How to Navigate Design Contracts for Smooth Client Relationships

Do design contracts make you seasick? Before you start negotiating, dig into this guide for smooth client relationships.

design-contracts

Illustration by Eleanor Shakespreare, eleanorshakespeare.com

Most business books will tell you that you need a contract or agreement for every client, every project and every professional relationship. But many creative professionals do not use contracts, unless it’s for big projects with big fees for big clients. Is it a style issue? You’re a “creative.” You’re not good with paperwork. You like flexibility and spontaneity and your manner of doing business is more casual. It doesn’t “feel” right to have a contract—they’re too formal and constraining. That’s just not “you.”

Is it because so many projects these days have to be done immediately and there is literally no time to ask the client to sign a contract? (That’s a pretty lame excuse, isn’t it?) Is it because you don’t have a good contract?

Or—and this is what I suspect—is it because you haven’t learned how to negotiate? A contract is the result of a successful negotiation between you and a client, a colleague or a contractor. In fact, the contract is the end—and the best result—of a successful negotiation.

Yet this is a step in the process so many just skip right over. No negotiation, no contract. Elementary, my dear Watson. Whether any (or all) of these reasons explain your own lack of contracts, the reality is that human relationships are messy, communication is often vague and memories are notoriously imperfect.

[Ilise Benun covers topics like this—and much more—in her comprehensive online course How to Start Your Own Freelance Business.]

Negotiating a good deal for yourself and sealing it with a simple agreement can go a long way toward avoiding conflict and reducing stress on all sides. It also lays a strong foundation of consensus and clarity between you and everyone you work with. Consensus because each party must approve what is agreed to before embarking on a joint project—if problems arise, the contract stands as the impartial document to fall back on. Clarity because it puts in writing what was said (and sometimes not said) so all parties can review it objectively. That’s important because sometimes, wanting to please a new client, you may blurt out numbers (often too low) or agree to deadlines (often unrealistic) without thinking them all the way through or checking your calendar.

When you take the time to negotiate and then put the agreed-upon terms in writing, you give yourself time to step back and consider whether the opportunity makes sense for you. But that’s not all. Negotiating demonstrates your professionalism. Clients expect to negotiate with you. If you don’t—if you immediately accept whatever is offered—you risk being perceived as an amateur and/or desperate.

NEGOTIATING DESIGN CONTRACTS: THE KEY TO A SUCCESSFUL NEGOTIATION

First of all, a negotiation is a conversation, not a confrontation. And like all conversations, every single one is different. To do it well, you must see clearly who you are talking to, and seek to understand what they are looking for and how you can tailor your negotiation strategy to them. It takes time, and lots of practice.

Your job in this conversation is to get the best and fairest deal for yourself, which is not necessarily what the other will offer—not because they are bad people, though many clients can be challenging.

It’s just that they don’t know what you need. You do. They don’t have your best interests in mind, but you should. They aren’t thinking of your needs; you should. They are simply trying to get the best possible deal for themselves. That’s the nature of business. If the negotiation is too short or occurs entirely via email, you won’t gather much intelligence or get to know your prospect very well. That’s why, even if they are in a hurry, it doesn’t hurt to slow things down by negotiating a bit. That will allow you to learn more about them.

Here’s a common scenario:

Client: We need a new logo by Friday. Can you do it?

Designer: That’s a pretty quick turnaround, but yes, I think I can manage that.

Client: Great, let’s get started. Just keep track of your hours.

In this short and seemingly harmless scenario, the client is not abusive or demanding. They’re simply focused on what they need: a quick logo. No mention of money, only deadline. That’s what they care about. That could mean the sky is the limit when it comes to budget. Or it could mean they haven’t given any thought to the budget yet. You must initiate the negotiation at that very moment. If you don’t, you may pay for it later.

So here’s what you say:

“Wait, let’s talk about money.”

Or, “Before we get started, talk to me about money.”

Imposing this step is not a confrontation. It’s an absolutely normal part of the negotiation and remember, negotiating is expected from a professional. Then, once you’ve agreed to a price, say this to get the contract in place:

I would love to design your website. And I’m glad we could agree on a price of $X,XXX. The next step in our process is to send you a contract and invoice for the deposit. Once that’s all taken care of, we’ll be ready to get started.

You may tell yourself: “There’s just no time to sign a contract and get a deposit.” But if it’s a rush job, there’s all the more reason to make sure you have an agreement in place. Too many things can go wrong and be miscommunicated when people are rushing.

Say this:

I see you’re in a hurry with this project so I’ll send you my simple contract today, and as soon as you turn it around with your deposit, we’ll be ready to get started.

