What Happens When a Freelancer Does Work for a Client Without a Contract(blog.kunvay.com)
blog.kunvay.com
What Happens When a Freelancer Does Work for a Client Without a Contract
http://blog.kunvay.com/what-happens-when-a-freelancer-does-graphic-design-work-for-a-client-without-a-contract-marks-copyright-case-study/
73 comments
Is there any value in a sample or boilerplate contracts?
I've asked some people in the past and they seem very guarded about sharing theirs and always try to refer me to a lawyer. Good advice and I realize that lawyers should save you money in the long run, but for on-the-side small time consulting is there a base template that would get people through their first few gigs?
I've asked some people in the past and they seem very guarded about sharing theirs and always try to refer me to a lawyer. Good advice and I realize that lawyers should save you money in the long run, but for on-the-side small time consulting is there a base template that would get people through their first few gigs?
Great article. Must read for anyone using freelancers to outsource work.
Seems very helpful for someone who ends up in a messy situation without a contract. But please, don't even allow this to happen. Use a contract!
If you're a freelancer of any type, you should always work under a contract. This talk (about 40 minutes) sums up why: http://vimeo.com/22053820.
I LOVE that video! He's right on point. Here's our take on the subject: http://kunvay.wistia.com/medias/4272c23ee2
I outsource work on eLance, and this made me investigate. For anyone else wondering, eLance's terms state that any IP for a project belongs to the employer after payment is made:
https://www.elance.com/q/sites/default/files/page_pdf/legal/...
https://www.elance.com/q/blog/elance-protection-dead-bolting...
https://www.elance.com/q/sites/default/files/page_pdf/legal/...
https://www.elance.com/q/blog/elance-protection-dead-bolting...
Just so you know, it's Elance – no weird Apple iSpelling. :)
You mean aPple, right? :)
This is definitely something that is important to be aware of and to have clarity on. Future investors and company buyers want proof you own the IP in your business if you're trying to sell it.
You should also check similar agreements on 99Designs, Freelancer.com, oDesk too to be sure you actually own what you buy.
You should also check similar agreements on 99Designs, Freelancer.com, oDesk too to be sure you actually own what you buy.
Recently, I've been using contracts that do not transfer copyright. We grant them unlimited license to our copyrighted content. We also signed an NDA, preventing us from relicensing the codebase to a competitor. We haven't done anything to take advantage of keeping the copyright yet, but I like keeping the rights for ourselves. I imagine of anything it would make it easy for is to open source code that doesn't tie in directly to the product.
I'd love to hear more details about this. Is this something you came up with yourself, or did you write it with an IP attorney? Would you be willing to share your template agreement somewhere? Has this been a tough sell to any of your clients? Does your agreement include language which either defines what's proprietary or specifies how to define what's proprietary and therefore subject to the NDA?
Here's an excerpt (condensed):
“Work Product” shall mean all design and applications... excluding the “Elements”. Developer assigns to Client all right, title and interest in and to the Work Product. “Elements” shall mean Developer’s algorithms, libraries, scripts, user interface and experience designs, architecture, objects, graphic files, [etc.]. The Elements shall remain the sole and exclusive property of Developer; provided that, subject to/upon full and final payment for the Services, Developer grants to Client a royalty-free, nonexclusive, irrevocable, perpetual, worldwide, subliceseable license in and to the Elements to use in connection with the Application.
So we do give up copyright for the application as a whole "Work Product", but retain the copyright for individual components "Elements".
The client is not in a technical space, and quite frankly doesn't know much about software development. We may be pulling a fast one here that other clients would refuse. In any case, it hasn't caused any problems in our working relationship and everyone's happy.
“Work Product” shall mean all design and applications... excluding the “Elements”. Developer assigns to Client all right, title and interest in and to the Work Product. “Elements” shall mean Developer’s algorithms, libraries, scripts, user interface and experience designs, architecture, objects, graphic files, [etc.]. The Elements shall remain the sole and exclusive property of Developer; provided that, subject to/upon full and final payment for the Services, Developer grants to Client a royalty-free, nonexclusive, irrevocable, perpetual, worldwide, subliceseable license in and to the Elements to use in connection with the Application.
So we do give up copyright for the application as a whole "Work Product", but retain the copyright for individual components "Elements".
The client is not in a technical space, and quite frankly doesn't know much about software development. We may be pulling a fast one here that other clients would refuse. In any case, it hasn't caused any problems in our working relationship and everyone's happy.
If I were a client, a big concern I would have with this license is what happens if one of my competitors rips off my product that is using the licensed software, and I want to bring a copyright infringement lawsuit against them.
Generally, a licensee cannot sue for infringement of something they only have a nonexclusive license for. There is some discussion of this here: http://www.copyrightcodex.com/enforcement-toc/22-plaintiffs#...
Even if my product contains copyrighted material in addition to your material, and I either own the copyrights on or have an exclusive license on that material and so do have standing to sue over it, the presence of your material would complicate things. The defense is going to argue that if they did copy my product, they only copied the parts that I do not have standing to sue over.
Generally, a licensee cannot sue for infringement of something they only have a nonexclusive license for. There is some discussion of this here: http://www.copyrightcodex.com/enforcement-toc/22-plaintiffs#...
Even if my product contains copyrighted material in addition to your material, and I either own the copyrights on or have an exclusive license on that material and so do have standing to sue over it, the presence of your material would complicate things. The defense is going to argue that if they did copy my product, they only copied the parts that I do not have standing to sue over.
To answer your other question, I bummed a template contract off a friend. He got it from an attorney.
You might fairly consider this an insignificant anecdote, but: I have rejected people for contract work because they insisted on retaining copyright, sometimes on this basis alone.
This is a new thing for me. It's a client that is not in a technical space and doesn't have much experience in software development.
If they had rejected that clause, I probably wouldn't have put up much of a fight. I figure that if they don't want it, we should keep it.
If they had rejected that clause, I probably wouldn't have put up much of a fight. I figure that if they don't want it, we should keep it.
An NDA or a non-compete? These are different beasts.
It's an NDA, and I guess technically we could contract a competitor and reuse some of the code, but the NDA requires us not to release "secret sauce" essentially, meaning that a good chunk of the application could not be reused.
While it sounds confusing, my understanding is that it basically means that we have the right to reuse whatever module or library we create however and wherever we want.
While it sounds confusing, my understanding is that it basically means that we have the right to reuse whatever module or library we create however and wherever we want.
For a Business:
* Its a Financial Risk in terms of Commitment to deliver for what is paid for.
You Don't know if the person is really spending the hours he spent.
There is nothing that can save your system, your business, because the business is your life, "Not Necessarily" his.
* Time and Commitment are absent in unwritten understandings.
For a Contractor/Freelancer:
* Its a Financial Risk with respect to the commitment to be paid for deliverable.
* You get only the advance, no matter how complicated the solution you have provided.
* Requirements may change any time, you don't know what you are working and there is no line between success and a failure.
* Its a Financial Risk in terms of Commitment to deliver for what is paid for.
You Don't know if the person is really spending the hours he spent.
There is nothing that can save your system, your business, because the business is your life, "Not Necessarily" his.
* Time and Commitment are absent in unwritten understandings.
For a Contractor/Freelancer:
* Its a Financial Risk with respect to the commitment to be paid for deliverable.
* You get only the advance, no matter how complicated the solution you have provided.
* Requirements may change any time, you don't know what you are working and there is no line between success and a failure.
I'm just going to echo what everyone else is saying: Contract. Contract. Contract.
A contract isn't some scary legal document full of cryptic legalese. It's a clear description of what services will be provided and what the compensation will be. And on what schedule everything will happen. With details about what happens if things go south.
Most client problems are not as cut-and-dry as "he took all of my work and is laughing at me and lighting cigars with $100 bills while he refuses to pay me for absolutely no reason." Most disputes are based on misunderstandings of some sort. They think feature X was in-scope. You disagree and want to bill them additionally for it. They are withholding pay because they don't consider the project completed. You do. And such. Having to threaten a client will waste a ton of your time and sour relationships -- clients you have disputes with can still be good clients. This is why you write down everyone's expectations at the start.
Most clients aren't evil. They want good relationships with the people who work for them. But disagreements arise. Contracts give everyone a neutral document to refer to and say "look, this is what we agreed upon when we started."
Use contracts.
A contract isn't some scary legal document full of cryptic legalese. It's a clear description of what services will be provided and what the compensation will be. And on what schedule everything will happen. With details about what happens if things go south.
Most client problems are not as cut-and-dry as "he took all of my work and is laughing at me and lighting cigars with $100 bills while he refuses to pay me for absolutely no reason." Most disputes are based on misunderstandings of some sort. They think feature X was in-scope. You disagree and want to bill them additionally for it. They are withholding pay because they don't consider the project completed. You do. And such. Having to threaten a client will waste a ton of your time and sour relationships -- clients you have disputes with can still be good clients. This is why you write down everyone's expectations at the start.
