Why You Should Love Contracts and Lawyers

There’s always a lot you can learn to improve your freelance web design business, but sometimes the most important things you can learn have nothing to do with web design. Like the benefit of contracts. So says Mike Monteiro, co-founder of Mule Design Studio, in a 2011 presentation for CreativeMornings-San Francisco that’s still relevant today because he didn’t talk about the latest design trends. Instead he talked about how to get paid. It’s a great presentation and you should just go watch it. Of course it’s titled “F-ck You. Pay Me.” and includes some profanity in the first few minutes, so be prepared. But despite the provocative and profanity-laden title, Monteiro isn’t completely in-your-face. He offers practical, confidence-building advice for freelancers to get paid more and have a better relationship with their clients.

For the Love of Contracts and Lawyers

The entire presentation is Monteiro’s argument for why you should love contracts and lawyers. We can summarize it in three words: Make more money. That’s why you need contracts, and it’s why you should work with a lawyer.

“You need a lawyer when you decide to stop being a design amateur and decide to start being a design professional.” -Mike Monteiro

Yes, a lawyer will cost you money. But a good lawyer will make you money. With good contracts and preventative practices you’ll stop leaving money on the table, start making more money, and that will more than cover the cost of that lawyer.

Stop Problems Before They Start

Because preventing problems is really what this is all about. Problems cost money (and time and headaches and agony). So you should avoid them whenever you can. A contract helps you do that.

• Contract first. Don’t start work without a contract. That gives away any leverage you have.
• Things change. Let’s face it: Stuff happens. Your client may have a problem and suddenly they can’t do the job. Now what do you do? You need a contract to tell everybody what to do when things go wrong.
• Contracts protect both parties. Everybody should be on board with having a contract because it helps everyone. It protects your client as much as it protects you.
• Don’t sign without reading. Of course a contract can only protect you if you read it and agree with it. If you blindly accept their terms, it’s probably mostly protecting them.
• Always negotiate. Which is why you should negotiate. Get better terms.
• It’s not about trust. “You can trust us,” is the biggest red flag. If a client says this, just walk away. Trust assumes the client has everything under control and the project goes just right, when in reality your client can’t control everything and no project is ever perfect. So get it in writing. When the unexpected happens, you still need to get paid.
• Be clear. A contract is simply a way to prevent problems. It’s setting clear expectations with clear definitions. Everybody understands what happens and everyone is on the same page.
• Lawyers talk to lawyers. If a client brings their lawyer in on a call, you need to have your lawyer. Don’t let their lawyer try to explain a contract to you. That’s what your lawyer is for.
• Power. You are not at the client’s mercy. You’ve got power in this relationship—you just have to realize it. Stand up for yourself. Ask for what’s fair. Be willing to walk away.

Contract Specifics

Here are a few specific things Monteiro mentions that you should always include in your contract:

• Deliverables. Define exactly what you’re providing and what you’re not. If you’re coding a site, who’s responsible for images and text?
• Review and changes. When you hand over those deliverables, what’s the process for approving and making any changes?
• Payment terms. Of course your contract should include how much you’re getting paid, but also include when you get paid and penalties for late payments.
• Kill fee. What happens when either party needs to end the project? Do you get paid if a client backs out? What if you back out? Include details on termination—how much, when, etc.
• Transfer of work. You shouldn’t hand over a finished project until you get paid. Monteiro says the “intellectual property transfers on full payment,” which gives you even more leverage than simply holding the logins.
• Liability. If something goes wrong, who’s in trouble? Make sure you can’t be held responsible for problems down the road.
• Lawyer fees. If you need to pay a lawyer to enforce the contract, you want to collect attorney’s fees as well. Otherwise it won’t be worth it to enforce the contract

When Things Go Bad

When a situation with a client gets ugly, the contract is there to protect everyone. It should help you sort things out and even salvage the relationship. Everyone is there to do business, so you need to clearly spell out what that business is. A lot of times you can work things out with a simple conversation. But don’t do it over email. Get on the phone or even meet in person. Sometimes a cup of coffee can help you avoid a mess. If there’s still a problem, bring in the lawyers. Let them handle those difficult, stress-inducing conversations. That’s their job.

Professional Contracts

Ultimately what Monteiro is talking about is being a professional and doing professional-level work to protect yourself and your business. Stop leaving money on the table. Stop letting clients walk all over you. Stop being the horror story. Meet with a lawyer. Put together a standard contract. Negotiate with your clients. You’ll make more money, and you’ll save yourself from losing even more money.

More on Contracts

• For more on contracts and the business of freelance work, check out Monteiro’s book, Design Is a Job.
• Our Q&A with WordPress developer Bill Erickson covers his unique take on contracts and billing.
• iThemes Training members can check out our Working With Contracts webinar.