Tech Consulting Payment Disputes Descripción General

Tech consultants and software developers face unique payment challenges. Clients may dispute deliverables, reclamación scope changes, or simply refuse to pay. California law provides strong protections for creditors, including 10% prejudgment interest on contract debts and abogados' fees provisions that shift the cost of collection to the debtor.

Key Advantage for Tech Consultants California código civil Section 3289 allows 10% annual interest on unpaid contract debts from the date payment was due - significantly higher than most states.

Common tech consulting payment disputes include:

  • Milestone payment delays - Client claims deliverables don't meet specifications
  • Hourly rate disputes - Client challenges hours worked or rates charged
  • Retainer exhaustion - Work performed beyond retainer without client approval
  • Change order disputes - Client refuses to pay for scope changes
  • Final payment holdback - Client withholds final payment pending "fixes"

Types of Tech Consulting Payment Disputes

Milestone Non-Payment

Client received deliverables but refuses to release milestone payment, often citing minor issues or "incomplete" work that doesn't match original scope.

Disputed Hourly Charges

Time-and-materials contracts where client challenges hours logged, claims inefficiency, or disputes the billing rate applied.

Retainer Exhaustion

Initial retainer depleted but work continues at client's request. Client refuses to pay additional invoices beyond original retainer.

Change Order Disputes

Additional work requested during project but client claims it was part of original scope or refuses to pay change order rates.

Final Payment Holdback

Client withholds 10-20% final payment indefinitely, demanding endless revisions or "fixes" not in original contract.

Startup Equity Substitution

Client attempts to substitute equity or future revenue share instead of cash payment as originally agreed.

Software-Specific Payment Issues

Software consulting has unique payment challenges:

  • Bug vs. Feature disputes - Client claims bugs are preventing acceptance when they're actually requesting new features
  • Integration failures - Third-party API or system changes cause issues; client blames consultant
  • Performance benchmarks - Vague performance requirements lead to disputes over what constitutes "completion"
  • Security audit failures - Post-delivery security findings used to withhold payment
  • User acceptance testing (UAT) delays - Client delays testing indefinitely to avoid payment trigger

California Law on Contract Payment Disputes

código civil Section 3287(a) - Prejudgment Interest

A person who tiene derecho a recover daños certain, or capable of being made certain by calculation, may also recover interest from the date the right to daños vests.

código civil Section 3289(b) - 10% Interest Rate

If a contract does not stipulate a legal rate of interest, the rate is 10% per annum on contract debts after breach. This applies to unpaid consulting invoices from the date payment was due.

Key Legal Principles

Written Contract Prescripción

California Code of Civil Procedure Section 337 provides a 4-year prescripción for written contract claims. For oral contracts, CCP 339 allows only 2 años. This is why written consulting agreements are critical.

Abogados' Fees Provisions

California código civil Section 1717 makes abogados' fees provisions reciprocal - if your contract allows the prevailing party to recover abogados' fees, this applies regardless of which party initiates litigio. This incentivizes clients to pay rather than litigate.

Practice Tip Always include an abogados' fees provision in your consulting agreement. Under CCP 1717, even a one-sided provision becomes mutual, but an express mutual provision is clearer and more enforceable.

Account Stated Doctrine

Under California law, when a client receives an invoice and doesn't object within a reasonable time (typically 30 días), it becomes an "account stated" - essentially an admission of the debt. This doctrine strengthens your position significantly.

Legal Element Requirement Benefit
Written Contract Signed agreement with payment terms 4-year SOL, clear terms for enforcement
Invoices Sent Detailed invoices with due dates Establishes debt certainty for interest
No Timely Objection Client didn't dispute dentro de 30 días Account stated - admits the debt
Carta de Demanda Written demand with deadline Triggers interest, shows buena fe
Abogados' Fees Clause Contract provision for fees Recoverable legal costs if you sue

Prejudgment Interest Calculator

Calculate your potential recuperación including California's 10% prejudgment interest under código civil 3289(b).

Calculate Your Reclamación Value

$57,466
Estimated Total Reclamación Value
$50,000
Principal
$2,466
Interest
$5,000
Est. Abogados' Fees

Tech Consulting Collection Timeline

Follow this proven timeline to maximize your recuperación chances while preserving the business relationship where possible.

