Firms Get Tough about Non-Payment

By Shell, Adam | Public Relations Journal, March 1990 | Go to article overview

Firms Get Tough about Non-Payment


Shell, Adam, Public Relations Journal


Firms get tough about non-payment

Stronger precautions, willingness to sue sends clear message to delinquent clients

An increasing number of public relations firms, burned in recent years by clients who refuse to pay their bills, are taking steps to protect themselves from bad debt. Firm executives say they've learned the hard way that not all clients respect a written contract, and are now requiring clients to pay fees and expenses in advance, tightening up the language in contracts, keeping closer tabs on accounts receivable, and performing more thorough financial checks on prospective clients. Many, in fact, say they now operate by a new philosophy: "No pay, no work."

"You've got to watch your receivables very carefully," says Alex Stanton, APR, president of New York-based Dorf & Stanton Communications, whose firm recently sued a former client charging non-payment of nearly $50,000 in fees. "Contracts are really only valuable if you're dealing with honorable people."

Lawsuits on the rise

Non-payment for public relations services is an ongoing problem, practitioners say, although not rampant or grievous enough to put many firms out of business. One source interviewed by PRJ, however, citing an extreme case, said that a friend who had worked in public relations for 15 years left the field recently "after being burned one time too many."

As a result, a growing number of firms are now taking a more aggressive stance in their efforts to recover outstanding fees. Lawsuits against former clients, for example, now appear to be on the rise. Indeed, firms have become less reluctant to make such disputes public.

In November 1989, for example, "Jack O'Dwyer's Newsletter" reported that six public relations firms were involved in litigation with clients who refused to pay bills ranging from $6,000 to $107,500. But many firms, especially small ones, say that legal fees are far too high to make filing a lawsuit worthwhile. While some firm executives stress that they turn to the courts not only to recover money, but also on principle, most admit that they prefer to settle out of court.

"This is something we do as a last resort," says David Braff, president of New York-based Braff & Co., who recently filed a lawsuit against Heublein Inc., charging the Farmington, Connecticut-based company with not paying $30,641 for marketing and public relations services for "Tropicfreezer," a frozen alcoholic drink. "You have to let clients know that you're not in a position to let this type of thing go by. And from an agency point of view, it's important to know that we have teeth." Braff refused to comment specifically on the Heublein case. Steve Goldstein, a Heublein spokesperson, confirmed that a lawsuit had been filed, but provided few details. "Because litigation is pending," he said, "I prefer not to get into it." Goldstein alleges, however, that no written contract was signed and that the "program proposed was never realized."

Why firms sue

Although most public relations firms and clients currently involved in litigation refused to comment on the circumstances leading up to their legal battles, a few outlined their general contentions:

* The principal of a two-person firm, speaking on condition of anonymity, says he agreed to a one-year contract with a financial company to promote a new penny stock. The company, he says, sought placements in major business publications, such as The Wall Street Journal, despite his repeated warnings that it would be extremely difficult. In the end, placements were made in "high-profile" trades, including a cover story in a penny stock newspaper, the firm owner reports. Six months later, the client's seed money dried up and payments to the firm stopped. The firm sued the penny stock company for $5,000 in back fees.

* Dorf & Stanton's suit concerns a 12-month contract that it is signed with Books-By-Wire International, Fort Lauderdale, to promote the launch of the start-up company's innovative venture: delivering books as gifts, following the floral industry's example. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Firms Get Tough about Non-Payment
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.