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Episode 200 - The Fine Print: What You Need to Know About Your Contracts
1.1k Plays1 year ago
Today we are chatting all things contracts with lawyer Kunbi Odubogun, founder of Legally Set. Kunbi shares tips for evaluating your contract, what clauses she likes to see in every contract, some red flags that maybe it's time to update your contract, and answers a number of listener questions, such as "What to do when the person paying is not the same person as the client?" I know this happens a lot in the wedding industry. Or, "What is needed when the scope of the work changes?" A big thanks to Kunbi for letting me ask her so many contract related questions, even beyond the questions I sent her in advance.
As always, links and resources can be found in the show notes. Check 'em out at https://daveyandkrista.com/need-know-contracts/. And if you enjoyed this episode, please consider leaving a review over at Apple Podcasts.
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Transcript
Importance of Reliable Contracts
00:00:00
Speaker
The truth is the idea here is not even just for the bad times, but for the good times as well, for you to have something in place that you can go back to and refer to as to handle certain things, because nothing will always go great. But even if it does go great, you want to have something that you can lean back on.
Podcast Introduction
00:00:17
Speaker
You're listening to the Brands That Book Show, a podcast for creative entrepreneurs who want practical tips and strategies for building engaging brands, crafting high converting websites, and creating reliable lead generation systems for their businesses. I'm your host, Davy Jones, co-founder of two agencies, a brand and website design agency, Davy & Krista, and the digital advertising agency, Till Agency. And I ask questions so you can find answers.
Contract Evaluation and Key Clauses
00:00:45
Speaker
Today, we are chatting all things contracts with lawyer Kumbi Odebagun, founder of Legally Set. Kumbi shares tips for evaluating your contract, what clauses that she likes to see in every contract, some red flags that maybe it's time to update your contract, and answers a number of listener questions such as what to do when the person paying is not the same person as the client. I know this happens a lot in the wedding industry, or what is needed when the scope of work changes.
00:01:11
Speaker
A big thanks to Coombi for letting me ask her so many contract related questions, even beyond the questions that I sent her in advance. If you're in need of a contract template or a contract addendum template, check out Legally Set. The website is well organized. She makes it super easy to find exactly what you're looking for. And after listening to this episode, I think you'll agree that Coombi knows what she's talking about.
00:01:34
Speaker
Just a quick disclaimer, while Kumbi is a lawyer, she is not your lawyer. Absolutely nothing in this episode constitutes legal advice and therefore does not create any attorney-client relationship. This content is for general informational and educational purposes only.
00:01:50
Speaker
As always, links and resources can be found in the show notes. Check them out at davianchrista.com. And if you enjoyed this episode, please consider leaving a review over at Apple Podcasts or wherever you listen to this episode. It really does help. Now, onto the episode.
Listeners' Concerns About Legal Evaluations
00:02:06
Speaker
Coombie, so good to have you on the podcast, excited to chat about all things legal. I feel like every so often I go through, you know, I sort of have this crisis like, oh, is everything buttoned up? You know? Mm-hmm.
00:02:19
Speaker
And I don't know, I mean, I'm sure you work with other service providers who send you their contracts. Do people ever get real nervous? I always, whenever we're working with a lawyer, you know, and I send them my contract, I'm like, oh no, you know, I feel a little embarrassment around it, you know, and are they gonna tear this thing apart?
00:02:35
Speaker
Honestly, it's so funny you asked me that because I swear I would say maybe 70% of people get nervous right there. Even some of the ones that have really great contracts, I think just the idea that you're being evaluated is the thing. But I'm one of those people that says, please remove the shame in your business. Remove the shame. That should shame you a lot to yourself because you're paying somebody for a service to help you fix things or help you spot those mistakes. There's no shame in my game.
00:03:01
Speaker
Yeah, well, that's great. I mean, I always – we worked with somebody relatively recently who was an attorney and sent our stuff over, and I always feel good getting it back with very few. They'll point out like, oh, I saw a few typos here. You might want to clean up this section, but it does – it makes me feel a little bit better about the contract.
00:03:21
Speaker
Yeah, even as an attorney, I get nervous with waiting to get it back from another attorney because it's like, whoa. But then sometimes that doesn't even mean anything because sometimes you want to get as many red marks back because you want them to like, you know, push back a little. Yeah. But yeah, so I get it. Yeah.
About Kumbi Odebagun and Legally Set
00:03:35
Speaker
Awesome. Well, maybe you could take a second and introduce yourself. Tell us a little bit about, you know, what you're about and what you do. Oh, thank you. So I'm Kumbi, Kumbi Udubogun. I'm a business attorney for creative entrepreneurs and small to medium enterprises, basically. I have, I'm based in New York.
00:03:51
Speaker
And I have been practicing for going on 13 years now, which is just adding up every day an indicator of my age. I am partner and co-founder of Oduberg, which is a business law firm with my partner, Leah Weinberg here in New York. I am also co-owner of Legally Set, a contract template shop for creative entrepreneurs and wedding pros. Awesome. Yeah. Tell us a little bit more about Legally Set because I think a lot of people would benefit from understanding what that is.
00:04:18
Speaker
Oh my goodness. So Legally Said is a shop. It's a contract template shop where we have ready-made, attorney-drafted contracts for entrepreneurs, specific entrepreneurs and individuals who are in the creative service industry. So event professionals, designers, photographers, and the likes. The idea behind Legally Said came having been immersed in the events industry for a while. I own a publication called Perfect.