Día 1: Invoice Due Date Passes

Payment terms (Net 30, Net 15, etc.) expire. Interest begins accruing under código civil 3289 if contract specifies or defaults to 10%.

Day 7: Friendly Reminder

Enviar courteous email reminder with invoice attached. Reference payment terms and offer to discuss any concerns. Document all communications.

Day 14: Second Notice

More formal email noting the account is past due. Request immediate payment or explanation. If disputed, request written explanation of specific objections.

Day 21: Phone Call

Direct phone call to accounts payable and project stakeholder. Document call with follow-up email summarizing conversation and any commitments made.

Day 30: Formal Carta de Demanda

Enviar formal carta de demanda via correo certificado and email. Include interest calculation, mention abogados' fees provision, and set 10-day deadline for payment.

Day 45: Abogado Demand

Have abogado send demand on law firm letterhead. This significantly increases response rate. Include full reclamación calculation with interest.

Day 60+: Litigio or ADR

If no response, initiate demanda judicial or arbitraje per contract terms. Small claims tribunal available for claims under $12,500 ($6,250 for businesses).

Documentation is Critical Save all emails, texts, call logs, and written communications. California courts require clear evidencia of the debt and collection efforts. Screenshot any verbal approvals or commitments.

Sample Cartas de Demanda

Use these templates as starting points. Customize with specific facts, invoice numbers, and contract references.

Milestone Payment Demand

[YOUR NAME/COMPANY] [ADDRESS] [CITY, STATE ZIP] [DATE] VÍA CORREO CERTIFICADO Y CORREO ELECTRÓNICO [CLIENT NAME] [CLIENT ADDRESS] [CITY, STATE ZIP] Re: Demand for Payment - Past Due Invoice #[NUMBER] Amount Due: $[AMOUNT] plus interest Project: [PROJECT NAME] Dear [CLIENT NAME]: This letter constitutes formal demand for payment of the outstanding balance owed under our Consulting Agreement dated [DATE] (the "Agreement"). AMOUNT OWED Invoice #[NUMBER] dated [DATE] in the amount of $[AMOUNT] was due on [DUE DATE] per the payment terms specified in Section [X] of the Agreement. As of today's date, this invoice remains unpaid for [NUMBER] days. de conformidad con California código civil Section 3289(b), interest accrues at 10% per annum on this contract debt from the due date. As of [TODAY'S DATE], the amount owed including interest is: Principal: $[AMOUNT] Interest: $[INTEREST] TOTAL DUE: $[TOTAL] DELIVERABLES COMPLETED On [DATE], I delivered [DESCRIPTION OF MILESTONE DELIVERABLES] as specified in the Agreement's Statement of Work. Your team confirmed receipt and [ANY ACCEPTANCE/ACKNOWLEDGMENT]. The deliverables fully satisfy the requirements for Milestone [X] payment. DEMANDA I hereby demand payment of $[TOTAL] within ten (10) días hábiles of receipt of this letter. Please note that Section [X] of our Agreement provides that the prevailing party in any dispute shall recover reasonable abogados' fees and costs. If litigio becomes necessary, I will seek full recuperación of all amounts owed plus interest, abogados' fees, and tribunal costs as permitted by California law and our Agreement. Payment should be made via [PAYMENT METHOD] to: [PAYMENT DETAILS] Please contact me immediately at [PHONE/EMAIL] if you wish to discuss payment arrangements. Atentamente, [YOUR SIGNATURE] [YOUR NAME] [YOUR TITLE] cc: [COUNSEL, IF APPLICABLE] Anexos: Invoice #[NUMBER], Agreement excerpt