Most clients aren't evil. They want good relationships with the people who work for them. But disagreements arise. Contracts give everyone a neutral document to refer to and say "look, this is what we agreed upon when we started."
Use contracts.
"Use contracts."
First, to state the obvious which anyone who has been around for some time will tell you a contract is only good if the dollar amount is enough to get a lawyer involved as far as filing and pursuing any legal action. Otherwise good luck with trying to convert a contract into actual dollars because you are right.
Anyway, for the purpose of what you are saying it doesn't have to be a "formal" contract but merely an email trail will suffice to make your point and get the other party (if honorable) to pay. In the past I've even used notes of verbal conversations which I've repeated back the sequence of events to the satisfaction of the other side. (Once again totally depends on who the other side is and their motives.)
Now if they are not honorable, don't have the money, or just want to play games, then if you have enough at stake to hire an attorney a formal contract is a benefit (but not essential since the "trier of fact" as well as the other side will weigh their chance of settling vs. fighting). Consequently, yes, documentation is key but it's more a balance of power rather than the formality of the document).
Unfortunately the article completely ignores the practical aspects of going after someone who owes you money despite what any contract says. As if the law is enough to make the right thing happen. It's not.
First, to state the obvious which anyone who has been around for some time will tell you a contract is only good if the dollar amount is enough to get a lawyer involved as far as filing and pursuing any legal action. Otherwise good luck with trying to convert a contract into actual dollars because you are right.
Anyway, for the purpose of what you are saying it doesn't have to be a "formal" contract but merely an email trail will suffice to make your point and get the other party (if honorable) to pay. In the past I've even used notes of verbal conversations which I've repeated back the sequence of events to the satisfaction of the other side. (Once again totally depends on who the other side is and their motives.)
Now if they are not honorable, don't have the money, or just want to play games, then if you have enough at stake to hire an attorney a formal contract is a benefit (but not essential since the "trier of fact" as well as the other side will weigh their chance of settling vs. fighting). Consequently, yes, documentation is key but it's more a balance of power rather than the formality of the document).
Unfortunately the article completely ignores the practical aspects of going after someone who owes you money despite what any contract says. As if the law is enough to make the right thing happen. It's not.
Contracts are such a basic fact of business life, universally understood by good-faith vendors and customers, that recalcitrance about signing one should be taken as a "run don't walk" signal. By working without a contract, you doubly imperil yourself: you lose significant legal protections, and also select a client base that is particularly likely to cause you problems down the road.
Matasano has many clients we've maintained since the formation of the company in 2005, and many more where our counterparts in those companies are friends. The idea of doing business with any of them sans contract is unthinkable. It just doesn't happen.
Working without a contract is unprofessional. Don't do it.
Matasano has many clients we've maintained since the formation of the company in 2005, and many more where our counterparts in those companies are friends. The idea of doing business with any of them sans contract is unthinkable. It just doesn't happen.
Working without a contract is unprofessional. Don't do it.
A few points. I'm not stating you are wrong but simply would like anyone reading to see that in business, the way I see it, it's art and not science. "Don't do it" sounds more like science to me. Business to me is art.
1) The dollar amount of the dealings greatly matters as well as the product or service being sold (and who it is being sold to and past history [1]). Matasano is a "real" grown up company. I would imagine the dollar amounts of the charges for what you do are not trivial or small in any way. "not freelance". And what you do has liability consequences as well if you screw up. And you have deep pockets to go after and a liability policy with pockets. [2] A contract of course is called for. Our accounting firm (been dealing with for many years) was just bought out by BDO. They sent a contract or rather a letter of understanding "whatever" that absolves them from any and all liability no matter what. This is after many many years of dealing with the firm they acquired. The legacy firm sent the same letter. Totally ignored it and never sent it back year after year. (Almost as a dare "ok we'll replace you!". They didn't take it personally at all. And if they did who cares?
2) Title of article appears to be targeted toward freelancers. Hence my comments. I'm not directing my thoughts toward Boeing (or Matasano). In other businesses I've dealt with freelancers (non computer, graphics basically) for many years. They do work you pay them. They give a quotation for the work and tell you if you exceed any limits and that it will cost more.
3) Using contracts puts friction in the process and gives people (on certain things, once again, smaller things) a chance to back out and think and delay. So to me there is a certain balance of risk that a freelancer takes (relative to the situation) vs. losing the sale that has to be weighed. Each situation is different. What's the up vs. the downside?
4) Unprofessional is relative to who you are and what you are selling of course. There are many business relationships that are done on a handshake in certain industries. I've been involved in many of them.
5) If you do (for whatever reason) use a contract and the other side doesn't want to sign it I agree that can be a red flag. In general. Once again, depending on the dollar amount. I had a domain broker come to me with a buyer for a domain name that I owned and they sent me a 10 page contract. I said "I'm not reading and reviewing that if you have a buyer I will pay you commission". They said "ok sounds good". And the deal was done and I have the money in the bank. Otoh I sold a domain to a very well known attorney (someone I knew that is well known in the business and everyone loves and even went to the same college) and I waited like 3 months to get the money. Go know.
I will end with a funny story. When I sold my first company a long time ago I asked both the accountant and the lawyer for an estimate of the legal and accounting charges. They both shot me numbers verbally over the phone. After the deal was done I got the bill and it was 2 to 3 times as high as the quote. So I said "you quoted $x what's the story?". They said "oh it was more work". I said "well you should have told me that, how would I know?". The accountant stayed with the quote and is the firm I've referenced above that I am still with to this day. The lawyer thanked me (he had just gone out on his own and left a big firm and had no clue about smaller clients or billing or people using their own money) and told me I had taught him a valuable lesson [3]. He then bought some computer gear from me (to give you an idea of how long ago this was it was a $4500 laser printer). Just to show you that he really was cool with it.
So it wasn't lack of a contract as much as lack of communication possibly that sunk them. And of course had they billed as the work was going on as opposed to all at the end they would have put me on notice despite the original quote (which by the way was stated like a firm quote..)
[1] Which of course is tricky because people and companies change their spots.
[2] As opposed to Dave, out of his house, living from hand to mouth. Nobody is taking "Dave" to court if he screws up.
[3] So in other words he wasn't used to anything but a larger company using someone else's money not an entrepreneur spending his own money.
1) The dollar amount of the dealings greatly matters as well as the product or service being sold (and who it is being sold to and past history [1]). Matasano is a "real" grown up company. I would imagine the dollar amounts of the charges for what you do are not trivial or small in any way. "not freelance". And what you do has liability consequences as well if you screw up. And you have deep pockets to go after and a liability policy with pockets. [2] A contract of course is called for. Our accounting firm (been dealing with for many years) was just bought out by BDO. They sent a contract or rather a letter of understanding "whatever" that absolves them from any and all liability no matter what. This is after many many years of dealing with the firm they acquired. The legacy firm sent the same letter. Totally ignored it and never sent it back year after year. (Almost as a dare "ok we'll replace you!". They didn't take it personally at all. And if they did who cares?
2) Title of article appears to be targeted toward freelancers. Hence my comments. I'm not directing my thoughts toward Boeing (or Matasano). In other businesses I've dealt with freelancers (non computer, graphics basically) for many years. They do work you pay them. They give a quotation for the work and tell you if you exceed any limits and that it will cost more.
3) Using contracts puts friction in the process and gives people (on certain things, once again, smaller things) a chance to back out and think and delay. So to me there is a certain balance of risk that a freelancer takes (relative to the situation) vs. losing the sale that has to be weighed. Each situation is different. What's the up vs. the downside?
4) Unprofessional is relative to who you are and what you are selling of course. There are many business relationships that are done on a handshake in certain industries. I've been involved in many of them.
5) If you do (for whatever reason) use a contract and the other side doesn't want to sign it I agree that can be a red flag. In general. Once again, depending on the dollar amount. I had a domain broker come to me with a buyer for a domain name that I owned and they sent me a 10 page contract. I said "I'm not reading and reviewing that if you have a buyer I will pay you commission". They said "ok sounds good". And the deal was done and I have the money in the bank. Otoh I sold a domain to a very well known attorney (someone I knew that is well known in the business and everyone loves and even went to the same college) and I waited like 3 months to get the money. Go know.
I will end with a funny story. When I sold my first company a long time ago I asked both the accountant and the lawyer for an estimate of the legal and accounting charges. They both shot me numbers verbally over the phone. After the deal was done I got the bill and it was 2 to 3 times as high as the quote. So I said "you quoted $x what's the story?". They said "oh it was more work". I said "well you should have told me that, how would I know?". The accountant stayed with the quote and is the firm I've referenced above that I am still with to this day. The lawyer thanked me (he had just gone out on his own and left a big firm and had no clue about smaller clients or billing or people using their own money) and told me I had taught him a valuable lesson [3]. He then bought some computer gear from me (to give you an idea of how long ago this was it was a $4500 laser printer). Just to show you that he really was cool with it.
