Insights

On the back-foot with client contracts?

You’ve won a new client, you’re thrilled and excited with great expectations for the future. You’re looking to working together with this client. You think back over the past few months with this new prospective client from being shortlisted, various client meetings, the pitch itself and those late nights before the pitch – so much work, time and money invested by you and the team.

Then the client sends through their contract for the agency to sign. They may even position it as “Can you just sign our normal agency contract” suggesting it is standard and previously happily signed by many other agencies. You’re thinking ‘I’m sure it’s ok’.

Contracts are not the most exciting read. I suspect that’s deliberate so we browse and scan it quickly thinking ‘it’s fine’. I don’t want to cause a problem right at the start of the relationship. In reality we’re on the back-foot receiving THEIR contract. It’s been written by THEIR lawyers for THEIR benefit totally. It was not written for your benefit.

The ideal is to work to YOUR contract.

Is that an option? Could you have pre-empted the client and got your contract on their desk? If that’s not possible then you have to work with the client’s contract. The client’s contract is not set in stone. It is not impossible to change – although some clients will make out it is unchangeable.

If the contract seems particularly onerous you should get your legal adviser to provide their opinion. Money spent now on legal fees will be a good investment.

You may find during these challenging Covid-19 times that clients want to renegotiate or change their contract with the agency. Because these times are so exceptional it is tempting to agree to their change requests. As hard as it might be don’t simply say ‘yes’ to their requests (or are they demands?) What concessions could you get in exchange? Demands to come down in price are easy to agree to. Increasing your price in the future is never easy.

Read the contract carefully. Don’t rush. Don’t assume everything will be fine. Highlight those areas which you’re unhappy or uncertain about. Read it again – particularly looking for where the agency could be at risk. Identify clauses which from your perspective are “non-negotiable” and those which are “ok to live with”. Get a colleague to read the contract seeing it through another pair of eyes.

Look particularly at the areas covering:

• Remuneration – is an annual increase or RPI increase included, probably not.
• Payment terms – do they coincide with yours? (cash flow is so important)
• Notice period – now is the best and probably the only time you can push for a longer notice period.
• Scope of work – is it vague or highly specific? What do you want?
• Intellectual Property – how is IP tackled? Many big corporates try to take ownership of all IP shown to them by their agency. Or do you want to retain ownership and copyright? This is often a tricky area but worth pushing for. An agency’s IP can have huge value and is often simply given away like it’s worthless. At minimum you could use it as leverage for another concession you want.
• Cancellation and delays – how will cancellation and delays of projects be tackled?
• Precedents – what are you about to agree to that in 3 year’s time you regret?

Then identify those areas where you want to make changes. Can you change a clause which provides protection for the client to a clause providing protection for the agency as well.

Then go back to the client saying “we’ve gone through your contract and mostly it’s fine, 95% is great. However we do have a few important changes and a few minor points”.

Provide your list of amends to the client. These may all be accepted by the client or you may have a negotiation on your hands over some contentious points. You need to decide how far you will push your interests and whether you are willing to say ‘no’ and walk away.

Finally, dust off your existing contracts with current clients. It is common to find the scope of work has changed considerably. How do your current client contracts need to be updated?