Disputed Invoice Response

[YOUR NAME/COMPANY] [ADDRESS] [DATE] VIA EMAIL AND correo certificado [CLIENT NAME] [CLIENT ADDRESS] Re: Response to Invoice Dispute - Invoice #[NUMBER] Original Amount: $[AMOUNT] su reclamoed Objections: [BRIEF SUMMARY] Dear [CLIENT NAME]: I received your communication dated [DATE] disputing Invoice #[NUMBER]. I have carefully reviewed your objections and respond as follows: YOUR OBJECTION: [STATE THEIR OBJECTION] MY RESPONSE: [Address each objection specifically with facts, contract references, and documentation] 1. Under Section [X] of our Agreement, [explain why their objection fails] 2. The deliverables provided on [DATE] included [LIST], which fully satisfy the specifications in Exhibit A, paragraph [X] 3. [Additional rebuttals as needed] ACCOUNT STATED I note that this is the first written objection to Invoice #[NUMBER], which was sent on [DATE] - over [X] weeks ago. Under California law, an account becomes "stated" when an invoice is rendered and the recipient fails to object within a reasonable time. Your belated objections do not excuse the obligation to pay. RESOLUTION OFFER Notwithstanding my position that the full amount is owed, I am willing to discuss a reasonable resolution to avoid litigio. Sin embargo, I require: 1. Immediate payment of the undisputed portion: $[AMOUNT] 2. Written identification of specific, objective criteria you reclamación were not met 3. A good-faith meeting dentro de 5 días hábiles to resolve remaining issues Absent agreement, I will proceed with collection including all interest and abogados' fees permitted under our Agreement and California law. Please respond by [DATE - 5 días hábiles]. Atentamente, [YOUR NAME]

Final Demand Before Litigio

[LAW FIRM LETTERHEAD] [DATE] VÍA CORREO CERTIFICADO CON ACUSE DE RECIBO AND EMAIL TO: [EMAIL] [CLIENT NAME] [CLIENT ADDRESS] Re: Final Demand - [YOUR NAME/COMPANY] v. [CLIENT] Total Amount Due: $[AMOUNT] (including interest) FINAL NOTICE BEFORE LEGAL ACTION Dear [CLIENT NAME]: This firm represents [YOUR NAME/COMPANY] regarding the collection of past-due amounts owed under your Consulting Agreement dated [DATE]. Despite multiple demands, you have failed to pay Invoice #[NUMBER] in the original amount of $[AMOUNT], which was due on [DATE]. The current amount owed, including prejudgment interest at 10% per annum de conformidad con California código civil Section 3289(b), is: Principal Amount: $[AMOUNT] Prejudgment Interest (as of today): $[INTEREST] CURRENT TOTAL: $[TOTAL] * Interest continues to accrue at $[DAILY RATE] per day FINAL DEMANDA This is your final opportunity to resolve this matter without litigio. We demand payment of $[TOTAL] within SEVEN (7) CALENDAR DAYS of the date of this letter. CONSEQUENCES OF NON-PAYMENT If payment is not received by [SPECIFIC DATE], we are authorized to: 1. File suit in [APPROPRIATE COURT] for incumplimiento de contrato 2. Seek the full principal amount plus all accrued interest 3. Recover abogados' fees and costs de conformidad con the Agreement and código civil Section 1717 4. Record any judgment obtained, which will affect your business credit Our client has authorized us to accept payment via wire transfer to avoid further escalation: Bank: [BANK NAME] Account: [ACCOUNT] Routing: [ROUTING] Reference: [YOUR NAME] - Invoice #[NUMBER] Please confirm receipt of this letter and your intentions within 48 hours. Muy atentamente, [ATTORNEY NAME] Abogado for [YOUR NAME/COMPANY] cc: Client

Lista de Evidencias for Payment Disputes

Gather these documents before sending carta de demandas or initiating legal action.

Documentos del Contrato

  • Signed consulting agreement (all pages including exhibits)
  • Statement of work (SOW) with deliverable specifications
  • Any amendments or change orders
  • Master services agreement (MSA) if applicable
  • Email chains approving scope changes

Invoicing Records

  • All invoices sent (with dates and delivery confirmation)
  • Invoice payment terms from contract
  • Any partial payments received
  • Invoice acknowledgment emails from client
  • Accounting records showing aging

Deliverable Evidencia

  • Code repositories with commit history and timestamps
  • Deployment logs showing go-live dates
  • Client sign-off emails or acceptance documents
  • Screenshots of delivered systems/features
  • Testing/QA reports and client feedback

Communication Records

  • All emails regarding the project and payments
  • Slack/Teams messages (export full history)
  • Meeting notes and recorded calls (if permitted)
  • Text messages with timestamps
  • Project management tool history (Jira, Asana, etc.)
Pro Tip: Document Everything Now Export and preserve all communications before the relationship sours further. Clients have been known to delete Slack channels or revoke system access when disputes arise.

Common Client Defenses & Responses

Anticipate these defenses and prepare your responses.