So it wasn't lack of a contract as much as lack of communication possibly that sunk them. And of course had they billed as the work was going on as opposed to all at the end they would have put me on notice despite the original quote (which by the way was stated like a firm quote..)
[1] Which of course is tricky because people and companies change their spots.
[2] As opposed to Dave, out of his house, living from hand to mouth. Nobody is taking "Dave" to court if he screws up.
[3] So in other words he wasn't used to anything but a larger company using someone else's money not an entrepreneur spending his own money.
Yes this is the business world exactly as I've experienced it. Specifically, #2-4. Handshake deals are great for people who are generally sane and trying to pick up momentum. People advise you lock everything down 100% but they don't realize what a time/energy drain it is on both parties.
A quote sets up a reasonable negotiating point and then any deviation from that can be discussed. The client eats it or the worker eats it. You win some you lose some -- at least things are moving.
A quote sets up a reasonable negotiating point and then any deviation from that can be discussed. The client eats it or the worker eats it. You win some you lose some -- at least things are moving.
I'll tell you an interesting thing that I learned in a past business where we were given many rush jobs.
Let's see how you view this.
a) Client comes with a rush job and asks you to quote the job and you do. You give them a price.
b) Same clients comes to you and says "just get the job done and bill me whatever it is. I need to get this done."
My question to you (or anyone else) is "under which situation did we end up making more money, "a" or "b" usually"?
Let's see how you view this.
a) Client comes with a rush job and asks you to quote the job and you do. You give them a price.
b) Same clients comes to you and says "just get the job done and bill me whatever it is. I need to get this done."
My question to you (or anyone else) is "under which situation did we end up making more money, "a" or "b" usually"?
Hmmm my gut says A.
When you give a quote it sets up a reasonable expectation and even if you go over-budget clients usually understand if you don't deviate by too much.
With B you have to pull the trigger on it all-at-once so I feel like it leaves you more inclined to bring the price down to avoid sticker shock.
"A" probably has a better "return customer" conversion rate too, no? Because they weren't on as much of an emotional-financial roller-coaster, it was just the execution of a process understood by both parties. So I'd guess with A you have a better shot both at short term money and future endeavors.
How did it work out really?
With B you have to pull the trigger on it all-at-once so I feel like it leaves you more inclined to bring the price down to avoid sticker shock.
"A" probably has a better "return customer" conversion rate too, no? Because they weren't on as much of an emotional-financial roller-coaster, it was just the execution of a process understood by both parties. So I'd guess with A you have a better shot both at short term money and future endeavors.
How did it work out really?
You are correct it is "a".
Reason was simple.
Customer was under duress and needed to get a job done. You stated a price and they accepted that price. That agreement was important.
With "b" - "whatever it costs is ok!" they could come back and say "Wow I didn't know it would be that much". So even though most people would go for "b" my experience was "a" was better.
Of course now if I wanted to argue the other side I could say if you really were trying to jack up the price than "b" might be better. Why? Because you are jacking up the price so if the customer say "I didn't know it would be so much!" you have some flexibility to throw them a bone and lower the price and make them happy.
My attorney on bills typically puts in all the hours he spends as "time spent, time billed" giving you some idea that you are actually saving money. As if he is cutting you a break.
"and future endeavors"
Right because you managed expectations successfully. Same reason perhaps paying $35 for parking is not the same as getting a $35 parking ticket.
Reason was simple.
Customer was under duress and needed to get a job done. You stated a price and they accepted that price. That agreement was important.
With "b" - "whatever it costs is ok!" they could come back and say "Wow I didn't know it would be that much". So even though most people would go for "b" my experience was "a" was better.
Of course now if I wanted to argue the other side I could say if you really were trying to jack up the price than "b" might be better. Why? Because you are jacking up the price so if the customer say "I didn't know it would be so much!" you have some flexibility to throw them a bone and lower the price and make them happy.
My attorney on bills typically puts in all the hours he spends as "time spent, time billed" giving you some idea that you are actually saving money. As if he is cutting you a break.
"and future endeavors"
Right because you managed expectations successfully. Same reason perhaps paying $35 for parking is not the same as getting a $35 parking ticket.
Heh right on I actually thought of that flexibility / throw them a bone bit after I already posted. I think that's the abstract bit, is that these things need to be negotiated in real-time for it to make any sense. If you find you're doing too much work or it's something that requires a lot of specialized knowledge, you need to get that level of pay while having it make sense to the client. I know some people try to whine that this amorphous rate idea is sketchy but then I hear stories about freelancers & small web ventures trying to do psychotic shit like quoting 2k/month for "site maintenace" or getting a 5k contract for "SEO". I deliver MUCH better quality of service to my clients than these "professionals" who are trying to set up bunk service contracts as sources of recurring income. The reality is you need to have your client's trust. I do the best work I can & if I feel I deserve extra for a job and can justify it, by all means I say so and negotiate it. And I do something similar to your lawyer in that I don't bill for email/communications unless we have time blocked for a longer meeting, so it's hard for the client to ever feel as if they've overpaid. 15 minutes on the phone every day or so on the job I let slide. Then I log most of my hours by task. What I want is to deliver them value so they can succeed and give me more work. Most clients can appreciate that.
Man I like your attitude larrys. Business really is an art, & I think my role model is kindof like "Better Call Saul" but without the illegal activities. He starts off as a sketchy, unlikable guy but then you notice that his clients are always satisfied and they are all well-paid. :D
It seems much easier to reach that type of relationship by doing some high-velocity business rather than dragging the process down &, as you said, letting everyone dwell too much on $$ signs.
Man I like your attitude larrys. Business really is an art, & I think my role model is kindof like "Better Call Saul" but without the illegal activities. He starts off as a sketchy, unlikable guy but then you notice that his clients are always satisfied and they are all well-paid. :D
It seems much easier to reach that type of relationship by doing some high-velocity business rather than dragging the process down &, as you said, letting everyone dwell too much on $$ signs.
> "First, to state the obvious which anyone who has been around for some time will tell you a contract is only good if the dollar amount is enough to get a lawyer involved as far as filing and pursuing any legal action. Otherwise good luck with trying to convert a contract into actual dollars because you are right."
I've been around for some time and I absolutely would not say this. A contract is not primarily about being adversarial. It's about being clear. There's a huge difference. A contract is the end-point of the conversation you have that clarifies as much as you can before anyone starts work or writes a check.
If someone is planning on making your life hell, a contract won't stop them. It's a piece of paper, after all, and, yes, if lawyers have to get involved then pretty much everyone has lost. Preventing that scenario is less about getting a contract and more about learning to assess people and decide who is legitimate and who is full of shit so you can walk away before any contract ever gets written.
(Negotiating a contract, by the way, is a pretty good measure of what it's going to be like to work with someone. Consider it your first project together. If it goes poorly, that might be a bad sign about how the whole project will go...)
I've been around for some time and I absolutely would not say this. A contract is not primarily about being adversarial. It's about being clear. There's a huge difference. A contract is the end-point of the conversation you have that clarifies as much as you can before anyone starts work or writes a check.
If someone is planning on making your life hell, a contract won't stop them. It's a piece of paper, after all, and, yes, if lawyers have to get involved then pretty much everyone has lost. Preventing that scenario is less about getting a contract and more about learning to assess people and decide who is legitimate and who is full of shit so you can walk away before any contract ever gets written.
(Negotiating a contract, by the way, is a pretty good measure of what it's going to be like to work with someone. Consider it your first project together. If it goes poorly, that might be a bad sign about how the whole project will go...)
First, to state the obvious which anyone who has been around for some time will tell you a contract is only good if the dollar amount is enough to get a lawyer involved as far as filing and pursuing any legal action.
I couldn't disagree more. Usually in this field, unless we're talking about a huge deal, you've both already lost if you get as far as litigation. That implies direct costs, and it implies a breakdown of your business relationship that probably doesn't help anyone accomplish anything or leave anyone's reputation changed for the better.
Contracts serve a valuable purpose long before court filings are involved: the contractual paperwork is where you can both set out, definitively and up-front, your understanding of what the deal is. If there are significant areas of disagreement, it is much better to discuss them and hopefully resolve them amicably before the project starts and either of you has serious skin in the game. If that's not possible, you can both walk with little loss and no hard feelings. It's unlikely to hurt either party's reputation if they want to figure out a different deal with someone else instead, and it leaves the door open to working together on some other project in the future.
It is in everyone's interests to get a clear, genuinely understood agreement written down in a specific, identified version at the start of a project.
I couldn't disagree more. Usually in this field, unless we're talking about a huge deal, you've both already lost if you get as far as litigation. That implies direct costs, and it implies a breakdown of your business relationship that probably doesn't help anyone accomplish anything or leave anyone's reputation changed for the better.
