If my client doesn't have the funds to pay me, he may have trouble finding someone else to do the work. He might get lucky with his neighbor's dentist's kid, or he could end up with his site even worse off.
Regarding liability for legal action, I have a clause in my contract that essentially says, "I own everything and retain full rights to it until you pay me in full. If you don't pay me as per the terms of this contract, I have the right to temporarily disable the stuff you haven't paid for, and you hereby waive all rights to collect damages of any kind that may result from the removal of content." Sure, a good lawyer could challenge that, but I think it gives me a pretty solid legal foundation to stand on.
Yup. Lesson learned. I did start pushing aggressively to get paid when things were 60-90 days late. The client promised things and delayed, saying he was expecting a big deal to come through soon and then he could pay me. I realize now he was just trying to get away with not paying me for as long as possible. I suggested he do that with his mortgage company and see what happens.
I did send a final reminder back in September, and we worked out a payment plan (because I knew there was no way he was going to pay me in full). He did pay half the outstanding balance in December and was supposed to pay the other have by the end of January. I did politely threaten to use the small claims court process, but I don't think it scared him too much. I have a trail of e-mail evidence clearly showing the client's acknowledgment of the debt and his promise to pay. I'm pretty sure I would win in court, but the collecting part is the problem. If he had the resources, I do think he would pay me. But his company is in trouble, and I don't think a judgment against him would bother him. A collection agency would do a good job harassing him, but I doubt they'd ever collect.
I am learning a lot from this experience, and am making changes. Now, I don't start any project before I get a 50% deposit up front. I've got a net 30 payment system in place, with proper finance charges for late payments. And I'm trying to do a better job at getting well-funded clients who have adequate budgets for the projects they hire me to do.
I guess the gist of my original post is finding a way to "enforce" in a technical way my "property rights" namely that I own the web pages I produce until the client pays me for them. Car dealers / finance companies can repossess a car, and mortgage lenders / banks can foreclose and repossess a house. I'm looking for a way for web designers / developers to repossess a web site!