Building a successful career as a freelancer is about more than acquiring clients; it’s no different than building a successful business.
Contracts, of course, are a necessity for every business. Yet when it comes to contracts, freelancers often make plenty of mistakes, some of which can carry huge costs. Here are eight of those mistakes…
Not getting it in writing.
Not having a contract is probably the biggest mistake a freelancer can make, for obvious reasons.
Assuming that there will never be a dispute.
One of the biggest reasons that freelancers don’t sign contracts (or sign really bad ones) is that they assume there will never be a dispute. Unfortunately, the reality is that disputes can pop up in the most unexpected of circumstances and they’re exponentially more costly to resolve when no contract was in place.
Being a freelancer can be tough, and one of the toughest things can be finding good clients. For this reason, many freelancers will be afraid to negotiate the terms of a contract.
Inexperienced freelancers in particular often believe that negotiating the terms of a contract will send a potential client running the other way. It could, yet a client acquired by agreeing to bad terms is never a good client; signing a poorly-written or one-sided contract can easily end up costing you lots of time and money if something goes sour.
Remember: a contract a potential client presents to you will typically contain boilerplate language written specifically for a party in the client position. This language is therefore, for obvious reasons, far more likely to contain terms unfavorable to you. An unwillingness to negotiate in turn means that you’re not protecting your interests at all, and in the worst cases, may even be creating significant potential liabilities that far outweigh what you might earn from the gig.
Ignoring intellectual property terms.
Most clients want the rights to the intellectual property you produce for them, and most contracts address the subject of intellectual property ownership. Yet making sure that a client ‘owns’ the work product you produce can be a tricky subject. Two examples:
- Are you agreeing to a work for hire, or are you assigning your work product? One of the biggest general mistakes freelancers can make is not considering the implications of how and when intellectual property rights are transferred to a client. The advice of an attorney is desirable here given the potential complexities, but in my opinion there is one term a freelancer should always insist upon: intellectual property rights are not transferred until the full amount due under the contract has been paid.
- Is the client asking you to assign work product, or much more? Be careful freelancers: clients may ask you to assign ‘intellectual property‘ that isn’t even really defensible intellectual property (eg. “ideas“).
In short, intellectual property is everything in many industries, and freelancers can’t underestimate the importance of making sure that their interests here are being protected even if the intellectual property they produce is being paid for by the client.
Not defining scope
Scope can be a freelancer’s best friend, or worst enemy. When it’s the latter, it’s usually because it isn’t well defined. And when scope isn’t defined, a freelancer can find himself or herself doing far more work than anticipated (and possibly not being paid for it) or stressing over uncomfortable client interactions.
Problems with scope, of course, often arise because clients don’t know exactly what they want, or they’re incapable of detailing explicitly what they want. Freelancers have several different options for dealing with this:
- Requiring the client to better define the scope so that the freelancer feels comfortable taking on the work at a fixed price.
- Billing the client on an hourly or daily rate if the client is unwilling or incapable of defining scope.
- Assisting the client in determining what he or she wants, and working with the client to articulate it in a formal requirements document. The client should, of course, pay for this work.
Asking little to nothing of the client.
In many cases, freelancers sign contracts under which they have all the obligations and, outside of payment, the client has few. This is, not surprisingly, very common when a prospective client provides a contract. But every freelancer knows that a project can’t be completed without a willing partner in the client.
A hypothetical example that will sound familiar to every veteran freelancer: you agreed to deliver a project by the end of the month. The end of the month is two weeks away. The project can’t realistically be completed by then because the client has not provided feedback and source materials in a timely manner.
Unfortunately, it’s far easier to find a freelancer who is contractually bound to deliver a project by a specific deadline than it is to find a client who is contractually bound to, say, provide feedback to a consultant a timely manner so that the consultant can actually meet that deadline.
Don’t make this mistake: make sure that what you need from the client is something the client is contractually obligated to give you within a reasonable timeframe.
Agreeing to poor payment terms.
I have personally met numerous freelancers who don’t ask for a deposit, who agree to perform a significant amount of work before they receive a significant payment, or who don’t seem to care that Net 45 means they might not get paid for a month and a half once they send an invoice.
Cash flow can make or break a freelance career, and serious clients understand that the only freelancer who delivers is the one who can pay the electricity bill. As such, the payment terms contained in a contract should never be ignored and are almost always worth pushing hard on when necessary.
Not having an attorney on your team.
A good attorney is hard to find, and doesn’t come cheap. But every freelancer should have one, even if only for the purpose of being able get a professional explanation when in doubt.
Photo credit: B Rosen via Flickr.