Here are all the things you should be looking at before signing a freelance contract, according to lawyers and seasoned freelancers

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Here are all the things you should be looking at before signing a freelance contract, according to lawyers and seasoned freelancers
couple reviewing paperwork
  • Although intimidating, it's important for freelancers to go through the contracts that they're signing.
  • Lawyers and successful freelancers recommended having contracts, even if they're not necessary, to ensure you know what the expectations of your projects are.
  • Pay close attention to payment sections, especially regarding overtime and extra meetings, in order to make clear when and how you're getting paid.
  • Also include an indemnification clause in case something in the project goes wrong and legal action is taken.
  • Click here for more more BI Prime stories.

One of the most important, and yet most overlooked, aspects of running a freelance business is knowing how to read over a contract. The amount of legalese found in these documents can be overwhelming to the average person - but just as large companies protect themselves by way of contract, it's also important for freelancers to have some basic understanding of what it is they're signing and thus legally agreeing to.

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So what kinds of things should you be looking for regarding your contracts? Business Insider spoke with a number of contract experts, including lawyers and experienced freelancers, for their insights.

Are contracts always necessary?

"Contracts are not always necessary, but are often the wisest course of action," said Vanessa Matsis-McCready, assistant general counsel and senior human resources consultant for Engage PEO, a professional employer organization that provides HR services to small- and mid-sized business owners nationwide. Matsis-McCready sited that in some places, like New York City, there are parameters stating where contracts should be provided under the Freelance Isn't Free Act (Local Law 140). You can also reach out to the Freelancer's Union for guidance on how to figure out your state's laws.

"Although an email can be sufficient from a legal perspective (if it includes the right terms), the freelancer is missing a huge opportunity by not having their own contract. Investing in a contract that you can use with all your clients not only protects your interests, but it makes you appear more credible, reliable, and professional," said Heather Hubbard, an attorney and founder of All Rise, a personal and professional development coaching service, who previously worked for an AmLaw 200 Firm - one of the 200 highest-grossing law firms in the country.

Heather Hubbard

Both Matsis-McCready and Hubbard added that if a contract is not provided by an employer, it's highly recommended to create a template contract yourself in order to protect your interests. The Freelancers Union provides a contract creation tool which can be customized to fit your needs.

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Seattle-based freelance writer, author, and writing coach Paulette Perhach learned the importance of having a contract the hard way.

"So many times a project started without a contract in place and it's just a recipe for a nightmare. I once did $600 worth of work that the client had verbally agreed upon but acted like he had no idea … He stiffed me," said Perhach.

Give the payment clauses a good looking through

Once you have a contract, experts agreed that the most important thing to look at is the payment clause. This means not only ensuring you have the agreed upon amount per deliverables, but also additional fees, payment schedule, late fees, and early-pay discounts (if applicable).

"Put a surcharge for weekend or rush work. That way, when the client asks, you can say yes if you want to and get a little extra for having to rearrange your schedule," advised Perhach.

Consider adding small fees for additional time spent on work, such as meetings.

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"Include language to get paid for … meetings that are not cancelled far enough in advance to avoid … loss of time," added NYC-based Howard Freedman, a lawyer who has specialized in, among other things, independent contractor agreements, general commercial contracts, content licensing, and other intellectual property issues for over 30 years.

Mechi Annaís Estévez Cruz, a freelance writer and owner of a small communications agency, also suggested negotiating away from net-30s (being paid within 30 days of invoice) and onto immediate payment.

"My employees don't get paid on a net-30 … We have bills due, too. If you are professional and courteous, great clients will understand," she added.

What happens when timely payment isn't happening?

Freelancers frequently hear horror stories of never receiving payment and are often unsure how to prevent it, or what steps to take next.

"Nothing can completely ensure timely payment without payment in advance of providing any deliverables or work product," said Freedman.

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He recommended all freelance contracts include language stating that the client can only use the deliverables after paying the freelancer in full. In the event of non-payment, you'd at least retain all rights to the work. Freedman also suggested getting paid per milestone if it's a lengthy freelance project, and withholding work until most if not all money has been paid.

Freedman and Hubbard also recommended asking for partial payment upfront, adding a recommendation for obtaining credit card information and including language in your contract that allows you to charge for the balance.

"If very concerned about the financial ability of the buyer to pay, consider requiring the buyer to get a guarantor (written guarantee) of the payment," added Freedman.

When a client fails to pay, freelancers often end up with little recourse. Some take their fight to social media, which sometimes puts a fire under a large publication to do the right thing.

"Although you may have the right to sue to collect payment, it's often not worth the time or energy to hire an attorney or file a lawsuit," said Hubbard.

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Freedman recommended hiring a debt collector, going to an attorney to send a demand letter for payment, or going to small claims court - all of which can be done without hiring an attorney.

"If a large sum is owed, consider engaging an attorney to file suit against the company," he added.