Trust me, following these steps speaks volumes about your professionalism, your organizational and project management abilities—not to mention your confidence, your integrity, even your self-respect.

THE ACTUAL CONTRACT

Whatever comes out of that conversation should then be put into writing and approved by both parties. You can have it written and/or reviewed by a lawyer, but that’s not usually necessary and could prolong the process.

“Having a written contract is essential,” says Katie Lane, a Portland-based lawyer and negotiation coach. “It doesn’t have to have magic words in it or be super fancy but it needs to answer the basic questions: Who is involved in the deal? What are they doing together? Why are they doing it? How do they envision it working out and how would they deal with it if it didn’t work out? When and where will they settle disagreements or conflicts?”

[Lost in legalese? Learn how to keep your design contract simple.]

The contract itself doesn’t have to be a thick document with lots of legalese. It can be one or two pages—in plain English—outlining the terms and conditions by which you and your client agree to work. A more complex project may require a longer document.

“Your contracts should make sense,” adds Lane. “You should understand what they mean, and more importantly a stranger should understand what they mean, because if things get rocky, guess who’s interpreting the contract? A whole bunch of strangers: lawyers, judges and juries.”

This should be done with each and every new business relationship, including those with clients, contractors and, especially, potential partners.

Don’t give in to the temptation to skip the paperwork on small projects or projects with a freelancer or an intern, believing that contracts are only necessary for “important” projects. It’s actually the small ones that have the most potential to cause time-consuming, expensive problems. Contracts are especially important for creative professionals because when you sell your work, you are essentially selling a right to your property—in this case, your intellectual property, which is intangible. And because it’s intangible, the process may be less clear than if the object in question were something like a car or a house.

On the whole, remember that a contract is only as good as the people signing it. Business relationships are built on trust. So the rule to live by is this: If you sense that your partner is not negotiating in good faith, walk away. Nothing you put in a contract will protect you.

FOLLOWUP: BAD CONTRACTS/BAD DEALS & HOW TO GET OUT OF THEM*

In the poem “The Hand That Signed the Paper,” Dylan Thomas wrote, “Great is the hand that holds dominion over / Man by a scribbled name.” All of our hands have signed papers we wish we didn’t. But when it happens in business and someone holds dominion over you, figuring out your options can be difficult indeed. … What happens if you sign a contract with a client or partner or employer or employee and you live to regret it? What do you do?

First, you have to identify what makes the contract a bad one. A bad contract usually comes down to one of two things: the deal itself is bad, the contract was badly drafted, or both. If the deal you made turned out to be a bad one, the best-drafted contract cannot turn it into a silk purse. But it should be able to help you change it. If the deal is sound, but the contract is poorly drafted, it won’t be able to help you solve problems that may come up. But if the deal is bad and the contract poorly drafted, you’re down that river and contemplating your lack of a paddle.

If nothing is permanent but change, a good contract anticipates change. And while it’s impossible to anticipate everything that could possibly go wrong, there are several issues that come up often enough that every “good” contract should deal with them.

Money.

Money is always a problematic issue in any business relationship. While most agreements specify how much money one party is supposed to be paid by the other, a common problem is how and when. If the contract doesn’t say specifically (1) when payments are supposed to be made, (2) what happens if they are not, (3) what has to be done before payments are made or (4) how long after invoices payments are due, there will be problems.

Ownership.

In the creative services business, any agreement that does not spell out who owns what—and when—will be problematic. Copyright ownership is the coin of the realm for designers. Agreements should be very clear about when and if rights transfer to the client. Also, pay close attention to work-for-hire language. Much to their chagrin, many creative professionals have discovered belatedly that they signed work-for-hire agreements.

Terms.

How long a contract will last can often be the difference between a good contract and a bad one. I have never had a client who regretted signing too short an agreement.

But many rue the day they signed long-term agreements. While it can appear very appealing to sign a five-year contract with a client for a monthly retainer, for example, for a specific type of work, fi ve years is a very long time in any business. What looked like a great deal in Year 1 can be strangling you by Year 3. Short term—no more than one-year agreements with the opportunity to renew—are much safer.

Termination.

Every agreement should have a way out. The simpler, the better. “This contract may be terminated with 30 days written notice by either party.” A bad contract may spell out the work to be done and how you will get paid… but not what happens if you are not paid or if the client rejects the work. A bad contract includes nothing about ownership of the copyright for the work that is created. It does not address how the agreement will end or specify a term after which the parties would have no obligation to each other. It may contain an attorney’s fees provision, but may also include an arbitration provision, which has legal implications you may not understand.

*Excerpt by Jean S. Perwin, from The Creative Professional’s Guide to Money by Ilise Benun. Perwin is a Miami-based intellectual property attorney with expertise in creative services.


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