Justin Barker, my producer at Creative Live, recently completed an instructional product video for a startup company in San Francisco. When this company refused to pay him and the contractors that he had hired, I was highly offended, not least because I know the strength of his work. 

Unfortunately, it’s all too common for creatives to get stuck with unpaid invoices and lame excuses from some clients; Justin is not alone. My experience is that this is happening to creative entrepreneurs more frequently than other entrepreneurs. 

Why is this? My theory is twofold:

  1. Creatives are not always clear enough with their clients about expectations and boundaries, nor do they define and state all of their business terms up front, with current contracts to back them up.
  2. Clients and patrons don’t appreciate the value of the product or service that they have commissioned or they have unrealistic expectations about the creative process. And sometimes, a project just goes south.

This deal gone bad not only put Justin at risk of losing a significant amount of money, it also cost him about two months of consternation because it actually threatened his future as a producer. Given everything he had to go through, I decided to ask him to join me in conversation so that he could share what he has learned and what he will do differently going forward. 

Now you might be saying, “But I’m an illustrator, a graphic designer, or a maker, what does this story have to do with me?” Have you ever poured a significant amount of time, resources, or materials into a creative project and not been paid? Are you concerned that this could happen?

Then stay with me, because Justin’s story is relevant to you.

Lesson #1: Mind the red flags 

Several months ago, one of Justin’s friends approached him about producing a video for the startup where she was working in San Francisco. “Red flags started flying from the very beginning,” says Justin. Justin sent through a detailed professional proposal with the cost of the production. For over a month he didn’t hear back from anyone.  

“It was an indication that this company was highly disorganized,” he says. If you are eager to make money, you might end up ignoring red flags that could actually cost you money. 

Justin was reminded of the fact that “the idea of making money and the reality of it are two different things.” Prospects should be professional in their communications. This means being prompt. Qualify your prospects by gauging their level of interest. You could be subjecting yourself to significant financial risk if you enter into business with flakes.

Lesson #2: Accurate, up-to-date contracts are key

From the start of his career as a producer, Justin has used solid contracts. His first ever contract contained a kill fee for $3000. In this instance, he did a significant amount of research as a producer, but then the project was cancelled; if he had not outlined a “kill fee” in his contract, chances are very high that he would never have been paid. 

Justin negotiated and lowered his price with this startup company. But he still felt that this was a fair deal, so the contract was signed and everyone was smiling. But Justin was confused about who actually signed the contract; it turned out the person who signed his contract was actually fired two days later. If the person who signed for the authorization of your payment is no longer able to authorize it, it is time to get your contract updated and pause work until then.

Lesson #3: Don’t work for free

Just a few days after the contract was signed, Justin’s client started trying to renegotiate the contract. His client wanted more rounds of edits without incurring any additional fees.

This was a big sign of trouble to come.

Lesson #4: Make sure you have payment information

If Justin had his client’s credit card information and authorization to charge it, he would have had a secondary back-up to recover payment and to easily charge for additional edits.

Lesson #5: Be your own (respectful) advocate

Justin remained respectful through out this process, and so was able to keep an ally within this company who advocated for him. Be firm and stand up for yourself but remain professional and respectful. Unfortunately, although Justin got paid, his internal advocate was fired.

Lesson #6: Don’t give up 

“Never throw up your hands and walk away,” says Justin. That negative energy and frustration will break your spirit, and that has a direct impact on your ability to create.

Lesson #7: Have a no-guarantee clause

Justin recommends including a no-guarantee clause in your contract and to talk through what that really means with your client. Justin breaks it down as, “If you don’t like what I create for you it doesn’t mean you don’t have to pay me.” The fact is that the creative process is not always predictable and the results are completely subjective.

Lesson #8: Make FAQs

I’m a big fan of maintaining a frequently asked questions (FAQ). It’s a great place to start the conversation and to set the expectations in a guided, poised, and confident way. An FAQ can lay the foundation for an effective and comprehensive contract.

Lesson #9: Get legal council

Invest in legal council; it could pay for itself many times over. Get a client agreement specifically tailored to your services. Make sure that your attorney has the experience and qualifications to address the specific laws relevant to your enterprise within your legal jurisdiction. Ask if they have worked with clients like you, get references, and contact those references.

Lesson #10: The support of friends and colleagues is invaluable 

Get support. Who says business isn’t personal? Not only is it personal, it can be very emotional. It was roller coaster ride for Justin, but he hung in there. 

How did Justin’s story pan out?

After being hired, Justin hired the contractors and talent and completed the job. Then, he handed over all the raw footage and the final edited video content before receiving final payment. After all of this, his client told him that they were not going to pay him.

At one point, he and a friend and I were supposed to meet for tea and Justin just wanted to stay in bed. In Justin’s mind, he had no leverage and he was completely overwhelmed. 

It wasn’t just that he wasn’t going to get paid—he also wasn’t going to be able to pay his contractors, leaving him feeling completely out of integrity. This situation looked like it could prevent him from working with his “A team” again. His ability to work as a producer was in jeopardy.

I insisted that he get out of bed and allow us to support him. “You’re only allowed to wallow for so long,” I said. I also reminded him that he owned the copyright to the work, and that the client did not. And that if this no-good client used any of the video content that Justin still technically owned, they would not only be in violation of their contract with him, they would be in violation of U.S. and international copyright law. Not a good move for a startup—San Francisco works in a surprisingly small town manner, and word gets around.

Although the client hired him to shoot their products, and use their copy and logo, none of that mattered because Justin owned the exclusive right to publish his video content; they didn’t. Meaning that if the client used any of Justin’s video content before paying him, not only would they be in breach of their contract with him, they would be acting in direct violation of U.S. and international copyright law. Copyright can only be transferred in writing, and this client did not have authorization until they paid him, as stated in his contract.

I suggested that he remind them of this reality, and to immediately register his copyright with the Library of Congress. Justin read the directions, paid $55, and experienced a huge shift in perspective. He realized that he was in control, and he went from feeling overwhelmed to empowered.

When he reminded this client of the copyright clause in their contract, Justin got his money soon after. In the end, Justin got paid, his contractors got paid, and his reputation was saved. Have you had a similar experience? How did you handle it?

AvatarAnn Rea

Ann Rea is a San Francisco based Artist and Entrepreneur. Her inspired business approach to selling her paintings have been featured on HGTV and the Good Life Project, in Fortune, and The Wine Enthusiast magazines, profiled in the book Career Renegade. Rea’s artistic talent is commended by American art icon, Wayne Thiebaud, and she has a growing list of collectors across North America and Europe. Learn more about Ann at ArtistsWhoTHRIVE.com and MAKINGArtMakingMONEY.com.