a client paid half my fee and then disappeared before giving me any work

A reader writes:

I occasionally offer consulting/advisory per my highly specialized knowledge for nonprofits. One particular one ended—well, not sure “ended” is the right word, exactly—in a most unusual way that I was at a loss to understand.

I was asked to do, let’s say, international research on teapots among (and only among) a specific group of emerging teapot makers, in a specific set list of countries. These “subjects” are not individuals known to me (not by name or by office location,) and the client explained, in person and in my written contract, that she would be providing me with a list of those shortly, once they determined the parameters. All of these would be in foreign countries, and I was told that I might need to travel to some of them to so my work “in the field,” as well as from my base here.

They paid me half my contract fee up front, to facilitate me setting up certain aspects of the project immediately. Then, I waited for the list to be sent so I could begin immediately. The project was to take no more than 3 months total (which is all I had available before the next big gig, as I made clear to the client.) So I waited. And waited and waited. Initially, the client would send a couple quick texts, to say they were “almost ready” with the info. I was at a loss as to what to do in the meantime. I would follow up and check in every Monday, reminding them that I could not even begin without the crucial info they had so far failed to produce.

Far be it for me to complain about being paid to do nothing, but I pride myself on my work and had been looking forward very much to this project getting underway. Also, there’s the fact that the only way I’d get the second half of my fee, of course, would be when it all was completed. I followed up by phone and by email each week, and only once did the client respond. She mentioned that she was coming to my city for some special event and we should meet to go over things then, enabling me thereafter to finally start. Well, I waited and waited to hear from her upon arrival, but heard nothing. I wasn’t even sure of the dates. Meanwhile, through a mutual acquaintance’s social media, I saw a photo of the client in my city with her family. She never emailed or called before or while there, and so our meet-up never happened.

Three months came and went. I never got even the preliminary information and data from the client and so never started the project at all. Meanwhile, I had shared with colleagues in my field that I was working on this, at the beginning, and had to deflect questions about it, because I had no answer for myself even, let alone anyone else. After 3 months of nothing, I finally had to start on my next project elsewhere, but even then I always expected at some point to hear from the client. I never did. This person is no longer with the organization and to this day, I have no idea what was going on. I ended up being paid for work never done, and of course never was paid the rest of the contract since I couldn’t do anything at all. (And no, nobody else was ever contracted to do this work for them thereafter, either. The project just never got done.) Hands down, the most bizarre experience I’ve had yet!

Have you ever come across this kind of thing? What on earth could I have done differently and what should I ever, if anything, say about this if asked? I’m not in the same city as the former client or her old organization, but we do have colleagues and acquaintances in common.

Projects that never come to fruition aren’t uncommon among freelancers, but they’re certainly a lot less common when half the fee has already been paid.

And you were smart to get half the fee up-front! Otherwise you would have ended up reserving that time for her, not taking on other work during that period, and having nothing to show for it at the end. So good for you for handling that piece of it as you did.

The only thing I can think of that you could have done differently is that there was probably a point in there where it would have made sense to say, “So that I’m not losing income by not filling this space with other work, if we don’t launch by next week, I’ll need to push the full project back until X.”

As for what to tell others about what happened to the project, I don’t think you need to feel embarrassed about that! You can simply say, “It ended up never getting off the ground, unfortunately.” In most cases, people won’t be all that interested in the details and are likely to assume it fell through for reasons that had nothing to do with you — which, again, isn’t terribly uncommon and sounds like was indeed the case here.

{ 28 comments… read them below }

    1. some1

      Hopefully her contact spells that out. When I worked in publishing, my company typically didn’t not go after fees already paid freelancers if we killed the project.

    2. AMG

      That’s what I am wondering. Part of me says that OP made a good faith effort to be available for the work and it’s the company’s loss because they charged someone with mismanaging funds. But the other part of me feels that the company would want their money back if it were fully aware of the situation. Curious about your thoughts, Alison.

      1. Ask a Manager Post author

        If she held the time for them and turned down other work because of their promises to her, and made a good-faith effort to keep the project moving (which she did), I think she can ethically keep the money.

      2. Student

        This isn’t like a retail transaction. This is a service transaction. Maybe think about it more like renting an apartment.

        The company bought the OP’s time. At the point where it was clear that nothing useful was going to come of the interaction, the company still owes the OP for the time they’ve taken up. You could maybe make an argument that they could request a refund for 50% of the fee if only 50% of the three-month time period had expired. Even then, I think the OP would be fully justified in keeping the whole fee, as it was an advance reservation for time and the OP has lost opportunities to fill that time with other work (and the company had opportunities to negotiate contract cancellation and refund possibilities during initial negotiations). If you suddenly leave an apartment with 10 months left on the lease, you’re probably on the hook for 1-3 months (but shouldn’t be on the hook for the full 10 months) of rent to compensate the apartment complex for not being able to lease it in advance.

        It’s not as if the company bought 1000 teapots, only used 500 of them, and then wants to return the remaining 500. The OP’s time was spent long ago.

        1. Josh S

          I think the OP could also make one last offer to the Organization to use the pre-payment as a partial payment for running that project in the future.

          If it was 50% paid up front, then take $X of that as the fee for reserving the time and offer to use the rest as prepayment for the project. That way the Organization’s funds aren’t lost to a black hole, OP gets some money for the non-work s/he did, and the project gets done to everyone’s benefit.

          Completely depends on how that relationship is though.

