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    8 Replies Latest reply on Aug 17, 2008 6:57 PM by Krystyn

    Contractor conundrum

    Krystyn Newbie

      My company is an LLC and I have no employees. I work from home only with contractors and consultants. One of my contractors has been building a custom product for one of my clients on several projects now that initially started in 2006 and continue until now. Now, the client wants to have a direct consulting project with my contractor leaving me out of the loop. Can they do that?
        • Re: Contractor conundrum
          LUCKIEST Guide
          Contractor conundrum, Yes and or No

          Everybody in business should have a Lawyer and an Accountant.
          Now is the time to talk to your lawyer.

          There is a lot you are NOT telling us. Have your Contractors and Consultants signed any papers
          or agreements with you. Also need to know the history and who does the billing.

          See your lawyer and or tell us more.

          Good luck, LUCKIEST
            • Re: Contractor conundrum
              Krystyn Newbie
              Well, thank you for your response, which only confirms what I have been thinking. Would you happen to know how one can find a good and decent lawyer who is also not expensive? I have been building my LLC by bootstrapping and so far have done most of the paperwork, including contracting agreements and accounting myself. I don't have a master agreement with my contractors, instead, my contractors and I sign an agreement at the begining of each project.
                • Re: Contractor conundrum
                  Yardbird Wayfarer

                  First to answer your question on how to find an attorney. Typically the state Bar association has a website that lists their members. Take a look; you may recognize some of the names. If they are listed by specialty, you want someone who specializes in Corporate or Business law. Ask other business associates who they use, check with the local Chamber of Commerce etc. Call several, see who has an initial free consultation (willing to meet and discuss your situation, don't expect free advice on resolution though), ask about rates and retainers. Retainers are normal, but can be significant in terms of ranges.

                   


                  Regarding your initial question, it is best to get an attorney to review your documents. You are viewed as a "middleman" and as such an added cost. So make sure all parties understand what you bring to the table and what you get paid for. Is it a commission from the main contract provider, introductions, research for the best contractor for the job, etc?

                   


                  Your agreements should preclude your contractors going direct after an introduction and if they do, they owe you an equivalent fee for any work they do. Fine, they want to take you out of the loop, you still get paid. After all, you are the person that brought them together in the first place. Non solicitation agreements should be part of your contract with your contractors and clients.

                   


                  Your existing documents may or may not help you in this specific instance, but good legal advice can definitely help protect you in the future. - Good Luck
                  1 of 1 people found this helpful
                  • Re: Contractor conundrum
                    LUCKIEST Guide
                    Contractor conundrum, Me again

                    Tell us more.
                    Where are you located?? Go to Members page and Share some more info about
                    you and your business besides Business Type: Engineering

                    Do you know about SCORE< SCORE is FREE and can suggest good lawyers
                    in your area (where ever that is). SCORE does not recommend, but can help.

                    Again LUCKIEST
                    1 of 1 people found this helpful
                • Re: Contractor conundrum
                  Milleisen Scout
                  Maybe I missed it, but what exactly do you do?

                  Have you expressed your concerns to your contractor? If you have a good working relationship, perhaps you can work it out without involving an attorney. If you give this contractor enough work, they may be receptive your concern of being cut out of the picture.

                  You should also consider the cost/benefit of bringing in an attorney vs. just letting it go. Not only the monetary costs, but you would not want to alienate a contractor that has close relationships with other contractors in the area over a small amount. Perhaps you could use this as a valuable learning experience, and create agreements going forward that make it very clear what will happen if this situation happens again (ie you get paid if you made the introduction).

                  Fully realizing that you have legal rights, it doesnt mean that suing is the best answer. We are all people, and if you can find a way to appeal on a personal level, that may be more effective than any threats from an attorney.
                  1 of 1 people found this helpful
                  • Re: Contractor conundrum
                    Krystyn Newbie

                     

                    Thank you for all your responses to my question. Here is an update you on the situation. I was able to change the customer's mind and they will not take me out just yet, but I do need to protect myself a little better in the future. My business is a high tech startup and my customer is a very large company with plenty of federal money. My contractors are mostly people like me, other startups and individuals with technological talents. Every project, we sign new agreements. For my customer, this is Q4 (quarter four) issue, when they have some leftover money and they need to spend it quickly or they'll lose it. Some of such money goes to my projects, which are high risk. The customer thought in this case that it would take less time to get the project moving and money assigned to it if he were to work directly on a consulting basis with my subcontractor.
                      • Re: Contractor conundrum
                        spn2008 Newbie

                        Hiring a lawyer for guidance is good. Other low cost options are doing the required analysis by yourself. Google around and you would find multiple ways. The problem you are running into is common in any business and has big impact especially in consulting world. As a business owner you need constantly show your consultants what value they get when engaged through your firm. My suggestion would be to use the legal process as a last resort as it is expensive and time consuming. I have seen quite a number of staffing companies run into this issues, especially the once who sit on their butt and just assume that they need to take a exhorbitant cut, since they placed the consultant. As an enterpruner you should always be selling to your customers as well as to your employees or consultants the value you or your firm provides. this my 2 cents...