"The deliverables don't meet specifications"

Your response: Request specific, written identification of which specification was not met. Reference the acceptance criteria in the SOW. If they accepted prior milestones without objection, that establishes the standard. Point out any "bug vs. feature" confusion.

"We never approved those hours"

Your response: Show email approvals, meeting notes, or project management records authorizing the work. Reference any "time and materials" provisions that don't require pre-approval. Demonstrate the work was requested and beneficial.

"The work was already included in the original scope"

Your response: Compare the original SOW line-by-line with the additional work performed. Show the change request communications. If they verbally approved changes without a formal CO, that's still binding under California law.

"We're disputing the quality"

Your response: Quality disputes don't excuse payment for work performed. They may have a separate reclamación, but can't unilaterally withhold payment. Offer to cure specific, documented defects while demanding payment for completed work.

"Our company is having cash flow problems"

Your response: Cash flow doesn't excuse contractual obligations. Offer a payment plan with interest, but get it in writing with personal guarantees if the company is distressed. Consider UCC filing or other security.

"We're unhappy with the project manager/consultant"

Your response: Dissatisfaction with personnel doesn't excuse payment for work performed. Address any legitimate performance concerns separately from the payment obligation.

Cuándo Contratar a Collection Abogado

Collecting unpaid consulting fees requires balancing cost against recuperación. Here's when self-collection works versus when professional help is needed.

✅ Puede Manejarlo Usted Mismo Cuando:

  • Invoice under $10,000 with clear documentation
  • Client acknowledges the debt
  • Small claims tribunal is an option
  • Client is solvent and located in California
  • No dispute about scope or quality of work

⚠️ Contrate un Abogado Cuando:

  • Unpaid invoices exceed $25,000
  • Client disputes scope or quality of deliverables
  • Client is out of state or overseas
  • Contract has arbitraje or venue selection clauses
  • Company may be insolvent or judgment-proof
  • Personal guarantees may be needed
  • Client has counterclaims or threatens litigio
  • Client has engaged legal counsel

📊 ¿No Está Seguro Si Necesita un Abogado?

Tech consulting payment disputes often require weighing collection costs against recuperación. Take our free assessment to determine the best approach for your situation.

Tomar Evaluación Gratuita →

Preguntas Frecuentes

Sí. Under California law, non-payment is a material breach that excuses further performance. Sin embargo, review your contract for any "pay when paid" or continuation provisions. Best practice: Enviar aviso por escrito that work will cease if payment isn't received by a specific date, then follow through. Document everything.

You can still recover under oral contract or quantum meruit (reasonable value of services). Sin embargo, the prescripción is only 2 años (vs. 4 for written contracts), and proving terms is harder. Gather all emails, texts, and documents that evidencia the agreement. Interest may be limited to 7% instead of 10%.

Small claims is efficient for claims up to $12,500 (individuals) or $6,250 (businesses). No abogados allowed, which can be an advantage. Sin embargo, for larger tech consulting disputes, you'll need superior tribunal or arbitraje. Consider whether your contract requires arbitraje.

Under código civil 3289(b), interest accrues at 10% per annum on contract debts from the date payment was due. Calculate: (Principal × 0.10 × Days Past Due) ÷ 365. For a $50,000 invoice 180 días past due: $50,000 × 0.10 × 180 ÷ 365 = $2,466 interest. This continues until paid.

Sí, if your contract has an abogados' fees provision. Under código civil 1717, even a one-sided provision (only benefiting one party) becomes mutual. Without a contract provision, California generally follows the "American Rule" where each side pays their own fees, with limited exceptions.

File a proof of reclamación immediately when you receive bankruptcy notice. Your reclamación is likely "unsecured" unless you have a security interest. Consider whether any payments in the 90 días before filing might be preferential (recoverable by the trustee). Consult a bankruptcy abogado for significant amounts.

This depends on your contract. If it says ownership transfers upon delivery (regardless of payment), withholding may be breach. If ownership transfers upon payment, you have more leverage. Review IP provisions carefully. Also consider whether you have a contratista's lien right under código civil 3110+.

For written contracts: 4 año(s) desde breach (CCP 337). For oral contracts: 2 años (CCP 339). The clock typically starts when payment was due. Partial payments or written acknowledgments can restart the clock. Don't wait - file suit before the deadline approaches.