80. What Can You Do Legally if Your Client Quits?

Sam Vander Wielen: Hey there, and welcome back to another episode of Sam’s Sidebar, where I tackle your essential legal questions about online business in ten minutes or less. This week, you’ll get a hot legal tip about what to do if a client quits or you want to fire them.

So, this week’s question came from our listener, Angie. Angie said, “I had my first coaching client quit just over halfway through my program. She did not do the work. However, I did. A lot of it. She was one of my more needy clients. So much of our interactions were conversations and encouragement through texts. My question is this, since she quit or had I fired her, I think she knew it was coming because she broke up with me first, do I reimburse her for the latter half of the program? Or if she refuses to make her last few payments – she’s on a payment plan – what can I do?”

Okay. Angie, first and foremost, I’m so sorry that this happened. I wish I could give you a big hug because I just really want to normalize this. And every time I talk about clients not paying people or people not paying your invoices, I always want you to know how common this is. I don’t mean it’s happening all the time, but it at least happens once to everyone. It happens at some point to everybody in business, me included.

So, not all client relationships go smoothly. And every single coach, every friend that I’ve had, has had someone “quit”. I also wanted to normalize this idea that, like, halfway through your coaching program, this person was like, “Thanks. I don’t need you anymore.” That is so painful when it happens and it’s so normal. So, I just want you to know both of those things.

I think that it’s important for us to talk about this more because I don’t ever want somebody taking it personally. Instead, I want you to kind of shift into what can I do about this. I mean, first of all, knowing what your rights are, which is what we’ll talk about today, but also like what can you put in place in the future so that hopefully this doesn’t happen again.

So, here’s the good part, I guess. The good part about being your own boss is that you get to decide how to handle stuff like this. So, of course, there are certain legal rights and obligations that you have. But when it comes to refunds, for example, if it feels better for you to release this person and move on, that’s okay. That is totally okay.

Yes, I’m a lawyer. Yes, I write refund policies and all this kind of stuff. Yes, I do go after people who don’t pay sometimes and all that kind of stuff. But I’ve also chosen not to, and I’ve also encouraged friends or colleagues not to as well sometimes.

So, just like it’s okay for you to stand your ground and say no refunds – because that’s totally fine, too – as long as you have the right contract with that language in it – which all of my contract templates do – you also have the right to refund that remaining time.

So, if you had fired her though, Angie, if you had fired her, a refund of her remaining time would 100 percent be the right thing to do and the legal requirement. So, if you’re three months into a six month coaching package with a client and you cancel on them, you’re going to have to give them the remaining money back. You’re not going to get to keep that.

But since she quit, the client quit in this case, you can decide whether or not you’d like to enforce that contract language or not. So, if she doesn’t pay her remaining payments and then you’ve tried collecting them from her yourself, you could explore collections if you wanted to, either through an attorney – not me – or a private collections company. There are even online companies for this now.

When you submit somebody’s failure to pay you or pay you on time to collections, you’ll need a legitimate contract to prove that the person agreed to pay that amount on that date. So, if you use PayPal or something similar to process people’s payments, I have seen complaining clients be successful these days against coaches in issuing chargeback threats. That’s where they complain to PayPal that they want a refund even though they know they signed a contract saying no. Typically, if the service hasn’t been offered yet, then PayPal will actually give them the refund.

So, I get angry comments from people on both sides of this issue. Like, “How dare you suggest to send good people to collections?” Or like, “You have us have refund policies but then say it’s okay not to enforce them? What a joke.” Honestly, the deal is I find my role here, in general, to give you the buffet of options and then you can decide what to do. It’s not about me telling you what to do. And the truth is that there’s not a right or wrong answer.

The answer in life is not always to go to somebody’s throat. You know, that’s not always the answer. And sometimes it is. Sometimes you are justified to do that too – well, I shouldn’t even say that. You are justified to do whatever you want to do. But sometimes one of those options makes more sense for you than the other.

The point is to make decisions that are for you and not based on what you think you should do or make a decision because you don’t think you’re allowed to do it. So, that’s where I really just see my role here is educating you for what the options are, and then you can decide. And that just starts with knowing what your rights are. I think it’s really empowering to walk away too.

To me, the best approach in general is prevention. So, having legally legit contracts that are in place early on will chase away, try it before they buy it clients. And that same contract will be what you’ll use later to either try to collect the payment yourself or submit it to collections because you’re going to need it, like I said.

All right. So, I hope that my answer to Angie’s question was helpful. If you need to grab a last minute legal template, like a contract or a website policy that you can write off – it’s a write off if anybody watches Schitt’s Creek before Q4 – you can visit my legal template shop on my website, samvanderwielen.com/shop. And keep in mind that when you decide to upgrade to the Ultimate Bundle, I credit the cost of any template that you’ve purchased from me that’s already included in the Ultimate Bundle. So, you have that fun thing coming for you.

All right. Thank you so much for joining me for another episode of Sam’s Sidebar. Check out the show notes below for related blog posts, resources, and my full episodes of On Your Terms, which are every single Monday.

And as always, if you have a question for me that you want answered on a future episode, you can submit it using the link for Sam’s Sidebar Q&A below. Thank you so much. I’ll chat with you next week.

Thanks so much for listening to the On Your Terms podcast. Make sure to follow on Apple Podcasts, Spotify, or wherever you like to listen to podcasts. You can also check out all of our podcast episodes, show notes, links, and more at samvanderwielen.com/podcast.

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Just remember that although I am a attorney, I am not your attorney and I am not offering you legal advice in today’s episode. This episode and all of my episodes are informational and educational only. It is not a substitute for seeking out your own advice from your own lawyer. And please keep in mind that I can’t offer you legal advice. I don’t ever offer any legal services. But I think I offer some pretty good information.