July 25, 2017
Legalese, redux
Thanks to everyone who sent in feedback on yesterday’s message about legalese in client contracts!
There were a few common questions that I’d like to address:
1. “Do you have insurance?”
Yes, I have a professional liability (E&O) policy from Hiscox that costs me about $87 per month and covers me up to $1,000,000 with a $1,000 deductible.
2. “Don’t good contracts increase clarity?”
Yes, good contracts can deepen both the understanding of both parties about what is being agreed to. Fewer assumptions, therefore fewer resentments. As I said in yesterday’s message, I’m not against contracts - I’m against employing lots of legalese in contracts preemptively as a defense mechanism (i.e., as a replacement for trust).
In the context of this list, my hope is to open people’s eyes to the inherently (but needlessly!) contentious relationships that they themselves often foster with their clients. Hourly billing, change orders, legalese, etc... These things all put consultants and clients on opposite sides of the table.
Keep in mind: when trust is low, profits are low.
3. ”What if there’s a personnel change at the client?”
This is a tough one. When you are on a long-term engagement and your project contact leaves, an ”iron clad“ contract might help insulate you from being unceremoniously fired by the new leadership.
But think about this for a second... why would you want to force a client to continue working with you when they don’t want to? Are you going to be able to deliver any value to a client who is likely looking to sabotage you at every turn?
(NOTE: whenever there’s a personnel shake up at a client, the odds that you’re on your way out go up.)
4. “Have you ever been burned by a client you trusted?”
Sure. A few years ago, a Fortune 50 client stiffed me on a five figure payment. We had negotiated “50% up-front and 50% in 30 days” payment terms. I started the work and as the second payment approached they killed the project for internal political reasons.
I suppose I could have sued them for the balance. It was clear from our (short, non-legalese) agreement that they owed it to me. But that would probably have netted me less than nothing after legal fees, stress, and time AND ensured that I never ever got another opportunity to work with them AND possibly gained me a reputation for suing clients.
I worked pretty closely with a half dozen execs on that gig. Many of them are at other companies now. Word would have spread. I’d rather have a reputation for letting people off the hook than being the doctor who sues his patients.
There are two things worth pointing out in this particular situation:
- I had done less than half of the work that I expected to do, so my profits were actually higher than they would have been had we gone to completion.
- I wasn’t desperate for the money.
If either of those things were different, I’d have been a lot pissier about the situation.
Getting paid in advance and not being desperate for money are huge. They make it a lot easier to do what feels like the right thing when things go sideways.
(I’ve written about both of these topics quite a bit in the past. Search your inbox for “desperate” and “up-front” to find previous message from me on these subjects).
Yours,
—J
P.S. Friends don’t let friends bill by the hour. Gift options available at checkout -> http://hourlybillingisnuts.com