Contracts serve a valuable purpose long before court filings are involved: the contractual paperwork is where you can both set out, definitively and up-front, your understanding of what the deal is. If there are significant areas of disagreement, it is much better to discuss them and hopefully resolve them amicably before the project starts and either of you has serious skin in the game. If that's not possible, you can both walk with little loss and no hard feelings. It's unlikely to hurt either party's reputation if they want to figure out a different deal with someone else instead, and it leaves the door open to working together on some other project in the future.
It is in everyone's interests to get a clear, genuinely understood agreement written down in a specific, identified version at the start of a project.
Once again, this all depends on the parties and the size of the deal and any past dealings.
I'm not against getting things or putting things in writing. Or having a contract when needed.
My comments relate to the form of that writing and the effort and potential friction vs. what you are trying to protect. Friction which can kill a deal if you have to think out every possibility. Not to mention that it can also work against you.
I'm not against getting things or putting things in writing. Or having a contract when needed.
My comments relate to the form of that writing and the effort and potential friction vs. what you are trying to protect. Friction which can kill a deal if you have to think out every possibility. Not to mention that it can also work against you.
I think the point some of us are trying to make is that if establishing a clear, written understanding at the start of a business deal creates enough friction that it's a problem for anyone, that party should probably be running away from the deal anyway. This is about as universal a truth as you can find in business. Someone might not feel that a written contract is particularly necessary, but if they are actively trying to avoid having one when it's proposed, either they don't know how the game is played or they're out to screw someone later, and you don't want anything to do with either group.
Of course the level of detail in the contract will be proportional to the size of the engagement. A small deal might only need a standard T&Cs sheet and a signature on quick statement of scope and rates. A large deal involving multiple parties and silly amounts of money might need multiple teams of lawyers and several weeks to draw up. But in each case, there is always a level of mutual understanding and it's always written down and signed off by everyone before the job starts.
Of course the level of detail in the contract will be proportional to the size of the engagement. A small deal might only need a standard T&Cs sheet and a signature on quick statement of scope and rates. A large deal involving multiple parties and silly amounts of money might need multiple teams of lawyers and several weeks to draw up. But in each case, there is always a level of mutual understanding and it's always written down and signed off by everyone before the job starts.
You're not wrong, but I'd feel remiss if I didn't make a point.
> but merely an email trail will suffice to make your point and get the other party (if honorable) to pay.
This is true if and when you are expressive in your emails. As soon as a new feature is added to the scope, it is imperative that you speak out and say "Well, this is out of scope, but we can likely accommodate by adjusting the scope <however>".
Far too often I see freelancers just take on the work without mentioning it's a scope change, only to have to fight for the bill to be paid later.
In fact, most of the people I see complaining about customers not paying are due to a failure of setting appropriate expectations. If timelines are changing as a result of your efforts, notify the customer. If they're changing as a result of the customer's actions, notify the customer. If the scope is changing for any reason, notify the customer.
Do not expect to be able to submit a bill at the end of the day and have it be paid -- in companies of a sufficient size, the person paying the bills is not the same person you're dealing with on scope, and the person paying the bills is likely being paid, in part, to ensure that they aren't being over billed. Where that's the case, they'll examine the contract line by line and compare it to the invoice, and pity to whomever meets someone good at that job.
They're not trying to screw you over, they're just trying to make sure taht they're not getting ripped off, and changing how you bill the customer without notifying the customer of a change, looks very much like ripping them off (even if it isn't.)
Use contracts. Use email. Speak plainly.
> but merely an email trail will suffice to make your point and get the other party (if honorable) to pay.
This is true if and when you are expressive in your emails. As soon as a new feature is added to the scope, it is imperative that you speak out and say "Well, this is out of scope, but we can likely accommodate by adjusting the scope <however>".
Far too often I see freelancers just take on the work without mentioning it's a scope change, only to have to fight for the bill to be paid later.
In fact, most of the people I see complaining about customers not paying are due to a failure of setting appropriate expectations. If timelines are changing as a result of your efforts, notify the customer. If they're changing as a result of the customer's actions, notify the customer. If the scope is changing for any reason, notify the customer.
Do not expect to be able to submit a bill at the end of the day and have it be paid -- in companies of a sufficient size, the person paying the bills is not the same person you're dealing with on scope, and the person paying the bills is likely being paid, in part, to ensure that they aren't being over billed. Where that's the case, they'll examine the contract line by line and compare it to the invoice, and pity to whomever meets someone good at that job.
They're not trying to screw you over, they're just trying to make sure taht they're not getting ripped off, and changing how you bill the customer without notifying the customer of a change, looks very much like ripping them off (even if it isn't.)
Use contracts. Use email. Speak plainly.
> a contract is only good if the dollar amount is enough to get a lawyer involved as far as filing and pursuing any legal action
I disagree, contracts are much better than an email trail for keeping both parties on the same page. Email trails are murky and take effort to navigate. Emails sometimes lack a complete context. A contract is a canonical text for your work arrangement. Starting your work with a contract is not just good practice to CYA so you get paid, it's a good way to start conversations with your client to make sure you both get what you're looking for and don't want to kill each other (or if you do want to kill the other person you at least have to blame yourself first for agreeing to such foolish terms).
I disagree, contracts are much better than an email trail for keeping both parties on the same page. Email trails are murky and take effort to navigate. Emails sometimes lack a complete context. A contract is a canonical text for your work arrangement. Starting your work with a contract is not just good practice to CYA so you get paid, it's a good way to start conversations with your client to make sure you both get what you're looking for and don't want to kill each other (or if you do want to kill the other person you at least have to blame yourself first for agreeing to such foolish terms).
I generally just tell people that if they do the right thing and pay up, I will do the right thing and let them live. Also see: OpenROV.
In short you can, and will, get fucked by your client. Never do work without a contract. I would have thought it were common sense but I have seen far too many people owed thousands from clients they did work for who then gave them the finger. Most people/small companies don't have the money or don't want to spend the money on getting the money as it will end up costing them more so they just put it down to "that is the price you pay". Well that is a fucking stupid attitude and you are a fool for doing the work without a contract. Watch http://vimeo.com/22053820.
As enjoyable as freelancing can be, the headache of contracts on one end, and trying to get paid on the other, really put a damper on the "lifestyle." This looks like a great asset.
Question for other freelancers: how do you handle changes in a spec?
I've been nervous about this lately because I'm doing freelance work and the contract outlined a spec that we've now deviated from greatly. I'm not incredibly worried because we do bi-weekly billing but do you regularly ask clients to revise contracts if the spec changes?
And when you begin a contract, what level of specificity in a spec is a good idea? Obviously some level of specificity is a must, but an overly detailed contract leaves you in the position I described above where the contract does not actually describe the work in progress.
I've been nervous about this lately because I'm doing freelance work and the contract outlined a spec that we've now deviated from greatly. I'm not incredibly worried because we do bi-weekly billing but do you regularly ask clients to revise contracts if the spec changes?
And when you begin a contract, what level of specificity in a spec is a good idea? Obviously some level of specificity is a must, but an overly detailed contract leaves you in the position I described above where the contract does not actually describe the work in progress.
There are two different functional components of a contract; the "terms" and the "statement of work" (SOW). They're often combined in a single "standard contractor agreement" with a fill-in-the-blanks "SOW exhibit", but just as often you have a distinct master agreement with terms and a SOW for each project.
The SOW is responsible for laying out what work you're going to do. If a changing spec is a project risk, a typical consultant response to that would be to build some of the spec language into the SOW, so that if the spec changes in a way that materially harms your ability to complete the project, you have recourse with the client.
The typical best case scenario for spec slips on projects is a client that extends the contract to account for them, and a somewhat rigorous SOW is a good tool for making that happen.
The SOW is responsible for laying out what work you're going to do. If a changing spec is a project risk, a typical consultant response to that would be to build some of the spec language into the SOW, so that if the spec changes in a way that materially harms your ability to complete the project, you have recourse with the client.
The typical best case scenario for spec slips on projects is a client that extends the contract to account for them, and a somewhat rigorous SOW is a good tool for making that happen.
We basically wrote up what we called a change order. Detailed how we changed, or what we deviated on. Signed by both parties as just a cya sort of deal.
While #1 is getting a contract, in "Mark's" case, he has a claim for Unjust Enrichment.
If you have a client that uses work you did, even if you have no contract, you can still sue for damages under Unjust Enrichment laws in the US.
If you have a client that uses work you did, even if you have no contract, you can still sue for damages under Unjust Enrichment laws in the US.
There's theory (taught at Yale Law), and then there's practice. While you may be theoretically correct, on a practical level, the lack of a contract makes getting paid much more difficult. Unfortunately, I can't bill the client for the time or stress of the legal case, and winning is never a certainty. Consider that the client is much larger, and may have lawyers on staff full-time.
I'm guessing most freelance work is for pretty small amounts. Unless you are talking about a claim in excess of $10,000, it's not going to be worth pursuing, you will owe your lawyer more than that very quickly. If it's a local client you might have some luck in small claims court where you typically represent yourself.
