[ksmiley]

An additional upside for them is, it sets an example. If MegaCorp gains a reputation for being revenge-driven life ruiners, then future contractors will know the stakes are serious, and they'll be less likely to violate their contracts.

Not that I consider that strategy cost-effective in general. For one thing, it's bad PR. (Unless you're some kind of wizard that can spin it like, "we're principled and don't let bullies walk all over us. That's why we hold people to their promises")

[yackob03]

They will also be less likely to attract future contractors.

[ksmiley]

Playing the devil's advocate here: if contractors self-select themselves out of being hired because they're not sure they can get the job done, then all the better! The remaining applicant pool will be stronger on average.

[slantyyz]

This is only true if the job market is a seller's market. If it's a buyer's market, it only prevents the smarter ones from wanting to work with that type of company.