00:04:44
Speaker
Which used to be called our perfect and it's a wedding block basically essentially and I found especially dealing with a lot of event professionals as they continue to like, you know, advance in their career. I started seeing like, you know, this need to service and provide legit contracts for them.
00:05:00
Speaker
And as an attorney, I always get asked the same questions over and over. Can you check out my contract? Can you help me make sure that this is, quote unquote, legally set for business? And so it just came in as I just figured the answer to that was already, especially for creative professionals. I find that a lot of people always hesitant to like, you know, spend the money on an attorney or like they're always nervous that they're going to like go, quote unquote, bankrupt paying for an attorney. So I wanted to create something that was legally solid, attorney drafted and was basically,
00:05:28
Speaker
the hours and hours an attorney would have put into the contract, whether you could have it ready made and ready to go, so that these contracts you're entering and these deals and services that you're providing are truly protected. Yeah. I think one of the things, just thinking back to when the first time we were starting a business and thinking about like, oh, I bet an accountant costs a ton of money. I bet a lawyer costs a ton of money.
00:05:51
Speaker
And to a certain extent, they do. I mean, you can get into really specialty type situations where maybe that would be the case. But it's actually way more affordable than you think just to go and grab a contract, right? Exactly. It's basically the same price as an hour, like maybe even less than an hour of an attorney's time, for instance. And you've gotten something that would have cost you maybe upwards of like $2,000 or about $2,000 for the price of like just one hour of an attorney's time. So for me, it's a smart decision.
00:06:17
Speaker
Oh, for sure. And the peace of mind that comes with that. And the same thing with an accountant, you know, I think like, one of the things friends who have started businesses and are thinking, I'm just going to kind of get away with maybe doing my own financial legwork. And it's like, no, just go to account. And I promise it's, you know, there's a little bit of money upfront. But I think at the end of the day, the the peace of mind and the amount of money it saves you over the long term so worth it.
00:06:37
Speaker
But the legally set website, it looks great. It's super easy to navigate. I'm on a net right now. You can shop by the type of contract you need, but then also it's organized by industry. So I highly recommend that. Real quick, just sort of an aside for everybody listening, get on to the legal stuff. I'm sorry I do this, but you manage multiple businesses. How do you do that? How do you split up your time? What advice do you have for people as far as time management goes?
00:07:05
Speaker
I think it's hilarious that I'm the one that's been asked about managing and time because I feel like I'm always drowning in some way or the other, but the truth is delegating is literally the thing that's saving me in this season of my life. I'm also the mother to a newly minted one-year-old and a five-year-old.
00:07:22
Speaker
time is a construct a lot of times. But what I will say is that delegation has really been the thing and the name of the game here, ensuring that I'm putting people in places and trusting people in places where they're able to essentially do what they're in their path of genius to do. Otherwise, I find myself doing things, which is why the statement about the accountant really resonated with me because
00:07:43
Speaker
which is why i'm not trying to do things that i know that i'm not skilled in or i'm not optimized to be able to do so for me it's always about that for perfect for instance i have a social media management team and editor for content so that high level things are the things that i sprinkle my appearance in for legally said it's the same thing and it's great to you know make sure that you're partnering with the right people to essentially make that easier
00:08:06
Speaker
Yeah, yeah. Well, I know about life. We have, I guess, a five-year-old as of this week and then an 18-month-old. So we're in a similar season right now. Very similar. Yeah, so I had to ask. You understand why I had to ask then.
00:08:19
Speaker
Of course, because you're also in a season where that's where you find yourself as well. And I mean, it's freelancers are just like employees are saving the industries like a lot of people. So I'm grateful. Yeah, yeah, absolutely.
Benefits of Well-Drafted Contracts
00:08:32
Speaker
Well, one of the things I was going to ask you about is, you know, why contracts are important. And maybe you could speak to that a little bit. You know, my assumption is that a lot of people, you know, they're listening to this episode because they know contracts are important. And they kind of want to get into a little bit more about that.
00:08:45
Speaker
I think one of the things that a lot of people do when they first get started is they go online and they type in like contract for a photographer or something like that or free photography contract and they either take somebody else's contract and try to make that work for them or they just kind of take what they find maybe on the first page of Google. That's a lot, but maybe you could speak to a little bit about maybe why people shouldn't go that route and why it's just important in general, especially as a service provider, to have a contract in place.
00:09:15
Speaker
Oh gosh, great question. So first of all, contracts are important because they establish the rules of engagement. They also establish and eliminate, he said, she said, when it comes to your business. It's very important when somebody is expecting something from you in exchange for something or expecting something for you in general, for you to be able to have proof and an established rule and direction as to how this is going to go.
00:09:39
Speaker
A lot of people are always saying, God forbid, or like knock on wood when it comes to like, Oh, I'm not going to get a dispute. This person sounds like a great person. But the truth is the idea here is not even just for the bad times, but for the good times as well, for you to have something in place that you can go back to and refer to as to handle certain things, because nothing will always go great. But even if it does go great, you want to have something that you can lean back on and remove the stress from.