I can see a client canceling a deal without paying after you have done work due to not having a contract. To actually use the work you produced and weasel out of paying with a "ha ha I tricked you into working for free" is really malicious. I would say that client would probably never have paid anyway. However you may force them to reveal their hand by signing a contract. They will probably try to find some other loophole, but at least you have some documentation that helps you to take legal action.
I have had client drag their feet on the contract and the down payment, but rush me to start. My feeling is that if you can't get a check when they are desperate for you to start, then it certainly will be difficult getting one after the work is complete.
The more eager you are for the gig, you may be more willing to agree to things. But definitely it's a always a good idea to be patient and make sure both sides agree to the terms before you invest your labor.
I have had client drag their feet on the contract and the down payment, but rush me to start. My feeling is that if you can't get a check when they are desperate for you to start, then it certainly will be difficult getting one after the work is complete.
The more eager you are for the gig, you may be more willing to agree to things. But definitely it's a always a good idea to be patient and make sure both sides agree to the terms before you invest your labor.
It works like this:
Companies have limited liability in the USA. They are subject to full market discipline. The owners of the companies are not.
And thus ... business between companies should take precautions such as getting paid a retainer, at milestones, etc. and assume that some payments will not be coming.
Meanwhile people (e.g. employees) can rely on the government to put heavy pressure on employers to pay them. I am in favor of more direct guarantees of basic living standards -- i.e. a basic income -- such as some European countries are doing. That way even the employer-employee relationship can be less regulated.
Companies have limited liability in the USA. They are subject to full market discipline. The owners of the companies are not.
And thus ... business between companies should take precautions such as getting paid a retainer, at milestones, etc. and assume that some payments will not be coming.
Meanwhile people (e.g. employees) can rely on the government to put heavy pressure on employers to pay them. I am in favor of more direct guarantees of basic living standards -- i.e. a basic income -- such as some European countries are doing. That way even the employer-employee relationship can be less regulated.
Just throwing this out there since I know the common wisdom is to "have a contract, duh".
I have a few clients who basically put me on a retainer, then I send them a bill. If you give an hourly rate + an estimate clients seem to be cool, provided they are actual businessses. The only clients I've ever had issues with are individuals (usually artists since I freelance electronic media) and that stems from budget / rampant psychotic narcissism. But with businesses, I state my rate I estimate hours & then I bill them.
I'm sure there is a more secure way of handling this with contracts but if a company I work remotely for ever stiffs me on a bill: 1. They better be closing up shop the next day or I'm gonna come after them hard. 2. They lose access to the skills I offer them. 3. I probably have accounts/services in their name that they can't alter/operate without my help, so they're really just shooting themselves in the foot & will likely come to realize this rather quickly.
Anyway worst case scenario I lose 1 payment (maybe it was 1-3 grand?). Maybe it's scary to think that a 3k payment might disappear but the reality is, after discussing with them they'll probably just hand it over anyway or you can settle in between. Even if I one day lose a thousand dollars (which I highly doubt) I can look back and smile knowing I never had to deal with a ton of legalese.
The reality of it is that businesses can't just stiff you on a bill if they agreed to pay for your services, and if you have nice clients who are trying to build a business they have no reason to hurt you if you do good work for them. But I understand not everyone has the luxury of sane clients. I certainly didn't back when I was dealing 1-on-1 with artists.
I have a few clients who basically put me on a retainer, then I send them a bill. If you give an hourly rate + an estimate clients seem to be cool, provided they are actual businessses. The only clients I've ever had issues with are individuals (usually artists since I freelance electronic media) and that stems from budget / rampant psychotic narcissism. But with businesses, I state my rate I estimate hours & then I bill them.
I'm sure there is a more secure way of handling this with contracts but if a company I work remotely for ever stiffs me on a bill: 1. They better be closing up shop the next day or I'm gonna come after them hard. 2. They lose access to the skills I offer them. 3. I probably have accounts/services in their name that they can't alter/operate without my help, so they're really just shooting themselves in the foot & will likely come to realize this rather quickly.
Anyway worst case scenario I lose 1 payment (maybe it was 1-3 grand?). Maybe it's scary to think that a 3k payment might disappear but the reality is, after discussing with them they'll probably just hand it over anyway or you can settle in between. Even if I one day lose a thousand dollars (which I highly doubt) I can look back and smile knowing I never had to deal with a ton of legalese.
The reality of it is that businesses can't just stiff you on a bill if they agreed to pay for your services, and if you have nice clients who are trying to build a business they have no reason to hurt you if you do good work for them. But I understand not everyone has the luxury of sane clients. I certainly didn't back when I was dealing 1-on-1 with artists.
There are worse things that can happen to you when you work without a contract than simply not getting paid. Contracts also set up liability and contract termination terms, and without that stuff in writing, you can end up in a he-said she-said situation over these issues.
You should always work under a contract. I have a hard time seeing why anyone wouldn't.
You should always work under a contract. I have a hard time seeing why anyone wouldn't.
Eh, I appreciate the effort that is being put into this argument but the reality of it is that it's not for me. If I have to drive an hour to see my client or send a lot of things back & forth in the mail it's really just time wasted.
A good professional relationship & a couple of emails is all I need for freelance. If you're talking about a long-term high dollar amount thing then sure, I understand.
& the reason I don't use one is simple -- I have an hourly rate. Whatever contract we come up with would look like this: "__ is my hourly rate. You will pay __ times the number of hours I worked." This has long been established since the first 1 or 2 interactions with any client and I think is obvious for any hourly service worker. Within the tech industry this is even standard for a lot of corporate consultants (I happen to be one).
For freelance, I provide work estimates but things change. All the comments I see on this thread are like "write a change order for each change, make sure you keep a record of scope". No thanks, not for me. I just give estimates, tell the client when we're going over-budget. If they seem concerned we can talk about it if they say "Keep going no worries" then I keep going, no worries.
I'm not at all saying that contracts aren't useful, it's just that the tech industry is really fast-paced and often involves remote work. If you're really concerned about stuff getting ugly, ask for a contract, sure. But I would do contract with 50% deposit because who actually wants to deal with going to court. At least you'd have 50% to sit on & think.
To each his own but I'm a programmer not a businessman. I net way more money streamlining my coding process than I do thinking about stuff like this.
A good professional relationship & a couple of emails is all I need for freelance. If you're talking about a long-term high dollar amount thing then sure, I understand.
& the reason I don't use one is simple -- I have an hourly rate. Whatever contract we come up with would look like this: "__ is my hourly rate. You will pay __ times the number of hours I worked." This has long been established since the first 1 or 2 interactions with any client and I think is obvious for any hourly service worker. Within the tech industry this is even standard for a lot of corporate consultants (I happen to be one).
For freelance, I provide work estimates but things change. All the comments I see on this thread are like "write a change order for each change, make sure you keep a record of scope". No thanks, not for me. I just give estimates, tell the client when we're going over-budget. If they seem concerned we can talk about it if they say "Keep going no worries" then I keep going, no worries.
I'm not at all saying that contracts aren't useful, it's just that the tech industry is really fast-paced and often involves remote work. If you're really concerned about stuff getting ugly, ask for a contract, sure. But I would do contract with 50% deposit because who actually wants to deal with going to court. At least you'd have 50% to sit on & think.
To each his own but I'm a programmer not a businessman. I net way more money streamlining my coding process than I do thinking about stuff like this.
"but I'm a programmer not a businessman"
Actually don't short change yourself just because you might not have gone to "business" school. (Did you?)
For example:
"If I have to drive an hour to see my client or send a lot of things back & forth in the mail it's really just time wasted."
Which makes a lot of sense. You have to factor in the pros and cons of all of this which you are clearly doing. What do I stand to gain? What do I stand to lose?
"I just give estimates, tell the client when we're going over-budget."
Exactly. State the framework "$x per hour" and keep them informed of any changes. Super easy to do with email as well. Communicate. I would also argue that getting people to sign things each and every time will get you less revenue because it gives them an opportunity to focus on the dollar to much. Once again, depending on the dollar amount and who you are dealing with. All situations are different.
Actually don't short change yourself just because you might not have gone to "business" school. (Did you?)
For example:
"If I have to drive an hour to see my client or send a lot of things back & forth in the mail it's really just time wasted."
Which makes a lot of sense. You have to factor in the pros and cons of all of this which you are clearly doing. What do I stand to gain? What do I stand to lose?
"I just give estimates, tell the client when we're going over-budget."
Exactly. State the framework "$x per hour" and keep them informed of any changes. Super easy to do with email as well. Communicate. I would also argue that getting people to sign things each and every time will get you less revenue because it gives them an opportunity to focus on the dollar to much. Once again, depending on the dollar amount and who you are dealing with. All situations are different.
heh thanks for your vote of confidence... I've been getting a lot of flack on this thread for apparently having a controversial view but it's something I've reached through years of freelance in NYC & long-term contract work with a couple of major corporations. No business school, just easy-come-easy-go focus-on-the-bigger-picture engineering gigs.
