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I'm working as a freelancer. My last job was done remotely, halfway around the planet. That has some major communication issues. This combined with with other issues in the workplace led to the contract being terminated early. My client refused to pay, and in the end I had to get a lawyer to get half of it.

After this I took some time off to work on my own projects, and now I'm looking for new contracts.

But recruiters I speak to ask for references, and usually the last workplace or 3. Without knowing the context, I would not blame them for thinking twice when I tell them "We had to quit that early because we couldn't communicate, and after this I sent my lawyer to them. But sure, here's their number".

Can I tell them about this situation, or should I refer them to my employer before this bad one, or just decline?

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"I am not offering you my most recent client as a reference because we had a contract dispute, which resulted in my getting paid only part of the money they owed me, and even then only after I sent a lawyer after them" And let the recruiters draw their own conclusions(*)

If you are a freelancer, the only thing that's more common than wage disputes is getting cheated out of wages. For a recruiter to insist that you get a reference from a client with whom you just had a wage dispute is like adding insult to injury. Some clients are bottom feeders and unfortunately, you are more likely to run into them as as a freelancer. I'd say, don't mention the client at all, if you can.

(*) From the New York Times: "Another problem was getting paid. Some companies, like Time Inc., actually charge freelancers penalties if they request payment within 25 days. Freelancers Union found that 77 percent of its members had been cheated by a client during their careers and 40 percent had had trouble getting paid in 2009. The average wage loss was $6,000."

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You're almost certainly going to have to give some sort of explanation - if they're asking for a reference for your previous employer and you give them a reference from the last-but-one, the first question you're going to get asked is "why not the most recent one?"

The way I'd approach this would be to tell the truth - but not necessarily the whole truth in the first instance. "That project didn't work out so well - can we skip over that one and go with these excellent references from the other employers?" If I'm hiring a contractor, it's not going to get you thrown out instantly if there's one job that's gone wrong, so long as you can show it was a one-off, and ideally that you've learnt from the process and won't be hitting the same problems when working with me.

Similarly, if anyone does start pushing for details on the bad project, tell the truth but you don't necessarily need to start with "I hired a lawyer". Try something like "There were some major difficulties, but we did come to a resolution which resulted in me receiving a partial payment for the project. However, we wouldn't work with each other again so I don't think that a reference from them would be a true reflection of my abilities on another project".

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