00:10:04
Speaker
So I think everybody can agree on that as to why contracts are important. And in certain situations, things have to be in writing. A written contract has to be in place in order for you to be able to have it enforced in court. So it's something to remember. In terms of why it's never a good idea for you to just like phone in your contract, basically, and not just copy paste something that's in somebody else's agreement. It's because a contract is a living document that works hand in hand as a whole.
00:10:28
Speaker
It's something that each clause feeds off the next clause and off the next clause to make one cohesive statement. One of the things that breaks my heart the most is seeing a contract that contradicts itself. And that always happens, not always, don't quote me, but a lot of times you find that in situations where people have just kind of copy pasted something that they found in somebody else's agreement.
00:10:48
Speaker
Because then, and I use this analogy all the time, then you're finding mortgage language inside a service agreement, or you're finding mortgage language inside a photography agreement, which has no business there. There's a whole thing happening now I saw in the news last week where somebody copy pasted a contract from their previous contract, the clause in there, and now it's costing a company like $60 million. That is, yeah, because somebody did not look at that aspect and realized that something wasn't supposed to be there and it opened the door for something else. So, I mean,
00:11:18
Speaker
We might not all be dealing in $60 million contract, but the idea here is that you want your contract not to tear apart or just crumble apart when it's time for you to enforce it. You want to make sure that your contract says, the thing that you wanted to say says it consistently. And also you just want to have peace of mind knowing that you understand why this thing is in place to protect you. So that's, that's it for me.
00:11:40
Speaker
Yeah, I think a few things there. One, even after 15 years of running a business, I've gotten pretty good at spotting maybe potential red flags when it comes to clients, but not perfect. And so I think everything is good until it's not. And so having the peace of mind of a contract that you can go back to and really understand is important.
00:12:00
Speaker
I think one of the other things that you brought up, which is really important, which I don't think maybe people who, if you've gone online and just kind of ripped together a bunch of different contracts, being able to explain to somebody why the contract is the way it is. And that's something that I do want to get to at some point during our conversation is because it's one thing to have a contract. One thing that I've realized is that it's really good upfront for people to understand what it is that they're signing and what's in the contract.
00:12:28
Speaker
you know, because I think even if you have this, this great contract, when there is a problem, enforcing it is a whole nother situation, even when it's all buttoned up. Yep, exactly. Because each stage of your owning and processing a contract, there's there's literally
00:12:46
Speaker
enforcement can look differently in different stages, but that's the reason why it's really, really important to have a consistent agreement from the beginning because that way you're able to, like, you know, that way from the beginning, you're able to weigh the options and wait and realize whether or not you want to now bring in someone or bring in an attorney to help you now, even like weigh whether or not you want to go the distance with certain things. But it's really, really important for the beginning that it makes sense and that it's like, you know, you've weighed the options for lack of a better word.
00:13:13
Speaker
Yeah, so as people are sitting down and maybe they're listening to this and thinking, oh, you know, I'm not maybe maybe they're guilty of doing this and no judgment if you are, you know, I think when you first getting started, you know, we definitely we definitely had a little bit of that where we are looking at other people's contracts and like, oh, that sounds good. Let's throw that into our so no judgment. I still get that even now.
00:13:34
Speaker
Yeah, so no judgment if that's you. But you have a contract that's, you know, I'm thinking about ours actually, you know, and so it's something that we got years and years ago now. And it has maybe evolved just a little bit, you know, here and there, you know, we went through, for instance, like COVID. And maybe that's something that's worth talking about, too, is like, maybe has COVID evolved contracts a little bit as well. But point being, they're evaluating their contract, trying to understand whether it's good or not.
00:13:57
Speaker
Are there certain red flags that you see in contracts or that people should look for that indicate maybe it's time for them to get a new contract or whatnot, or are there certain clauses that every contract should have? Very good question.
00:14:12
Speaker
There's, okay, so there's two parts to this. And sorry, daily, I know I can be very wordy. No, this is great. Take as much time as you want. Thank you. But basically, so you're right. COVID really changed. They didn't change the, like, I wouldn't say it changed it necessarily, but it changed the mindset towards contracts, which is really important. And COVID also like for any kind of business owner across industries, there was this reflection basically, because there's a lot to think about now. Something through everybody for the loop in terms of like enforcement and also fulfillment of the agreement.
00:14:42
Speaker
So those things, those things can always end up being like, you know, those things that make you have to start thinking, have to start considering whether or not did I give too much money away? Or did I lose money on the table? What can I do better in my agreement? So that also plays a part in definitely in the conversation.
00:14:59
Speaker
about what's it called, about, you know, what to look for and what red flags to look for in your agreement. For one, red flags as a whole. One is first of all, you want to see how much like what's happening when it comes to payment enforcement. You have to be able to evaluate. That's something that you want to see. The way a contract is drafted right now, do you find yourself having to send refunds all the time? Do you find yourself having to lose money or like, you know, if the cancellation happens or if something changes? Why, what's happening? And am I leaving money on the table all the time?
00:15:29
Speaker
Another thing is to make sure that your cancellation and postponement or changes clause across board is making sense, is consistent. What happens if there's something that happens that makes both parties unable to fulfill the agreement? What happens if you're not able to fulfill the agreement? So those clauses on its own already are looking like they're red and green flags at the same time. You want to make sure that those clauses are very clear as to what to do and what not to do.
