3 Easy Ways to Royally Muck Up Your Freelance Contracts
A deal is never truly done until the ink is dry. Here are some common mistakes to avoid as you build your empire.
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One of the first things you'll learn upon launching your freelance career or starting a business is that handling paperwork is roughly 10 times more tedious than you might have imagined. Customizing a standard agreement can save time, but even savvy solopreneurs can forget the importance of starting new partnerships on the right foot -- that is, with a sound contract.
Here's a (very) likely scenario: You jump out of a promising Google Hangout with a prospective client, or waltz back to your WeWork desk the morning after a successful networking event, and all you want to do is start the project. The ideas are flowing, the relationship is new, you're excited, they're excited. It's go-time.
Not so fast, kids.
In my past life, I worked at an ad tech startup that operated in a rather volatile space in which clients were notorious for changing their tune with the days of the week. I very quickly learned that a deal is never truly done until the ink is dry.
Related: How to Get Clients to Pay You Upfront
At a larger company, whole teams are dedicated to negotiating the terms of an agreement before work ever begins. But, as a solopreneur, you're on your own. Self-sufficiency is one of the most admirable traits exuded by entrepreneurial types, but there are times when doing your homework is the best (and only) course of action.
One of those times? Drafting freelance contracts. Here are some common mistakes to avoid as you build your empire.
Mistake No. 1: Starting work without a signed agreement.
Look, I'm an optimist. I like to think that most people aren't total jerks. It's difficult to imagine that the kind of person who would skip out a contract could possibly be at the helm of a credible and trusted entity, but ask around: Freelancers get shafted. A LOT.
The Freelancers Union reports that 70 percent of freelancers have been stiffed, and this doesn't include the many others who have faced frustration or uncomfortable circumstances due to not having a contract in place prior to starting work.
For this reason, you should always formalize the agreement on paper before starting the gig. Do it every time. By the way, being able to execute a timely and accurate agreement isn't just for your benefit. Articulating the terms in a detailed yet straightforward manner will reinforce with clients that you're a total pro who is serious about your end of the bargain, as well. So, in other words, rock-solid contracts help protect your clients' interests, too.
Related: The Freelancer's Approach to Managing Expenses and Getting Paid
Mistake No. 2: Phoning in the statement of work section.
One of the most notoriously time-intensive sections of a freelance contract is the area in which you spell out your services and fees, aka the Statement of Work (SOW).
Business and employment lawyer Nancy Greene says the biggest mistake freelancers make is to fail to adequately describe the products or services they intend to deliver. "Ambiguity stops you from getting paid, and may, in fact, get you sued," she said. "Creatives are particularly at risk for this mistake as to what a "finished' product is may be subject to interpretation."
Here's a particularly heinous example of what not to write in your contract: "Consultant to provide graphic design support at negotiated rate."
Yikes. First, what does "support" mean in this sense? Are you supporting by creating everything from scratch? Are you only editing and finessing in-progress work? Second, how many revision cycles can be expected? Are these one-and-done tasks, or are you going to be CCed on 34-email-long strings of back and forth from an entire brand and agency marketing team along the way? Finally, what is the negotiated rate? Even if it's written elsewhere, you're going to want to copy over those terms within the contract itself.
"When critical details are vague, the parties start off on the wrong foot, and disputes become difficult to reconcile before litigation," said J.R. Skrabanek, senior counsel with the Snell Law Firm in Austin, Tex.
Related: Here's How This Freelancer Made the Move to Business Owner
Here's how to make the previous example better: "Consultant to concept, sketch and execute graphic design elements, which will be delivered as source files as well as print-ready PDFs within five business days of receiving the brief. Each element will include three revisions before additional scope is incurred. Company will pay Consultant at a rate of $100 per element. Additional revisions after three will incur a $20/per element fee."
For creative professionals, stipulating the number of revision rounds is especially critical.
Natalie Bidnick Andreas, a digital strategy consultant of more than 10 years, says she used to make the early mistake of failing to establish boundaries and hourly maximums. "This resulted in clients getting three to four times more services than they paid for," she said.
One way to do avoid scope creep is to state what you will NOT be doing as part of the terms. Adding "anti-deliverables" will allow you to manage client expectations and provide a smoother customer experience from the day you sign the contract to the day you get paid.
Mistake No. 3: Failing to Nancy Drew the heck out of the situation.
It's your responsibility to leave no stone unturned when it comes to asking about, investigating and ultimately reporting on any potentially "unknown" area of the agreement.
One of the most basic questions to cover is with regard to your employment status: W4 vs. 1099 status. "Freelancers have strict rules in terms of tax laws: Follow them," says Donna Lubrano, an adjunct business professor at Northeastern University's College of Professional Studies. The short of it: Make sure your status is in line with your expectations.
Related: How Much You Should Be Charging For Your Freelancing Gigs (Infographic)
Some questions to ask yourself as you review the agreement:
- How do you want to be paid and within what time frame? Net 30 is the standard, but you shouldn't be afraid to ask for what you want. I know consultants who won't begin work without payment upfront. Make a reasonable request, and then negotiate from there.
- Will you be reimbursed for expenses, such as travel, utilities and the like? Will the client provide you with the tools or utilities you need to complete the work?
- Is there a non-disclosure agreement involved in the partnership? What are its terms?
- What happens if the terms change? Include a provision for how things will be handled if the scope or ask shifts along the way. Be open to flexibility, but protect yourself, too.
- For creatives, you should also inquire about ownership and trademark rights. Who owns the content you create? Can you share it on your portfolio? If you're in advertising, will you be listed in the credits and therefore eligible for awards? "Contractors own the copyrights in the works they create, unless the contract assigns those rights to the client," says Jessica Childress, managing attorney and founder of the Childress Firm PLLC in Washington, D.C.
- Finally, how can either partner proceed to terminate the agreement if things aren't working out? When is this acceptable, and within what time frame?
Drafting agreements should be a fun exercise -- after all, you're at the precipice of an exciting new business relationship -- and with the right best practices and tools, you'll be on your way to creating bulletproof freelance contracts.