I say I'm not a businessman not because I don't do business, but because I just try to keep my focus on my skills that are actually generating revenue. In the end we're all at the will of the market and my personal belief is that the more pressing need is to understand those ebbs and flows rather than trying to build a safe-room. Chomsky I think said something about how 9/11 couldn't be a conspiracy because it would involve too many irrational actors working in concert. We must assume man to be rational. Kindof a non-sequitur, I know, but I approach business with this attitude. Assume you are dealing with rational actors, be a good judge of character (don't do a ton of work on spec for a business that is clearly failing, for example), and ride the wave. With this approach, the potential for gains is great and the losses are there but can easily be left in the rear-view mirror. Otherwise you will spend your week working and your weekends doing pro-bono bookkeeping for your own ventures. Seems we are very much in agreement here, hah.
I say I'm not a businessman not because I don't do business, but because I just try to keep my focus on my skills that are actually generating revenue. In the end we're all at the will of the market and my personal belief is that the more pressing need is to understand those ebbs and flows rather than trying to build a safe-room. Chomsky I think said something about how 9/11 couldn't be a conspiracy because it would involve too many irrational actors working in concert. We must assume man to be rational. Kindof a non-sequitur, I know, but I approach business with this attitude. Assume you are dealing with rational actors, be a good judge of character (don't do a ton of work on spec for a business that is clearly failing, for example), and ride the wave. With this approach, the potential for gains is great and the losses are there but can easily be left in the rear-view mirror. Otherwise you will spend your week working and your weekends doing pro-bono bookkeeping for your own ventures. Seems we are very much in agreement here, hah.
Assume you are dealing with rational actors, be a good judge of character…
You work for corporations, right?
It's never a good idea to bet big money that a human being who is rational and classy today will remain so for months or years in the future. (After you've lived with a few Alzheimer's patients, you'll know what I'm talking about.) But corporations aren't even human. Their character is literally for sale. The honest and rational person you worked for on Monday could be bought out and replaced by a knuckle-dragging troll before the week is out.
Seven years from now, when one of your customers has been acquired by some new company that has never heard of you, and that new company's East Texas-based law firm decides to make some easy money by sending out letters like this:
"We had a software problem last month that we believe cost us $1 million and which we traced to a line of code that you committed eight years ago. Would you like to pay us $200k, or defend our incipient lawsuit?"
What are you gonna do? My plan is to take the problem to my lawyer, who will say: "Can you give me a copy of the signed contract that, together with an hour of my time, will make this problem go away forever?" And I will say: "Yes".
And it's not like this contract took months of my time to create. If you're not picky, you call up a lawyer, you say "I need a boilerplate consulting contract," they pull one out of the files and hand it to you.
You work for corporations, right?
It's never a good idea to bet big money that a human being who is rational and classy today will remain so for months or years in the future. (After you've lived with a few Alzheimer's patients, you'll know what I'm talking about.) But corporations aren't even human. Their character is literally for sale. The honest and rational person you worked for on Monday could be bought out and replaced by a knuckle-dragging troll before the week is out.
Seven years from now, when one of your customers has been acquired by some new company that has never heard of you, and that new company's East Texas-based law firm decides to make some easy money by sending out letters like this:
"We had a software problem last month that we believe cost us $1 million and which we traced to a line of code that you committed eight years ago. Would you like to pay us $200k, or defend our incipient lawsuit?"
What are you gonna do? My plan is to take the problem to my lawyer, who will say: "Can you give me a copy of the signed contract that, together with an hour of my time, will make this problem go away forever?" And I will say: "Yes".
And it's not like this contract took months of my time to create. If you're not picky, you call up a lawyer, you say "I need a boilerplate consulting contract," they pull one out of the files and hand it to you.
I work for corporations through a consulting firm. Most won't let you deal with them directly. But I get a paycheck every 2 weeks, I can't really see them being able to take that away from me retroactively...
But trust me the corporations (the one I work for is an international electronics manufacturer) are very polite and respectful and very much understand the realities of risk/reward, and that you have to spend money to make money. And they all have an army of QA engineers double-checking work because they will not allow $1 million dollars of business to be dependent on a single point of failure. Even if they bring you to court (they never would) I'd assume its VERY difficult to get compensation. If you hire an employee and he does a bad job, do you get to sue him for damaging your profit margins? Hell no, you just get to fire him and hire a new guy. If everyone were legally on the hook for the work they produced, it would be like assuming that everyone you ever hire is required to be omniscient. The reality is, you can't hire someone with a 50 IQ and then sue them because you believe one of their lines of code hurt your profitability. It's your fault for hiring them.
I gotta say a lot of these responses I'm getting are very paranoid. When a company pays you for work it's really hard for them to take that away from you. The most that's ever really at stake is your current paycheck and not even that really because the department of labor is VERY harsh on reputable employers who deny paychecks.
It seems like your point is more of a fantasy scenario where they give you a billion dollars & 5 years of unsupervised time to design a huge blackbox program that has to do X, then find out it doesn't do X. The software industry is simply not like this. All tasks are broken up into discrete components and if you're not doing a good job they'll fire you and bring in a new team to finish the job.
The ONLY way I've actually heard of an employee losing $$ is when they have a long-term employment agreement and they break it. It's kindof like an athlete signing a 10-year deal & walking off the field after 6 months. Then, yes, you're liable.
Otherwise being a paid consultant is pretty much the same thing as being an employee. Also, I doubt that companies will sign some "boilerplate contract" that absolves you of all liability. They'd rather hire someone who is more confident. That's not a dig, I really mean that sincerely. Over-negotiating and specifying a bunch of "unrealistic-covering-my-ass-terms" can come off as amateur.
But trust me the corporations (the one I work for is an international electronics manufacturer) are very polite and respectful and very much understand the realities of risk/reward, and that you have to spend money to make money. And they all have an army of QA engineers double-checking work because they will not allow $1 million dollars of business to be dependent on a single point of failure. Even if they bring you to court (they never would) I'd assume its VERY difficult to get compensation. If you hire an employee and he does a bad job, do you get to sue him for damaging your profit margins? Hell no, you just get to fire him and hire a new guy. If everyone were legally on the hook for the work they produced, it would be like assuming that everyone you ever hire is required to be omniscient. The reality is, you can't hire someone with a 50 IQ and then sue them because you believe one of their lines of code hurt your profitability. It's your fault for hiring them.
I gotta say a lot of these responses I'm getting are very paranoid. When a company pays you for work it's really hard for them to take that away from you. The most that's ever really at stake is your current paycheck and not even that really because the department of labor is VERY harsh on reputable employers who deny paychecks.
It seems like your point is more of a fantasy scenario where they give you a billion dollars & 5 years of unsupervised time to design a huge blackbox program that has to do X, then find out it doesn't do X. The software industry is simply not like this. All tasks are broken up into discrete components and if you're not doing a good job they'll fire you and bring in a new team to finish the job.
The ONLY way I've actually heard of an employee losing $$ is when they have a long-term employment agreement and they break it. It's kindof like an athlete signing a 10-year deal & walking off the field after 6 months. Then, yes, you're liable.
Otherwise being a paid consultant is pretty much the same thing as being an employee. Also, I doubt that companies will sign some "boilerplate contract" that absolves you of all liability. They'd rather hire someone who is more confident. That's not a dig, I really mean that sincerely. Over-negotiating and specifying a bunch of "unrealistic-covering-my-ass-terms" can come off as amateur.
To add to this: I would guess that the majority of our contracts are boilerplate, and executing them involves no additional legal expense.
Side note from when I was in the printing industry and handled forms and contracts..
You stand a better chance of getting something agreed to (in some contracts) if you are using a pre-printed form with fill in the blanks or a form that appears to be a "standard" form. (Like a lease etc.)
A "standard" form is more likely (once again by certain parties) to just get signed and not questioned because it appears to be "the way things are done". Presenting someone with a 10 page microsoft word document screams "shit I'd better read this".
Car dealers do this as well. They have forms where the have pre-printed in the gotcha fees (title transfer etc.) as if to say "hey this is the way it's done and everyone is charged that way".
You stand a better chance of getting something agreed to (in some contracts) if you are using a pre-printed form with fill in the blanks or a form that appears to be a "standard" form. (Like a lease etc.)
A "standard" form is more likely (once again by certain parties) to just get signed and not questioned because it appears to be "the way things are done". Presenting someone with a 10 page microsoft word document screams "shit I'd better read this".
Car dealers do this as well. They have forms where the have pre-printed in the gotcha fees (title transfer etc.) as if to say "hey this is the way it's done and everyone is charged that way".
I don't write fiddly "change orders" either. I still work under a contract!
I agree with this, completely.
During the first 5 or 6 years of my 10 years of freelance, I almost never had a contract in place, and I _never_ got fucked over for it.
That's not to say it's OK to avoid contracts. Only a single set of data points that says it's possible to do business without them and still do very well.
Of course larger clients will generally require them to cover their own asses. And any project that's over x, where x seems like a good deal of money, should _always_ be covered by a contract - both for your safety and the safety of your client.