00:15:56
Speaker
A red flag in an agreement for me as an attorney is seeing that it's not clear who the individuals or the parties entering the agreement are. That's one that I see a lot of times where a lot of individuals are seeing basically that you're not sure who you're going to go after or who is the actual client in this situation. Who's the responsible party? Who's the person that's responsible financially, contractually, everything? That's a big one and that's even from the beginning. A red flag for me is seeing people entering these agreements as individuals and not their entities.
00:16:26
Speaker
If you have an entity, it's probably best that you lean towards that because there are certain liability protections you could be able to get as an entity instead of an individual, especially if, for instance, you work, let's say you have an agency or you want somebody else to be able to fulfill it within your company. It's always a great idea for the entity to enter. Red flags for me is like it's not clear who's responsible if something goes wrong. What does a client's default look like? Like at what point is the money owed to you?
00:16:55
Speaker
If that is not clear, your contract is too open-ended and you want to make that very clear from the beginning. Maybe we could talk about responsible parties first because I think that's a pretty common, especially in the wedding industry, pretty common question. It's like parents are going to pay, but the bride and groom was the one that actually reached out and solicited the services of a photographer or a planner or whoever.
Key Contractual Elements and Avoiding Disputes
00:17:18
Speaker
So in a situation like that, how does somebody get clarity in terms of who they're responsible to? Because you could see how parents being the ones that are paying for it think, well, this photographer needs to be answering to me on some level. Whereas the photographer might be getting vastly different directions from the bride and groom. So in that case, when it comes down to the contract, what does that look like in terms of who you're entering into the agreement with?
00:17:44
Speaker
So for me, and the easiest way for me, I believe is the easiest way to handle this, is having something called a third party payee agreement, or payor agreement, where basically the third party is financially responsible, but the client is still clear. That way, the third party is basically guaranteeing financial payment and is dating that it's an addendum to the agreement, basically. That states that they will be financially responsible, and that is what they will be responsible for.
00:18:08
Speaker
and then maintain that the couple is still the client and the couple will be the responsible party in terms of the conversation, in terms of direction. And that way you're not going left and right because you're right. You do see that a lot, especially with families in which somebody else is paying instead of the bride or instead of the couple, whoever it is. So it's really important that that's established that this person that's paying is financially responsible. However, all conversations, direction will be handled by the couple.
00:18:36
Speaker
Yeah. Awesome. And so is this something that if someone were to go to legally set, they could get situated with, you know, cause I think that's the extra, I would ask, I go, well, how do you put that in your contract? But that's just, you know, I think beyond the scope of what we can cover in. That's the thing, obviously, like everything is contract dependent, right? But in situations like that, we already have a third party payer and add them available and legally set. So you can just buy that and then include it and attach it, like have it added to your agreement basically as its own,
00:19:05
Speaker
like its own addendum.
00:19:07
Speaker
Awesome. The next thing I want to talk to you about is payment and understanding when payment is due. One of the things, and this might not be correct, but my understanding, for instance, is that whether you use the language of retainer or deposit connotates different things. So for instance, if you pay somebody a retainer, that can be non-refundable, whereas a deposit can't or maybe vice versa. Is that true? And even if not,
00:19:35
Speaker
What are the things that people should be thinking about as they construct their payment schedule? Great question. I get this question quite frequently, and I imagine that it's of a concern to a lot of people. But the idea here is that you don't want to lean in on the literal definitions of things too much. You don't want to err on the literal definition of something if this thing is going to go to court.
00:20:01
Speaker
A deposit in definition is a deposit that's returnable. It's a payment that's returnable. It sounds like that. Do you know what I mean? So leaving anything open-ended is going to have that going. Now, retainer in itself too is not something that you just want to lean on and say it's just a retainer. You want to establish that it's a non-refundable retainer. You want to establish that it's a non-refundable whatever it is.
00:20:22
Speaker
And it's a non-refundable payment for and establish that it's non-refundable under any circumstance as the time, as the payment to remove that date, for instance, whatever you want to define it as. But for some people have said that it's a payment to remove that date from my calendar and forego any other business for that day because I have committed to this. The whole idea is to establish that it's non-refundable under X or under any circumstance. That way, it's clear from the beginning that that money is not coming back.
00:20:51
Speaker
people pull at the definition of deposit versus retainer a lot, but if you still do not establish how that works, then you have a problem. Awesome. As far as payments go, is there anything else that people should really be thinking about, especially in terms of the payment schedule, when they're paid, how they're paid, those sorts of things? 100%. That's basically it. And I think you and I already were even hinting at that in the beginning when it comes to establishing when we were talking about red flags.
00:21:17
Speaker
like establishing what your payment looks like, when how frequently it's going to be paid. Some people do monthly payments, some people do three payments, like, you know, based on milestones, whatever it is, it needs to be clear. And it does not meet the cannot contradict itself within the agreement. So establishing what your payment schedule is establishing whether or not those payments are non refundable upon payment, because it's
00:21:39
Speaker
Like depending on you, that's for work that's already been performed or that whatever the case it is, you want to make sure that it's clear what the payment is when that payment is due upon invoice or upon receipt. You also want to make sure like it establishes when a payment is late. What happens in the event that a payment is late? Is there a late fee? Is there this? What kind of payment methods do you take? The more detailed a payment schedule, the more detailed a payment clause is, the better it is and it helps remove any confusion.