Reflect on the scope of work - and adjust payment clauses as needed

Another pain point for freelancers is the issue of scope creep - when a client asks for additional work outside of what was agreed upon initially, without added pay. Hubbard said that setting expectations along with ongoing communication is key to avoiding this issue.

"Kick off the project by confirming roles, deliverables, and deadlines," she said. "As soon as a client starts to suggest you go beyond the scope, it's your responsibility … to raise the issue that very moment." She added that freelancers should see if a client is open to expanding the contract to reflect the new scope and rates.

While these conversations are important, they aren't always easy for freelancers to bring up - especially those who are new to freelancing.

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Estévez Cruz cited the precariousness of freelance business (due to a lack of job security, benefits, and regular, guaranteed pay) as reasons why freelancers often struggle to point out when their contracts aren't being respected.

"When a client asks you to do more than what you are paid for, ask yourself if the situations were reversed if your client would be amenable to being asked to do more work without more pay. Most of the time, the answer to that is no. As freelancers, we also have the right to set down professional boundaries and have them respected," she advised.

Furthermore, it's important to always be clear in your contract in the event of changes in scope. Juliette Fairley, a Manhattan-based freelance journalist, cited one such instance in which she was initially asked to conduct expert interviews for an assignment writing home buyer guides, and was later told by an editor to forego this and cite information from state websites. After completion of the assignment, she was informed via email that she would not be getting paid, claiming breach of contract.

She was eventually paid for part of the work, but had to take the matter to small claims court in order to receive the remainder. She won her case, but it took several months to clear the matter - which can be difficult for many freelancers.

Take into account intellectual property rights and derivative works

"(Intellectual property rights) should spell out who actually owns the work, and exactly how the freelancer and the publication can use the work, including any time limits, geographical limits, or other restrictions," said Autumn Witt Boyd, a Chattanooga-based intellectual property lawyer and owner of the AWB Firm.

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Autumn Witt Boyd

Intellectual property rights can take on many forms depending on your industry, including but not limited to copyrights, trademarks, patents, and more.

"Be sure you fully understand the permissions on your work," said Perhach. She recommended freelance writers specifically read Jane Friedman's "The Business of Being a Writer," which includes thorough explanations of the different types of rights.

"When beginning their business or as they start to grow, it is helpful to have an attorney review the intellectual property rights language of their freelancer contracts," advised Matsis-McCready.

In freelance writing, Witt Boyd said that when a publication buys all the rights, a freelancer can't reuse their story, even if the piece never gets published.

"Other publications may obtain a license, or limited permission, to publish the story, which may have a time limit, after which the freelancer will have the rights to use it again … Even if the contract says the publication owns all the rights, if they never ran the story, it can't hurt for the freelancer to ask if they can get their rights back so they can use it elsewhere," said Witt Boyd.

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"Try to grant narrow rights as are feasible," adds Freedman. That is to say, if you can grant rights for only a limited amount of time (such as a year), you're better off than granting rights indefinitely.

Related to all this is your derivative works clause, which is basically anything new that came from the existing work.

"Examples of derivative works are a translation into another language, a movie or TV adaptation of a book or play, a new arrangement of an existing song, or a 'new edition' of a book with commentary or new material," said Witt Boyd.

When you sign a "Work for Hire" contract, Witt Boyd said you essentially give up your rights to such derivative works.

"Freelancers who do not want derivative works created from their original work should be careful to include terms in their contracts that reserve or explicitly define this right," she added.

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Consider indemnification

According to Matsis-McCready, indemnification is one of the most important clauses, especially for freelancers who might not have insurance or vast amounts of money to defend themselves.

"This clause outlines whether the freelancer will be responsible for damages, penalties, and costs for themselves and the entity … publishing their work, if the outlet is sued," she said.

As such, many of the lawyers Business Insider spoke with strongly recommended consulting with an attorney in order to be clear on the parameters of this clause.

"A freelancer can always ask to remove indemnification languages also. Sometimes if negotiations fail for agreeable indemnification terms, passing on a project that would impose too much risk … is the best course of action," said Matsis-McCready.

Additionally, many experts suggested obtaining some form of liability insurance. The Freelancers Union is one such place where one can purchase this.

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"If you are wrongfully sued for defamation, plagiarism, etc., the publication will likely not pick up your attorney fees," added Fairley.

Look for additional clauses like noncompetes and termination of the contract

Overall, while contracts can feel intimidating, it's important to have them and read through them in their entirety.

"It's important to read the fine print. Sometimes publications restrict you from writing for other outlets within the same vertical/industry. If you're an expert in one particular area, then make sure you're not signing a contract that limits you from writing for other outlets," advised Leila Najafi, a full-time digital marketing consultant and travel writer.

Perhach suggested putting your times and hours in your email response to a contract. "The client does not own you, and they should understand your boundaries," she said.

And, added Witt Boyd, "Freelancers should pay attention to how either side can fire the other (termination) - and who owns the rights to the work if this happens."

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Finally, don't forget the most important lesson of all: "Everything is negotiable," said Najafi.

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