In May 2017, the Freelance Isn't Free Act took effect in New York City. As reported by Bloomberg BNA, NYC-based freelancers contracted for work paying at least $800 over a 120-day period are now guaranteed certain rights, including contracts that state…
- An explanation of the work to be done.
- The exact amount to be paid to the freelancer.
- When payment is due.
Though this law only applies to New York City residents, laws that originate in New York or California often end up trickling down to the rest of the country. Even if it takes a while for laws like Freelance Isn't Free to become more widespread, freelancers can still insist on contracts with all clients.
Let's examine why contracts for freelancers are a good idea and what you might want to include in your contract.
Contracts Can Help Freelancers Weed Out Potentially Undesirable Clients
Many IT freelancers are hesitant to use contracts because they're afraid of potentially alienating clients. But
David Leffler, a
(@CulhaneMeadows), says freelancers are probably better off without the kinds of clients who don't want to sign a contract.
"Freelancers are often worried that somehow they are going to lose the job if they demand that type of formality," says Leffler. "In fact, sometimes if they lose the job maybe it's a good thing because if the client doesn't want to sign a contract, that's a sign that there may be trouble ahead."
By insisting on contracts, IT freelancers can potentially spare themselves from working with clients who may end up being more trouble than they're worth.
If you aren't working as an IT consultant yet, but are thinking about taking the leap, be sure to read "5 Steps to Becoming an IT Consultant."
Want to Get Paid on Time? Use a Contract
It's logical to assume that once a project is complete, a client will pay. However, sometimes clients are busy, procrastinators, or simply short on cash. But if you have a contract that spells out clear payment timelines, a client is less likely to drag their feet when it's time to cough up the dough.
"At least if you have a basic contract, you have a well-defined description of what has to be done and how it's going to be paid. If there are any disputes, they [the client] are much more limited and you have a much greater chance of being paid," says Leffler.
While a contract may feel stuffy and formal, it doesn't have to be. It's simply a way for both you and your client to outline expectations and protect yourself if you end up in court.
"Contracts don't have to be hard to understand or include archaic legal jargon," says
associate attorney at the
"If a freelancer is going to be paid an hourly rate, the contract should simply state how many dollars per hour the freelancer will be paid. If the freelancer is going to be paid a flat fee, the contract should state the fee, whether the fee is pre- or post-tax, and when the fee will be paid."
There you go. Easy enough. For more on how contracts can help you get paid, read "5 Steps to Becoming an IT Consultant."
Contracts Can Help Protect You from Scope Creep
Projects often change after work has begun. You can combat scope creep by including contract language that addresses how changes to the initial project scope will be handled.
"The disputes I've seen are quite often about the scope," says Leffler. "They involve compensation issues where the client decides midway they want to change things and suddenly the project becomes bigger in some way – but the client is not expecting to pay anything more."
No one wants to do more work without getting paid for it. That's why it's important to outline how changes to the scope will be handled:
- Set expectations for change requests. For example, you could state that clients will receive one complimentary round of revisions, but any further edits will be at your base rate of $X per hour.
- Include a provision for contract alterations. This way if a project changes significantly, you can revise the contract to address these changes.
By addressing scope creep before it happens, you can reduce the chance of a lot of extra, nonpaid work.
Contracts Can Clear Up Intellectual Property Ownership Confusion
When you're an IT consultant, you may run into issues over who owns intellectual property you create for a client. Rather than battle it out in court later, it's better to outline ownership rights in your contract upfront.
"If you are doing a technology job or an assignment, there may be questions about intellectual property – who owns what," says Leffler. "Technology consultants can create something that might be useful for other clients, and they may want to be able to have certain rights to it depending on what it is. For example, if you design a website and there are certain things that were developed for that website that might be useful, you can include that in an agreement."
Worried about how time-consuming it will be to create all these contracts? Don't be. Most freelancers simply work from a few contract templates that they update and reuse with every client.
"You can have a standard contract that you can modify for each particular project," says
founder and CEO of
Vethan Law Firm
(@VethanLawFirm). "Every contract is going to be unique to the specific business, but there are some general elements that most contracts will include, like title and preliminaries, the scope of work, payment and terms, terms of contract, and termination."
If you aren't sure how to write a work contract agreement, check out our free sample contracts for inspiration.
About the Contributors
David J. Leffler guides entrepreneurs and small businesses through some of the most critical moments in the life of their business operations. As a partner at Culhane Meadows, he specializes in providing relevant, timely legal advice to small businesses across a variety of industries, with a special focus on growing web-based companies. Mr. Leffler has been rated by Super Lawyer Magazine in the fields of corporate, intellectual property, and real estate law.
Charles Vethan is the founder and CEO of Vethan Law Firm. For more than 20 years, Vethan Law Firm has delivered top-tier legal counsel to private businesses and professional practices of all sizes, including their founders, investors, partners, and management teams.
Benjamin Weisenberg is an employment attorney at the Ottinger Firm. He specializes in employment law, with a focus on representing executives in the negotiation of employment contracts and severance agreements. Mr. Weisenberg also represents executives in connection with disputes concerning bonuses, commissions, and non-compete agreements.