00:22:08
Speaker
I will also say that any changes that are made to that payment schedule, any changes that are made to the agreement need to be documented in writing so that there's no confusion. Because one of the things that people deviate from a lot is that payment clause. And I found that even in the event of that, you want to make sure that it's clear, you want to make sure that it's documented. It's not phone calls, it's documented in writing and in amendments how that changes.
00:22:30
Speaker
So, I mean, I guess that being my next question then is regarding changes to a contract, you know, and that happens throughout the scope of working together. Maybe somebody decides to add a service. In most cases, do you need to send over a totally new contract along with every change? Or is there maybe a more efficient, more flexible way to deal with those changes? That's also legally binding. One, first of all, before we even get there, make sure that it's written in your contract that all changes will be in writing. All changes to the agreement that's been signed will be in writing.
00:22:59
Speaker
Also, I think that depending changes should have amendments to it. So if there's a material change to the agreement in any form, for instance, like you're changing the dates, changing something, changing something that's, you know, material, you want to make sure that you have an amendment to the agreement. You do not send out a new agreement. Your agreement is already signed. What you're doing is amending whatever it is. I'm just attaching that.
00:23:20
Speaker
A lot of people use CRMs a lot of times, so you can even do that within your CRM and send out an amendment. We do have an amendment template on legally set, but having something in there under the just updates, whatever it is, for instance, a lot of people change.
00:23:34
Speaker
Maybe people change the date, for instance. One of the biggest changes is usually the date. Like you make sure that you put it in there and say the date is rescheduled. The date of the event or blah, blah, blah is rescheduled to X. And then that's the only thing that's amended in the agreement. Unless there's an amendment to the payment schedule, then you have that documented.
00:23:55
Speaker
You just want to make sure it handles that way. I've seen a lot of people have amendment conversations over the phone, but don't reiterate or regurgitate that in writing. So whatever the case, even if you did not use an amendment, make sure you have documented that in writing, have an email thread going, some documented proof that it is in writing, because I just think that it's harder to chase down and harder to start remembering conversations.
00:24:19
Speaker
it's harder to start going back on that. I know a lot of people who have texts, please, even if it's in text, go back and reiterate it in another form or in writing in email form if that's the case or in an amendment form as needed because you do not want to have to start trying to remember the conversation or trying to defend the truth when it comes to the time. Yeah. And one of the things that we've done over the, on the advertising agency side of things is it's a matter of policy that after every meeting you send a follow-up
00:24:48
Speaker
I love that. And I think it just, you know, it enhances the client experience, you know? I think so. It's not just a matter of even protecting yourself as much as it is like, hey, here's what we talked about. And just, I mean, everybody has trouble remembering the finer details of a Zoom conversation or a phone call or whatever. So I really think that is just good practice in general. So that's great. You have a template for that. Another question around copyright, all right?
00:25:15
Speaker
peppering you with questions right now. Yeah, so copyright, this is really interesting. And this is one of those things that this is why I think maybe the single most reason why I was grateful to have an actual lawyer develop a contract for us is because to me, when I'm thinking about the wedding photography business at this point, we're just thinking like, okay, we're going to go take photos for somebody. And so when somebody says, oh, well, do I own those photos? Like on some level, I'm just kind of like,
00:25:42
Speaker
Well, yeah, sure. I mean, I'm taking them for you. They're your photos. And I wasn't even thinking like, okay, what are the ramifications of that? And I think something similar in web design now where it's like, or the advertising agency for that matter. Copyright's important because we have a lot of different clients. We might come up with a similar
00:26:02
Speaker
add creative concept for two different businesses. And these two different businesses might even be in different industries. But what happens when one says, hey, that looks actually like a pretty similar piece of creative. We have to be able to say, well, we own this creative. And so we're able to use this. And that's not to say that we're just throwing things in templates or whatever.
00:26:22
Speaker
But point being, I mean, even on the website design side of things, like we design websites that have a certain aesthetic, and we don't want somebody coming back to us and saying, my website kind of looks like this other website, you know, and that becoming this this really, really big issue. For the record, for anybody listening, we haven't ever dealt with that issue. All right.
00:26:43
Speaker
But point being is that it wasn't until sitting down with a lawyer and them explaining like this is why it's important for you as a photographer to actually own the images that I ever really start thinking through those things. So maybe you could speak to copyright and what you like to see as far as copyright goes in most service providers agreements. Thank you. That is a great question. So copyright is one of those things that generally would protect your original creation of work, like some kind of tangible expression of your work.
00:27:13
Speaker
Most basic definition, obviously. This applies to, for instance, even photographers with the origin, like the creator of the work, the person that's taking the picture is the owner, typically the owner of the copyright. Just like the work that you have said now, whether it's web design, graphic design, whatever it is, those tangible expressions, those, those things that you have created are, or it's, it's yours. Like it's standard. It's usually yours unless you decide to lean.
00:27:37
Speaker
towards giving somebody the rights to that copyright. And this is why that is really essential because yes, you don't think about it when you're speaking to like for a photographer taking pictures like, okay, I'm taking it. But you do not realize the substantial amount of rights that you're parting away with when you do that.
00:27:53
Speaker
For instance, if somebody's saying that the client owns all that copyright, for instance, then what happens? You've basically stated that, OK, you've given them all that use. They can use it in ads. They can use it because it's theirs. No permission ever needs to be asked. No permission has to be asked about in what manner they use it.