But the cynical idea that everyone is out to get you is silly. Yes, get a lawyer to get a solid standard contract together for you. But then pay attention to the clients you're dealing with. A contract gives you a legal standing in court, but you still have to go to court. There's a lot more to be said for choosing clients that aren't going to cause trouble in the first place.
During the first 5 or 6 years of my 10 years of freelance, I almost never had a contract in place, and I _never_ got fucked over for it.
That's not to say it's OK to avoid contracts. Only a single set of data points that says it's possible to do business without them and still do very well.
Of course larger clients will generally require them to cover their own asses. And any project that's over x, where x seems like a good deal of money, should _always_ be covered by a contract - both for your safety and the safety of your client.
But the cynical idea that everyone is out to get you is silly. Yes, get a lawyer to get a solid standard contract together for you. But then pay attention to the clients you're dealing with. A contract gives you a legal standing in court, but you still have to go to court. There's a lot more to be said for choosing clients that aren't going to cause trouble in the first place.
all good advice. I've actually had issues working with larger clients because they try to give all-inclusive project prices. For one I fulfilled it and weaseled into off-contract hourly rate and that actually worked out much much better for me.
If you give a tech consultant a job they will code from A to B. The client is always the one throwing up roadblocks and change requets. If they don't understand that they are on the hook for those billing hours, yeah you don't have a good client there...
ONLY USE HOURLY RATE + ESTIMATE that's the best advice I can give on top of enobrev's. Maybe others disagree, but in my experience project rates mean the client will try to take advantage or if you get a project price that seems absurdly high & you get that flash of $$ signs in your eyes, the client will usually realize they overpaid and you'll lose potential future business with them. Just use a rate and be somewhat ethical about it. Even if you don't have a huge client base, they will all come back around for more work every few months.
If you give a tech consultant a job they will code from A to B. The client is always the one throwing up roadblocks and change requets. If they don't understand that they are on the hook for those billing hours, yeah you don't have a good client there...
ONLY USE HOURLY RATE + ESTIMATE that's the best advice I can give on top of enobrev's. Maybe others disagree, but in my experience project rates mean the client will try to take advantage or if you get a project price that seems absurdly high & you get that flash of $$ signs in your eyes, the client will usually realize they overpaid and you'll lose potential future business with them. Just use a rate and be somewhat ethical about it. Even if you don't have a huge client base, they will all come back around for more work every few months.
I probably have accounts/services in their name that they can't alter/operate without my help, so they're really just shooting themselves in the foot & will likely come to realize this rather quickly.
Just as a counterpoint to this, it's possible for a client to not pay you for services rendered and sue you for not maintaining previous accounts/services for them, and the courts might very well take their side, depending on the specifics. Whether there is a written contract or not, there is a contract when you agree to exchange services for money; the only difference is that if it's not written and a conflict arises, you're depending on the court system to guess what the agreement was based on the word of two opposing parties.
I understand what you're saying though; realistically a lot of work gets done all over the world every day without written contracts, and everyone is okay. My general rule of thumb is to never extend more than a few thousand dollars of credit to any client without a written contract, and less if the job could involve any sort of extra liabilities. For a retainer-style agreement like the one you describe, I like to have a contract in place from the get-go, but with the "terms of notice" set so that things like email count--that way, if we ever negotiate for a specific project I can do it over email and count that as a written record of our agreement should the need ever arise.
Just as a counterpoint to this, it's possible for a client to not pay you for services rendered and sue you for not maintaining previous accounts/services for them, and the courts might very well take their side, depending on the specifics. Whether there is a written contract or not, there is a contract when you agree to exchange services for money; the only difference is that if it's not written and a conflict arises, you're depending on the court system to guess what the agreement was based on the word of two opposing parties.
I understand what you're saying though; realistically a lot of work gets done all over the world every day without written contracts, and everyone is okay. My general rule of thumb is to never extend more than a few thousand dollars of credit to any client without a written contract, and less if the job could involve any sort of extra liabilities. For a retainer-style agreement like the one you describe, I like to have a contract in place from the get-go, but with the "terms of notice" set so that things like email count--that way, if we ever negotiate for a specific project I can do it over email and count that as a written record of our agreement should the need ever arise.
Yeah it's not like I'd use a threat like "I'll disconnect all your accounts!" but if they have some EC2 instance they don't understand how to operate it does give you some leverage since they will be needing some admin done at some point in the near future. I really doubt they can sue you for refusing to perform maintenance on their systems since we as programmers do not become indentured servants simply from having done business with them in the past. Tons of high-end engineers leave big projects all the time with the attitude of "well, you should've realized I might not be around forever" and it hurts projects but that's capitalism, it's one of the few rights that give employees an edge in the market.
If we never had an agreement for me to document all my work (extremely common) then the best they can do is say "hand over the keys" but they can't make you drive. If they're willing to invest in a new engineer's learning curve, the problems must be way deeper than 1 bill & you should've seen it coming, enough to write out a formal contract for that last bit. In hostile workplaces contracts should be the norm, sure, but I just try to avoid those situations to begin with.
Good advice on the email bit, but I kindof just assume that those count as written records. Either courts acknowledge them or they don't I'm not sure that explicitly saying they do really changes much.
Also, you say "there is a contract when you agree to exchange services for money" but if they don't pay you... didn't they already break that contract? Why would you have to do due diligence (maintenance) for someone who refuses to acknowledge your initial agreement?
If we never had an agreement for me to document all my work (extremely common) then the best they can do is say "hand over the keys" but they can't make you drive. If they're willing to invest in a new engineer's learning curve, the problems must be way deeper than 1 bill & you should've seen it coming, enough to write out a formal contract for that last bit. In hostile workplaces contracts should be the norm, sure, but I just try to avoid those situations to begin with.
Good advice on the email bit, but I kindof just assume that those count as written records. Either courts acknowledge them or they don't I'm not sure that explicitly saying they do really changes much.
Also, you say "there is a contract when you agree to exchange services for money" but if they don't pay you... didn't they already break that contract? Why would you have to do due diligence (maintenance) for someone who refuses to acknowledge your initial agreement?
I really doubt they can sue you for refusing to perform maintenance on their systems
Of course they can. In most first world jurisdictions, anyone is free to bring a lawsuit against anyone else over anything, and then it's up to the court to decide on the merits of the case. If the court finds that the case was without merit, they might be able to compensate the successful party in some way depending on your particular legal system, but that would probably happen later.
What's more, if you created a system for someone, that system requires maintenance, your original contract did not specify who was responsible for that maintenance, and your clients sue claiming that they already paid for you to do that work and you're refusing to do it, you could well find yourself on the wrong end of a judgement.
In short, you seem to have quite a few misunderstandings about the basics of how contract law works, unless your local jurisdiction is a lot different to most. This is exactly why you should have everything clearly specified in a written contract, and it's also why paying an "expensive" lawyer to give you proper advice in your particular situation is almost certainly a good investment. Probably you should expect to spend significant time with a real lawyer for your first contract, so you have some idea of the general legal areas you need to consider, and then depending on how things go you might find just a quick review by someone who knows what they're doing is sufficient for a lot of later work.
Of course they can. In most first world jurisdictions, anyone is free to bring a lawsuit against anyone else over anything, and then it's up to the court to decide on the merits of the case. If the court finds that the case was without merit, they might be able to compensate the successful party in some way depending on your particular legal system, but that would probably happen later.
What's more, if you created a system for someone, that system requires maintenance, your original contract did not specify who was responsible for that maintenance, and your clients sue claiming that they already paid for you to do that work and you're refusing to do it, you could well find yourself on the wrong end of a judgement.
In short, you seem to have quite a few misunderstandings about the basics of how contract law works, unless your local jurisdiction is a lot different to most. This is exactly why you should have everything clearly specified in a written contract, and it's also why paying an "expensive" lawyer to give you proper advice in your particular situation is almost certainly a good investment. Probably you should expect to spend significant time with a real lawyer for your first contract, so you have some idea of the general legal areas you need to consider, and then depending on how things go you might find just a quick review by someone who knows what they're doing is sufficient for a lot of later work.
Not to sound confrontational but I think you have quite a few misunderstandings about the software industry and at-will employment. Never have I ever seen any situation where an engineer is beholden to a client without having signed a long-term service contract or employment agreement.
In most places an individual can't be compelled to do much of anything for a client or employer regardless of what a contract says, since generic laws against slavery and similar concepts will apply. This is true almost everywhere in the first world, whether or not it has at-will employment. Normally there are some special legal provisions for cases where you need this not to apply, such as the military or emergency services.
However, it is entirely possible that a client could successfully claim back much of the compensation they paid for the original work via a civil suit if they subsequently argued that the original fee included maintenance and that maintenance was not in fact being carried out.
If it could be argued that the lack of maintenance also resulted in other damage to the client, they could potentially go after compensation for that damage as well. In the absence of a written contract putting clear (and legally enforceable) limits on such things, that could be far more expensive than just paying back the original revenues.