    3. OP

      I really hope not! It’s been a few years since this happened. It’d be pretty challenging for me now to suddenly come up with $$$$ to “refund” them. As far as my contract, it specified that I’d be paid half up front, to facilitate me setting up several aspects to get things going (which I did do, and did document well.) But then the rest would be paid “upon completion.”

      1. Tim

        I see this thread is from quite a while back, but I just stumbled on this because I fell into a similar situation except it is even more strange! In my case the client paid the full amount up front (in the contract I specified half up front, half to receive the final delivery) because they said that is how they process funds. I was thinking that was fine, but now it’s especially weird because my contract doesn’t address what should happen in the situation the way it played out. I have to pay taxes on this money, so it’s even more strange if I sit on the money and at some indefinite future point have to return it… And I feel it’s worth noting this is not a small project which makes it even more significant.
        It is so weird… Any thoughts or advice is greatly appreciated. Thanks!

  1. the_scientist

    Not that this is really relevant to the OP but because I like internet speculating, here is what may have happened:

    The OP mentions that this is a non-profit organization, which may be grant-funded, and as everyone working in the grant-driven world knows, all grants have different stipulations attached to them with respect to when and how money can be spent. For example, for some multi-year grants, funds can roll over from year-to-year; in others, you have to spend the allotted yearly amount by the end of the year or return it (i.e. the use-it-or-lose it method). Sometimes grants have hard and fast end dates, some do not. I currently work for a grant with a hard and fast end date and a use it or lose it policy, and in our first year, when we were understaffed, contracts were taking forever to get signed, we were getting datasharing agreements in place, etc., we had to kind of rush to spend the rest of our annual budget near the end of the fiscal year, and it led to some disorganized decision making.
    So, if I had to guess….this project was probably cooked up as an attempt to spend out some grant money before a deadline, and the organization was too disorganized or came up with a better idea later and did a poor job at following up with the OP (probably because they didn’t want to admit that they’d turned their attention elsewhere?).

  2. Robin

    OP, it sounds like you did everything right. Sometimes these things just don’t work out. It’s pretty difficult to say why from the outside — there are a lot of possible explanations, almost all of them have nothing to do with you. Internal disorganization was probably a factor, staff turnover might have been involved. Who knows. The right thing would have been for them to let you know what was going on, but it’s unfortunately common for that to not happen. These are the kinds of risks you sometimes take on as a consultant. If people ask, I agree with Alison to just keep it vague — “it didn’t work out” “timing wasn’t right” etc. Honestly, in your case, I would have been happy I got paid at all.

    1. Josh S

      OK, so not entirely “Free” because you were essentially paid to be on retainer and book your time for a project that could have been used to take on some other work.

      That said, I would reach out to your highest-level contact at the organization in question, and give them a heads up about what happened. Perhaps something along the lines of, “Hi _____. I was contracted by C. Shire Cat for the Teapot Project back in June. Your organization paid me a portion of the contracted fee in advance, but the project itself never got off the ground. It was work I was excited to do–something that seemed interesting/exciting to me, a great use of my skills, and that would provide value to Organization.
      “The pre-payment was a way to reserve my time for the 3 months from June-August, so I am not able to offer a refund. But, if you decide that the Teapot Project is still something you would like to pursue, I’d be able to use those funds as partial payment for the project, if we launch the project by DATE.”

      The ball is in their court at that point, you’ve informed them that you have their money (essentially for free!), that you haven’t vanished with it, and that you’re still open/eager to doing the work. It absolves you of any guilt you might have surrounding keeping money for nothing, keeps the avenues open for doing a fun-sounding project –not to mention future work with Organization!–, and lets them decide whether the sunk costs are worth swallowing or not.

      But…FREE MONEY!

      1. Robin

        Hmm… I might only do this if you have a sense that High Level Contact would react well to this, and there is good reason to believe that this is still something the nonprofit wants. Otherwise I think you might be opening a can of worms.

        1. AdAgencyChick

          Me too, I wouldn’t do it. I think this might make higher-up decide to ask for the money back, since my guess is this was Departed Client’s pet project that no one else cares about.

          Also, OP already reserved time for the project that ended up being wasted. I’d consider that money a “kill fee” that pays for the fact that OP could not use that time making money working for other clients.

          1. OP

            I definitely see it (in hindsight) as having been a retainer for my time—which I definitely would have been unable to offer to other clients, particularly as there was to have been travel involved and I would not have been able to advise any other clients about my exact availability.

      2. OP

        In this case, the contact WAS the highest-lever person there. I didn’t feel it appropriate to contact anyone junior to her about this. Also, again, this was a few years ago, so at this point would be odd I’m sure for a new person there, who didn’t know the old boss and doesn’t know me, to get such a message.

        1. OP

          Of course, I was only seeking insights on what to do in such case, in general. Thanks to AAM and other readers for the wisdom!

  3. MR

    This is why it is important for consultants to obtain half of the money up front before they do any work.

    Given this happened years ago, your conscious should be clear and not worry about this unless you happen to encounter them again. If you do encounter any of these folks again, be prepared for something similar to happen and again, make sure you get at least half of your money up front.

  4. Lisa

    Wow, this has happened to me, too! Twice now! The client is eager to start, everything is in order, they pay half UP FRONT and then disappear when the first working session comes around. No amount of email or phone calls gets a response. It’s free money — but I don’t like that, because I knew I could help these clients and was very eager to do so! I personally cannot imagine paying a considerable amount for a consultant’s time without ever using it. I actually now charge the full amount up front so that there’s even more incentive for them to complete the project.

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