00:28:11
Speaker
in what way that they're using it, whether it violates something that you probably stand for or anything like that, whether it could be anything. Basically, ownership also dictates use. Ownership dictates permissions, and you want to be able to retain that in some way or the other, depending on what you've negotiated with the client. So with photographers, for instance, you want to make sure that it's clear that you are still the owner of those images. The use and control is yours, and you are granting permission to use in this particular way.
00:28:42
Speaker
It's really, really important because a lot of times, for instance, I've seen people come back to me and be like, okay, Kumbi, I found one of my pictures as an ad in a this, this, this. Somebody is making money off of it. How do we do this? You want to be able to retain the control, the final control of your images in specific ways. And that's how you govern that through permitted uses.
00:29:02
Speaker
Now, with a web designer or a graphic designer, you want to also essentially mean that, okay, now that I've created this thing, depending on how I've negotiated with the client, if the client has decided that it wants to own, like complete ownership, it's still clear that I own copyright to my methods to use it. Like my uses, sorry, not my uses, but my original designs, the things that, the facets and the aspects of it in different forms. But maybe I'm giving them the entire ownership of that logo, that design, that particular thing. It's up to you how much you control.
00:29:32
Speaker
The reason why I'm saying that is, especially with like marketing agencies, if you're giving them, you want to be clear that, oh, I still retain copyright to, to my tools and things that I used to develop this for you. Yes. But you don't want a situation where you want to be able to still control whether or not they can sell, transfer, use who is permitted to use this. Who have I granted this license to? All those things are important. I've seen situations where for instance, an illustrator maybe handled the illustration for a book.
00:30:02
Speaker
or a book is the most simplistic example here, a book or cards or something like that. But they want to ensure that they still own the copyright to that so that that person is still going to pay me X or pay me this to be able to use that. And it's not going to resell my original design and my original creation to another person without my permission or without my knowledge or even at all. All these things comes down. What copyright gives you as a general concept is gives you control.
00:30:28
Speaker
It keeps you in a place where you are able to still have financial control on your own product, on your own creation.
00:30:35
Speaker
and doesn't take that away from you unless you decide to give away those rights. I hope that makes sense. Oh, it does 100%. And again, I think, hopefully, if someone's listening, and again, this is reason alone of all the things that we talked about, in my opinion, really, just to get help with the contract. Because it's one of those things where, I guess, conceptually, maybe it sounds simple enough, but it's relatively complex. In terms of actually implementing that in the contract, I definitely think you need the help of a lawyer to do that.
00:31:05
Speaker
So is there anything else in terms of common questions you receive from just about contracts that we should cover here before turning our attention to maybe how you explain your contract to a client? Oh, yes. So I get a lot of questions with contracts. It's always really important. One of the things that I didn't mention in the beginning, but I think is really important to mention here is there's a clause in the agreement that gets overlooked a lot. There's a small clause called governing law.
00:31:31
Speaker
which might sound like the most basic thing, but a lot of contracts I have read recently have been missing that. And then that comes the conversation, especially with creatives where our jobs are becoming very fluid in terms of location.
00:31:42
Speaker
providing services to people in another state, in another country, in another place, establish what governing law applies. Establish a dispute resolution clause. So in the event that something goes wrong, you don't want to start chasing people up and down across the country. What you want to be able to do is say that this law applies to the state of X and this will be governed by the laws of the state of X. Any dispute that arises from that will come from there so that you don't have to start chasing people and they have to come to you if necessary.
00:32:09
Speaker
So it's really important. Like I said, it's a small clause. A lot of people overlook. They just get straight to the terms, but then don't talk about the other things. And it's all what we like to call the legal ease in an agreement, but they're there for a reason. The reason why they're there is because a lot of things that they're supposed to be there. They might sound like they're called boilerplate clauses, but they're there for a reason. Another one being the force majeure. For lack of a better word, ish happens.
00:32:33
Speaker
It happens all the time. And it's really true. You want to make sure that, OK, so in the event that I'm unable or there's something that happens, for instance, there's a flood, there's tornadoes, there's something. Whatever it is, there's COVID. When COVID was a force majeure, what dictates how this will happen? What happens if something has literally made it a problem for one party to finish the terms of the agreement? How does it work? When would it be considered a cancellation? And when would it not?
00:33:00
Speaker
When can I, as a service provider, provide an emergency substitute if I'm unavailable? Like for instance, if I go into labor today and I need somebody to fulfill the terms of my agreement, my contract should be able to say that I'm allowed to do that. So those are the things, like what I think I want people to take away from this conversation is that, yes, you can go five years, you can go 10 years without having a dispute or any stuff pop up in your agreement. It takes that one time.
00:33:27
Speaker
for things to really get real. And you want to be prepared for that one time. Yeah. I think I saw, I saw a statistic today that 53% of businesses get sued, which I feel like is absurdly high. I saw that. You know, but yeah, that is insane to me. So anyways, not to like spur on fear or anything like that. But I mean that, when I saw that, I was like, really? You know, hat, that's more than half of all businesses.
00:33:49
Speaker
I saw that statistic too. We probably saw it in the same place. I can't speak on the statistic specifically, but I will tell you that it's even rising further as we go on. I don't know if you're listening out here and you have seen it in your own business, but since COVID, because COVID shook a lot of people from both ends, from the client perspective and from the contractor perspective or from the service provider's perspective, people have become 10 times more litigious.