As an aside, this is particularly dangerous for freelancers, because if you don't have a written agreement making clear who the client was actually contracting to do the work, a court might find that it was the freelancer personally who was party to the agreement and not any corporate entity they normally work through. That would leave no legal shield to protect the freelancer from losing everything they personally own to settle a severe damages award.
However, it is entirely possible that a client could successfully claim back much of the compensation they paid for the original work via a civil suit if they subsequently argued that the original fee included maintenance and that maintenance was not in fact being carried out.
If it could be argued that the lack of maintenance also resulted in other damage to the client, they could potentially go after compensation for that damage as well. In the absence of a written contract putting clear (and legally enforceable) limits on such things, that could be far more expensive than just paying back the original revenues.
As an aside, this is particularly dangerous for freelancers, because if you don't have a written agreement making clear who the client was actually contracting to do the work, a court might find that it was the freelancer personally who was party to the agreement and not any corporate entity they normally work through. That would leave no legal shield to protect the freelancer from losing everything they personally own to settle a severe damages award.
Eh I'm sorry I just don't buy it. Without a maintenance contract, they could never win the argument that you were required to perform maintenance. And freelancers/consultants/employees-in-general have very little liability. I code people's websites all the time with 0% fear of losing my bank account in court.
And freelancers/consultants/employees-in-general have very little liability.
If what you wrote there were necessarily true, nobody working as a freelancer/consultant would need to set up their own corporate entity as a legal shield, nobody in that field would need professional indemnity insurance, and insurers who offer professional indemnity insurance to IT contractors here in the UK wouldn't routinely ask specific questions about whether those contractors were going to be working with clients in the United States because of the risk of having to cover significant legal bills increases so much in that case that a higher premium is indicated.
I code people's websites all the time with 0% fear of losing my bank account in court.
Well, that's your choice, and of course you're entitled to your personal opinion.
I've worked with other freelancers who didn't feel the need to have a written contract with a long-term client either, but I would never recommend that approach myself.
If what you wrote there were necessarily true, nobody working as a freelancer/consultant would need to set up their own corporate entity as a legal shield, nobody in that field would need professional indemnity insurance, and insurers who offer professional indemnity insurance to IT contractors here in the UK wouldn't routinely ask specific questions about whether those contractors were going to be working with clients in the United States because of the risk of having to cover significant legal bills increases so much in that case that a higher premium is indicated.
I code people's websites all the time with 0% fear of losing my bank account in court.
Well, that's your choice, and of course you're entitled to your personal opinion.
I've worked with other freelancers who didn't feel the need to have a written contract with a long-term client either, but I would never recommend that approach myself.
> The reality of it is that businesses can't just stiff
> you on a bill if they agreed to pay for your services
Perhaps it actually is better in the software world, where clients (hopefully) know they are going to need you in the future.
Anyway, good for you that you can find clients that know they need to pay you; but not all businesses have figured that out.
Hmm I'm sorry to hear that. :-/
But if they brought a civil suit they would win easily, no? That's what I really meant by that line. My father is a lawyer & every time I bring up something like that to him he laughs. "Of course they have to pay, it's just too much trouble sometimes. Usually just the threat of legal action is good enough."
Maybe it's not so simple but that's a shame.
But if they brought a civil suit they would win easily, no? That's what I really meant by that line. My father is a lawyer & every time I bring up something like that to him he laughs. "Of course they have to pay, it's just too much trouble sometimes. Usually just the threat of legal action is good enough."
Maybe it's not so simple but that's a shame.
Oh, yeah, they eventually get paid. It's just shocking how many people try to not pay them.
Years ago I worked for a mom & pop computer consulting shop and I was surprised by how many small businesses just didn't pay their bills.
Anecdotally, we did a lot of work with local law firms and they were the worst. (I guess because what're you gonna do? Sue them?)
Anecdotally, we did a lot of work with local law firms and they were the worst. (I guess because what're you gonna do? Sue them?)
I may be misunderstanding something here. To paraphrase, the argument this article opens with is "we didn't agree that you were working for me, so I don't have to pay you" along with "because we didn't have an agreement which protects your ownership of your work, I can do whatever I want with it." I thought the law (shop law?) defaults to an independent contractor owning his or her own work in most (every?) states? Even if the law defaults to a work-for-hire agreement (where the client owns the work outright) for independent contractors, how could the client reasonably argue that he/she somehow doesn't need to compensate the contractor (essentially saying "Me? You weren't working for me!"), while simultaneously arguing that somehow the client has any/all rights to the work?
I'd hope that anyone in this kind of situation would think through this kind of logic, short circuit to "okay, I'm dealing with a ripe asshole here" and take the same action which they would toward anyone else outright stealing from them.
Edit:
Regarding contract/no contract, experienced/knowledgeable clients will require a contract when dealing with an independent contractor, even if for no other purpose than to protect their ability to make use of the output of said contractor's work.
I'd hope that anyone in this kind of situation would think through this kind of logic, short circuit to "okay, I'm dealing with a ripe asshole here" and take the same action which they would toward anyone else outright stealing from them.
Edit:
Regarding contract/no contract, experienced/knowledgeable clients will require a contract when dealing with an independent contractor, even if for no other purpose than to protect their ability to make use of the output of said contractor's work.
"Federal courts now routinely accept an individual’s electronic “click” or “tap” within an electronic transfer of copyright document as a valid “electronic signature” fulfilling the signature requirements of the Copyright Act of 1976."
See things like this are dangerous. To the uninformed the above looks so simple. "Federal courts now accept" (and the rest of this article) totally ignore the cost and practicality of bringing any legal action. And guess what? The other side, when they are trying to screw you, is aware of that and will use it against you.
Back in the late 90's we had the opposite thing happen. Paid $6500 +- for a freelancer (related to a well know internet celebrity at the time) to write some software (total cost maybe 20k iirc.) Time dragged on and on and they were not able to deliver.
You know what? We just walked away from the money. What to do? Sue someone in another state over $6500?
See things like this are dangerous. To the uninformed the above looks so simple. "Federal courts now accept" (and the rest of this article) totally ignore the cost and practicality of bringing any legal action. And guess what? The other side, when they are trying to screw you, is aware of that and will use it against you.
Back in the late 90's we had the opposite thing happen. Paid $6500 +- for a freelancer (related to a well know internet celebrity at the time) to write some software (total cost maybe 20k iirc.) Time dragged on and on and they were not able to deliver.
You know what? We just walked away from the money. What to do? Sue someone in another state over $6500?
I'm no lawyer but wouldn't email communication at the very least be used as evidence, if not an "informal contract". The scope of the work had to be defined somewhere. Obviously this falls apart if this was all done via verbal communication but its always a good idea to have this in some form you can store for safe keeping. Even recorded phone conversations count.
A purposeful contract makes sense in every situation but if you have clear documentation without one, you should be pretty well off when a problem arises.
The notion of hourly work is something I try to divorce from my thoughts. Yes I do base what I do on some hourly metric but the complexity has to matter to some degree. Generally more complex = way more hours but that's not always the case. Most of my problems in this area come from uncovering a hornets nest when something just seems simple enough on the surface.
I like to think of it this way. Office is still $x per seat. I may have figured out 98% of a domain but I should charge the last customer the work it took to get to that point from customer #1. I may have to do much less work if I've done my job right but there's no telling exactly what of that they'll want to unravel in the process. Unlike Office I don't have a bankroll for r&d I can charge a premium for to recoup my losses over clients. Clients need to assume that just because they want what someone else has its never what they paid - the hours it takes to just tweak it for them.
A purposeful contract makes sense in every situation but if you have clear documentation without one, you should be pretty well off when a problem arises.
The notion of hourly work is something I try to divorce from my thoughts. Yes I do base what I do on some hourly metric but the complexity has to matter to some degree. Generally more complex = way more hours but that's not always the case. Most of my problems in this area come from uncovering a hornets nest when something just seems simple enough on the surface.
I like to think of it this way. Office is still $x per seat. I may have figured out 98% of a domain but I should charge the last customer the work it took to get to that point from customer #1. I may have to do much less work if I've done my job right but there's no telling exactly what of that they'll want to unravel in the process. Unlike Office I don't have a bankroll for r&d I can charge a premium for to recoup my losses over clients. Clients need to assume that just because they want what someone else has its never what they paid - the hours it takes to just tweak it for them.
If you don't use a contract you're asking for trouble. Be like James Bond in The World Is Not Enough- don't hesitate in jumping into bed with Elektra King (the client), but don't overlook the possibility that she's been brainwashed by an evil sociopathic genius.
You might be able to guess them with sufficient knowledge of the law of your jurisdiction. In the US (other than Louisiana [1]), you'd need to know at least State and possibly Federal contract law, common law, and a bunch of court cases.
[1] Louisiana based its law on French and Spanish law, which derive from Roman law. The other 49 states base their law on English common law.