Top five contract negotiation tips for creative freelancers
As commercial lawyers, one thing we try to avoid is a legal clause getting in the way of a business transaction – as we know that both creative industry freelancers and their clients ultimately want to get on with the business of working with each other, writes Lily Morrison, legal consultant at Gerrish Legal.
We’ve said it before but it bears repeating -- contracts exist in order to protect both parties and should be a useful and indispensable tool to be used during the creation of business relationships.
Feel like you can’t get insistent about clauses? You’re not alone...
That said, we understand that sometimes it might feel intimidating to push for some specific wording if your prospective client or contracting partner seems hesitant, or to refuse the inclusion of a clause that another party, like your customer, is keen on. The last thing you want to do is ruin an otherwise good relationship!
We have already explored the most important parts of a contract, what you should ensure is included and what you should avoid. The next step is, how to do all this while maintaining a good working-relationship with your clients! So, here are our top 5 tips for negotiating a contract as a self-employed person or trader.
1. Make sure you understand what you’re asking for
There is lots of guidance online about the right wording to push for as a freelancer. However, before asking for this wording to be inserted, make sure you understand the effect it will have on your contract.
Contracts are very personal, and it may well be that the wording you are asking for is dealt with in another section of the contract, or is even irrelevant. For example, it is useless for you to argue for an exclusive license of the contracting partners’ intellectual property (such as your customer’s IP), if you will not actually use any of its intellectual property during the project!
Previously to FreelanceUK readers, we have stressed that contract negotiation can be your chance to demonstrate to the other side that you take your business seriously and understand the industry that you work in. However, this impression will be destroyed if it is clear that you do not understand the effect of the wording that you are requesting.
If you are ever in any doubt about wording in a contract, we would always urge you to get independent legal advice.
2. Be reasonable
Being unreasonable during contract negotiations is not only bad business sense but also bad legal sense!
While it might be tempting to push to only protect yourself under the contract in the hopes that the party you are working with will not realise the contract is one-sided, they almost always will, and this is what can ruin a business relationship.
Contract negotiation should be a collaborative experience and you should be willing to make concessions on points that are not so important to you, in order to achieve the points that are more important to you. Not only this, but courts will often be unwilling to enforce a contract which is clearly unreasonable, so that precious time that you spent pushing for points that will only protect you, might well turn out to be time wasted.
We recommend beginning by mapping out the risks that could occur under the project. Ask yourself some basic but pertinent questions:
- Could you be liable to claims from any third-parties who are affected by the work you are carrying out?
- Will you be responsible for personal data belonging to the other party, and thus open to fines for data breaches?
- Are you going to be using any trademarked information of your business partner, and need assurances that this information can legally be used? ,
Then, think about how essential it is that you avoid these risks, and whether there are any mitigation measures that you can take. This way, when you request certain wording to be inserted, you can explain your reasonable concerns to your client, agency or other business party you are freelancing with, and show that you have considered all other alternative measures. This will demonstrate that you are not being adversarial, you simply have good business sense.
Of course, this goes back to our first point, that you need to understand what you are asking for in order to show that you are being reasonable!
3. Don’t be shy!
We often hear of freelancers who do not want to appear too formal with businesses or new customers who seem laid back, or do not want to come across as pushy. We would urge you to never accept anything that you are not comfortable with or don’t fully understand, and never to proceed with a project until there is a contract in place.
Contracts exist in order to protect both of you, and a business should never be offended at being issued with a contract or asked to amend wording that they have issued.
If you have followed the first two tips on this list, and understand what you are asking for and know that it is reasonable, you should not be afraid to ask for it. As a freelancer you are providing value to a business, and you deserve to have your business protected too.
If you feel ‘push-back’ from the other side, ask them to explain their concerns. Hopefully, they also understand what you are asking for and have reasonable concerns about it. By discussing this, you can find each other’s shared goals and hopefully find a compromise.
4. Find that compromise, so keep flexible
Sometimes in contractual negotiations, there will simply be ‘hard lines’ where both parties find it difficult to cross and won’t compromise. One party may wish to have more control over the creative project which feels impossible to the other party, or both parties might not be able to agree on a liability cap, for example.
If this is the case, look at the contract as a whole to find if there are other concessions you can make. If the liability cap seems too high, think about re-defining the scope of the work so that you have less potential liability under the project. If the other party is not willing to give any warranties about the materials they supply to you under the agreement, specify that any new materials produced will be “as-is”.
For these considerations you need to weigh the risk of the contract against the potential advantages of the partnership. You might be willing to accept wording that you would not normally accept under a contract, if it is with an especially attractive business partner. In which case, perhaps you could agree to the wording on this occasion and ask for it to be tabled for review in one year’s time, when you can evaluate how successful the partnership has been.
Again, if you are ever in doubt and seem to have come to a stand-still, we always recommend seeking legal advice before signing anything.
5. Stay safe -- protect yourself throughout the negotiation
Finally, don’t presume that the contractual relationship does not begin until the contract has been signed! As soon as you start negotiating you will be sharing private information about your business; the ideas that you have for the project, and the portfolios that you have built up over the years.
Think about having a Non-Disclosure Agreement (NDA) in place before you begin the negotiation process in order to protect your information and prevent any unscrupulous clients from benefiting from the information you provide them with and later deciding not to contract with you! Having a good NDA in place can demonstrate to the other side that you are serious about this process and understand what you are doing. Fortunately, this does not need to be a newly drafted document that you spend time on every time you begin a negotiation -- you can have a template NDA to issue to all potential clients or other partners and ensure you are protected. For creative industry freelancers, consultants and professionals specifically, we are well-placed to help you create a bespoke one-way template NDA and have come up with this special offer as result – ideal if you don’t’ have a NDA yet.
We hope that our top five tips to help you succeed in the contract negotiation stakes will make it easier to assert yourself during business talks, face-to-face meetings (when they resume after the coronavirus eases!) and online discussions. Remember, this is your own freelance business and you have worked hard to build it, so you should never be hesitant to protect it!