00:34:12
Speaker
when it comes to their agreements. You just hear, somebody has a brother, sister, cousin, uncle, classmate, who's a lawyer. So you say, I'm about to get counsel. There's always the threat of lawyers being brought into it. So you want to be prepared. One of the things I haven't asked about is the COVID clause. Is that something that people should still be working into their contracts? Or is there something that replaces that now?
Adapting to Unforeseen Events and AI Considerations
00:34:34
Speaker
Or does the force majeure clause really cover any COVID-like situations?
00:34:40
Speaker
So like the thing about is that COVID is no longer considered. It should generally is no longer considered a force majeure moment because a force majeure is a surprising, unexpected and uncontrollable situation usually in its definition in different forms. I'll get what I have two parts to say to that. What I'm getting at here is that just like COVID was an immediate, when we were in an active pandemic, it was a situation in which like the lockdowns, the government lockdowns were considered a force majeure.
00:35:06
Speaker
Now you kind of want to imbibe COVID and consider COVID when drafting your agreement. In other words, you know there's COVID outside. I know there's COVID outside. So you're still going ahead and booking this contract. So the idea now is that it's considered a general cancellation option now, or it's considered a general, you would be postponing it just like you would be postponing it for anything else. So you kind of make sure that your postponement and cancellation clauses are consistent across board.
00:35:32
Speaker
I would say that one, two, but with force majeure, you still want to make sure in certain states, force majeurers can be state specific. They will be state specific because contract languages can be governed differently in different states. I say that because New York, they want you to, usually New York might want you to break down what and define what a force majeurer event is. I want to define it specifically. So if pandemics are not included in your force majeurel clause,
00:35:56
Speaker
then pandemics are not considered a false majority. You have to kind of push for it further and like really battle it out in court. So you want to make sure that you've considered that. Pandemics, infestations, government lockdowns. If you live in like, I don't want to call out any states here, but Utah, California, or any of those states, for instance, or Colorado, where air quality might be something that's considered like a big issue, where you are actually unable to complete an agreement if the air quality is X, Y, or Z.
00:36:23
Speaker
you want to make sure that it's clear inside your agreement. If you're in a place that gets a lot of flood, tornadoes, hurricanes, hello, make sure that that's included and considered in your force majeure. So I say all of that to say, this is the reason why you just don't want to go copy paste something into your agreement. Because why are you talking about like, I don't even know which one of the forest fires in the middle of downtown New York City. So yeah, so this is the reason why your contract, you kind of want to be on top of it and understand what the clauses say.
00:36:49
Speaker
Awesome. Well, before we turn to just sort of the client experience aspect of contracts, one other question, another sort of current event, artificial intelligence, AI, using AI to complete your work. Do you have any thoughts on, you know, whether a contract needs to be, whether anything needs to go into a contract to account for maybe fulfilling services using some sort of AI tool, or would it just be like you use any other tool to fulfill your service?
00:37:18
Speaker
I mean, it's that's a very great question. You know, it's an ever evolving situation now as AI gets monitored and regulated in different forms. But you also want to make sure that like if depending on it just depends on what the work is. So letting them know like some people depending on how essential or primary a tool it is.
00:37:35
Speaker
making it clear that maybe for one, you don't have any control over how this AI handles X part of your execution and stating that the client will hold you harmed as for X, X, X, depending on what it is. But I will say that if you're using AI as an essential part of your process, you might want to consider what the limitations are and include that in your agreement as not a disclaimer, but included. But the truth is, as a service provider, you're still essentially accepting responsibility for whatever it is that you're doing in execution.
00:38:04
Speaker
of that. One of the things that came to mind when you said that is I have
00:38:08
Speaker
I have seen situations where, for instance, designers are using AI rendering tools to create renderings or design things. And I've seen that they've included in the agreement that it's subject to the limitations of the tool that you are using. I can't promise or over-promise anything other than that. I am limited by the tools that I'm using in that regard. So client will not hold client understands that I'm assuming no liability, for instance, for any limitations in that and not providing it, like cannot guarantee the result of X.
00:38:38
Speaker
That way it's clear but I will say that I have two things to say on the issue I love a good chat GPC like anybody else like I asked you to do the weirdest things but you also want to be double checking. Essentially you cannot transfer liability to. Especially if you are collecting payment and service for provision providing service for that thing and promising that service done regardless you want to be very clear about double checking and doing that but essentially if you want to you can still display my let them know that you are.
00:39:06
Speaker
subject to the limitations of X or whatever the tool is. Yeah. I mean, I just ask, it's going to be fascinating to watch how this unfolds a little bit. I mean, you know, in the news recently was, I think it was Samsung or something, but basically they were using chat GPT, but they were putting sensitive company data into chat GPT. And chat GPT is learning from our input, right? And so somehow that Samsung data, I guess, was leaked.
00:39:32
Speaker
via chat GPT, right? So interesting. I mean, I guess, you know, be careful how you use those tools if you're listening, but I like you. I mean, I use chat GPT almost every day and really, yeah, really enjoyed fooling around with it. Well, the last thing I want to talk about is basically how to create a good client experience around our contracts.
