Which Areas of Your Agency Need Legal Protection?

By Jason Swenk on January 18, 2017

It’s not a matter of if but when a legal issue arises for your agency, are you prepared? My guest today is an Intellectual Property attorney who focuses on helping marketing agencies stay protected.

In this episode, we’ll cover:

  • What legal mistakes to avoid.
  • Which areas of your agency need legal protection.
  • 3 contract loopholes you need to watch for.

Your agency’s biggest asset (other than your team, of course) is your intellectual property. This episode features Sharon Toerek, attorney at Toerek Law and founder of Legal+Creative. Sharon shares the processes to have in place in order to cover your ASS(ets). 🙂 As an attorney specializing in marketing agency law, Sharon tells us exactly what mistakes to avoid and how to plan for potential sticky situations.

2 Big Mistakes to Avoid

According to Sharon, one the biggest mistakes she sees from marketing agencies is not understanding, undervaluing and not protecting their intellectual property. Everything your agency touches, does or creates is intellectual property. This is the product you’re selling. It’s absolutely imperative to adequately protect it.

The other common mistake is not having a process in place for the occasion when (not “if”) a legal situation arises. Issues such as: freelancer management, client contracts, brand protection and copywriting/social media content compliance can cause friction. The absence of a process for these things can make it even worse.

Areas that Need Legal Protection

Sharon has identified 6 legal silos every agency should be concerned with; she covers 3 of them for us:

New Business: Whether you do a lot of pitches or not, at some point you must show your hand in order to land new clients. Agencies need to know how to protect themselves from the potential of a client taking their ideas to a competitor or in-house.

Solution: Avoid having your work stolen by having a non-disclosure agreement in place, or intellectual property and copyright notices in your proposal.

Contracts: Somewhere along the way, the word “contract” got a bad rap. People don’t like the stigma around contracts because they fear breaking them or wanting out. Sharon says a contract is simply a written set of promises both parties agree upon. Contracts are a MUST.  Run away from any client who doesn’t want to sign one.

Solution: Have a contract template, non-disclosure agreement, MSA or statement of work. Even if you end up using the client’s contract forms, having your own and knowing it’s contents will make you a smarter negotiator in the end.

Freelancers: With the ebbs and flows of agency workflow there’s often the need for freelancers. Managing the relationships and expectations with your freelancers is an area that can require special attention.

Solution: Be sure you have a strong independent contractor agreement in place that protect both parties, as well as a non-disclosure agreement.

3 Client Contract Loopholes to Close

In the event that a client requires you to sign their contract (instead of them signing yours), it’s super important to make sure it’s mutually beneficial. After reviewing hundreds of client-generated contracts, Sharon has identified some common areas to watch for:

1. Intellectual Property Provisions

These assets are your biggest form of capital but often times client-generated contracts provide for ownership by the client upon creation. Sharon tells agencies to protect themselves by allowing your intellectual property to transfer ownership to the client upon approval and payment. When you legally turnover assets before receiving payment, you’re essentially giving way your leverage for payment.

2. Liability and Indemnification Provisions

In most client’s contracts, they hold the agency responsible and liable for all outcomes. However, sometimes the outcome is reliant on information provided by the client. The agency should only be held liable for what they do, make and create. Even better, hold the agency only liable for gross negligence or purposeful wrongdoing and cap limits to the amount the client paid or to the amount of your insurance policy.

And speaking of insurance… Errors and Omissions coverage is necessary, no matter how small your agency may be. It’s typically very reasonable to add this coverage and can save you tons of headaches down the road.

3. Payment terms

First of all, make sure you have the right payment terms. (Hint: it’s not 50% upfront and 50% upon completion!) Next, make sure phrasing in the contract protects your agency and gets you paid in a timely manner. Sharon has reviewed contracts which promise payment after the invoice is approved. This means you could be waiting months for someone to approve an invoice. No way! Check that contracts clear and fair payment terms.

Protect your agency from the liability of missed deadlines. Be sure there is language in the contract that allows for charging rush fees and passing along costs associated with delays caused by the client’s inaction.

Being aware of these areas will make you a better negotiator. It will also help you resolve an issue more smoothly when (not “if”) one arises. Having the right documents and processes is the only way to do it. You can check out the agency documents I used here.

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