There was a “Top 40” song, years ago in the last century, called “Signs”. A Canadian group called The Five Man Electrical Band sang this counter culture classic. The lyrics included:

… sign, sign.
Everywhere a sign.
Blockin’ out the scenery.
Breakin’ my mind.
Do this. Don’t do that.
Can’t you read the sign?

There are certain signs which when properly read, will prevent you from breakin’ your mind along with your bank account. Let us explain. All Federal Court files can be searched by (at least) an attorney from the comfort of his/her office. Most state and local courts are on line and you can search by the name of a “party”. Worse comes to worse, you can visit your local court(s) and run the name(s) of your candidates on the court’s computer and if you are not a lawyer, let a clerk know and he/she will be delighted to assist you. They prefer not to deal with lawyers and who can blame them? If you find that the subject of your litigation search has been sued about something business related – well that’s a sign that you should have a lawyer review the prior incidences of litigation to see if they might impact on you. The mere existence of pending or prior lawsuits alone may not be relevant to you. However…..it may.

1.  Considering hiring an agent?  Google that individual and his/her current and any prior company(s) and run a litigation search. Recently we were (twice) successful in having our photographer/client being awarded compensatory and punitive damages owing to the misappropriation of the photographers’ funds by their respective agent(s). In one case the court awarded $100,000 in punitive damages and in the other case $10,000.  Such awards were over and above the amounts of money which the photographers should have, but did not receive, from their respective agents. Judges rarely grant punitive damages and only when the acts of an agent are egregious. Agents or reps who historically have failed to promptly pay their photographers all monies due them and then spend that money on their own needs, are to be avoided. Such agents are unfortunately, not rare. Having such information in hand might have you change your mind about hiring such an agent.

2.  Clients or prospective clients who seem to get sued often for non-payments to vendors, landlords and service providers must also be scrutinized. Such a litigation history is a sign to at the very least, to get all of your money up front. The alternative may likely be that you will become yet another plaintiff suing a habitual deadbeat. You might be getting in at the tail end of a long line. Some companies use litigation as a tool to delay having to pay and/or as a strategy to pay less than what is justly due.

3.  Numerous claims of copyright infringement filed in the Federal Courts against a given person or company is about as big a “Stop” sign as you can have. If they have infringed before, they will likely infringe again.  Do you want to be the next victim?

4. Reputation is important. If there is a perception by and among many of your comrades that a particular client, agent, rep, lawyer or accountant should be avoided you should not simply ignore such talk as mindless gossip. It takes years to build a reputation and sometimes just one incident to kill it.

Do your homework.  Seek advice from those you trust including a lawyer or accountant and don’t ignore the signs of danger up ahead. Do your due diligence, Avoiding trouble is easier on the wallet than dealing with it.

PS: We got an excellent point recently from a reader and thought it would be better added here rather than in comments. They wrote to Ed asking:

“What about outstanding judgments?  I sued, won but there are several other ‘winners’ in front of me who are getting paid in dribs and drabs. I’m at the end of the list and may never see a dime.” 

An “outstanding” judgment means (in legalese) that the the loser (now debtor) has not yet paid any or all of the money a Court has ordered it to pay. So if you are about to consider doing business with a person or company which has judgments against it that have not been paid, run.  A potential client which has not complied with  judgments issued by a Court is certainly not likely to  pay you on time…or at all. Run like the wind.