Enhancing Client Experience Through Contracts
00:39:51
Speaker
And if you have any tips for how somebody should present a contract to their client, because like I said, you know,
00:39:58
Speaker
If you're just sending your contract out there, that's fine. I mean, it's good to have it in place, right? And we should be reasonably assured that somebody, when they receive a contract, they actually read through it before signing it. But I found in the past that that's not always the case. So do you have any tips for just how a contract is presented to a client and navigating that with them, especially if a client were to have questions or to push back and say, hey, about this copyright thing, I really want to own the images. How would you just
00:40:28
Speaker
How would you recommend people sort of tread those issues? Okay, so that's a great question. I think, one, in terms of presentation, I think you do whatever, you're definitely open to do whatever works with your flow of business. I say one thing, like I mentioned before, a lot of people are using CRMs now because of the retention, like the document retention aspect of it, which is a big part about when you're sending contracts, you want to make sure that you have it
00:40:50
Speaker
easily accessible, easily documented. You can do that. And especially if you're working with a CRM, you're able to tie it in nicely and everything. And also it's easy and easily accessible for either party to go back and read it and remember what it is. I will say at the same time, you want to make sure just because you're going for pretty or just because you're going for like a nice presentation doesn't mean that you should overlook a lot of things. So you want to make sure that within, even within the CRM, it's their tracking in terms of like my payment schedule and the payment language in my contract.
00:41:20
Speaker
It's really clear as to where everything is. I have seen a lot of people now in terms of presentation, maybe having initial spaces or something for places that are really, really important. Like you want to make sure that the client has read it and has understood for instance, postponement cancellation language.
00:41:37
Speaker
payment, indemnification, liability language, whatever it is that you want to emphasize. For instance, the copyright language, whatever it is, you want to make sure that it's clear, send it over to them, send the follow-up asking, I wanted to make sure that you received the agreement that I sent. Please let me know if you have any questions, happy to jump on the phone and discuss whichever part are.
00:41:56
Speaker
of concern or whatever. A lot of attorneys will say that it's not it's not anybody's business like it's not your business to make sure that they understand the agreement but I find that in the creative space it's really important that you're both on the same page. I don't want to hear like the Nigerian meme is already coming out and I'm like I don't want to hear any rubbish when the time comes about oh I didn't know this was where I was signing. We're both entering this agreement informed and knowledgeable and so we know that if anything pops off this is how it's going to go.
00:42:25
Speaker
But making that an experience for both parties is always a good idea. With the copyright language, well, not copyright specifically, but I'll go into the copyright and also the model release, because a lot of contracts should have some kind of image release or permission inside it, especially if you want the client to seek permission from the photographer on your behalf, for instance, to allow you to be able to use those images in your portfolio.
00:42:46
Speaker
or in your work or in advertising. You want to make sure that those clauses are clear. I am seeing a lot of clients push back now and being like, okay, but I don't want you to share my images. I want nothing there. Those are negotiable clauses because then you'd be like, okay, it's the confidentiality premium. This is how much it costs for me to remove that option from this thing or to sell you the rights to these images or whatever, depending on who owns them.
00:43:12
Speaker
I will remove this and this is it for a fee. Certain clauses in the agreement will be negotiable, like the payment clause. So you want to make sure that you're able to, I know I keep going back to it, you understand your contract so that you can properly explain it to another person or more than anything else, you can properly stand by it. If you say, nope, that's not negotiable and I'll be keeping that because I understand how it protects me.
00:43:35
Speaker
Yeah, yeah. Well, I really like the idea of adding initial spaces next to important clauses. So if you find maybe that you have a clause for something in your contract, but people somehow you get to a point where, you know, maybe it's the cancellation, maybe it's the rescheduling, you know, whatever, but you're constantly having to fight that battle, it might be good to include like a little initial there. We actually do that in our contract for a few different things towards the bottom. You know, I would say it's not even for things that we feel like are
00:44:05
Speaker
have legal ramifications to them? I mean, I guess maybe one of them does. One of them is around password sharing. Data protection. Yeah, we make it clear that we recommend you use something like OnePass or LastPass or something like that to share passwords securely. And if you decide you want to text passwords or email passwords, yeah, exactly. That's irresponsibility you're taking upon yourself. But anyways,
00:44:28
Speaker
I really appreciate your time today. Thank you. And, you know, I feel like I just have a whole page of notes here. I mean, again, just speaks to the reason why people should take their contract seriously, because even after 15 years of business, I'm thinking back, you know, and back in my head, I'm like, Oh, we need to.
00:44:44
Speaker
We need to check out that clause in our contract and just make sure everything's good. But if you are looking for a contract, head on over to Legally Set and take a look there. We will also make sure that we include all of Kumbi's links in the show notes. So if you are looking to follow along with her, head on over that way. Kumbi, is there anything else that you want to just call attention to before we sign off here? No, this has been really good. I think if you're sitting down here and you're just listening and wondering whether or not it's time for you to update your contract,
00:45:12
Speaker
it's probably time for you to complete the contract. So at least have somebody look at it or check out Legally Set. I'm also offering your listeners 20% off the entire shop if they want to include the code. We have to come up with a code. Yeah, I'll get that from you. And then if you're listening, go and check out the show notes. We'll make sure that the code is there and definitely check out Legally Set. All right, thanks. Thank you.
00:45:36
Speaker
Thanks for tuning in to the Brands of Book Show. If you enjoyed this episode, please consider subscribing, leaving a review on Apple Podcasts, and sharing this episode with others. For show notes and other resources, head on over to davianchrista.com.