawyer to handle the case, page 2 may be consulted with respect to how to find an attorney who will be familiar with the issues that artists are likely to face.