Legal Questions for Independent Professionals
Presenter: Elizabeth Hanley of Dano-Gilbert, P.S.
Day of Meeting: July 09, 2012
Attorney Elizabeth Hanley primarily practices in the areas of employment law and/or litigation of contract disputes, so her presentation centered on various aspects of contracts between editors (generally doing business as independent contractors) and clients. She was not giving legal advice in individual matters, and would like it to be noted that nothing in these notes should be construed as legal advice, nor does she have an attorney-client relationship with the Guild or any members of it.
Considerations in Contracting for Work
1. Consider including an indemnity clause in your contract. Elizabeth writes that “if someone brings litigation against you, the editor, for the work you did on behalf of the person who contracted with you, the contracting person has to cover your legal costs.” If they’re a large company, they’ll most likely have indemnity insurance.
However, we individuals/independent contractors shouldn’t agree to indemnify other companies or individuals. Doing so could obligate us to pay that company’s attorney fees in case of litigation.
2. Elizabeth writes, “Generally, editors should be careful to avoid signing contracts with liquidated damages, this could also lead an editor to being financially exposed to damages that are a preagreed dollar amount, rather than dependent upon someone else proving the dollar amount of damage to them by, for example, breach of a contract.” The definition of liquidated damages, according to the legal section of thefreedictionary.com is:
An amount of money agreed upon by both parties to a contract which one will pay to the other upon breaching (breaking or backing out of) the agreement or if a lawsuit arises due to the breach. Sometimes the liquidated damages are the amount of a deposit or a down payment, or are based on a formula (such as 10% of the contract amount).
3. Pay careful attention to forum selection clauses, which may dictate where (geographically) you are allowed to file a claim against the contractor if they breach or fail to follow the terms of your agreement. Generally speaking, editors will want to make sure that if there is a dispute with the contractor, it can be handled here in Washington State. This way, traveling to another venue to file a claim or take care of other aspects of a dispute can be avoided; plus, you won’t need to learn the contract laws of different states, which do vary and might be unfavorable to you. Elizabeth mentioned that it’s not a bad idea to include language in your contract specifying that Washington laws will apply in case of any disputes.
4. Try not to use boilerplate contract forms from the Internet, as they may contain unnecessary or contradictory terms. You should either consult an attorney to draw up your contract or carefully read any contract provided by your client to make sure it doesn’t contain too many legal “terms of art.” (Webster’s definition: “A word that has a specialized meaning in a particular field or profession.” Another source adds that the “term of art” may have a meaning within that discipline other than the commonly understood meaning.) Black’s Law Dictionary is a good resource for checking any terms that might fall into this category.
It was mentioned that the Editorial Freelancers Association (EFA) provides sample contracts that are specific to our profession.
5. An audience member brought up the option of purchasing errors and omissions insurance. Elizabeth declined to comment on this, but there are many online resources describing E&O insurance.
Suggestions and Practical Tips for Getting Paid
1. Consider building milestones into your contracts; that is, break the project into logical segments with dates for completion of your tasks. If you make them specific and geared toward getting something to your client (rather than them getting something to you), you’ll have more control over the process. It’s a win-win in that they’ll be happy to see their project moving along, and you can potentially use those milestones as points for getting paid.
2. Consider requiring payment of a certain portion of the fee upfront. Elizabeth points out that getting paid for a service after it has already been provided is sometimes difficult, as you cannot repossess your thoughts and work after you’ve already provided the service. Don’t be hesitant about asking for money upfront; it can actually help lay the groundwork for a better relationship with your client.
Responses to Audience Questions
1. If you want to set up a business structure other than that of an independent contractor, it’s best to hire a lawyer. The most common of these is the Limited Liability Corporation (LLC), which establishes your business as something legally separate from you. It can be trickier than people think, as it requires that very specific formalities be followedso Elizabeth recommends we hire a lawyer to do this. (She doesn’t do LLCs, but states that many lawyers do, and may offer a flat fee if it’s a simple plan.)
2. A member asked whether it was a good idea to establish a relationship with an attorney prior to when you might need their help (for one’s general education, or in case of possible future problems). Elizabeth replied that it might not prove satisfactory to do so; for one, you wouldn’t know ahead of time what type of problem you could be facing, and your attorney might specialize in a different aspect of the law.
3. Regarding email agreements: if clarification is needed in an email, it’s good to ask specific, yes/no questions in order to get definite answers. And it can be very helpful to end documents with a sentence such as, “If anything in this letter is contrary to your understanding, please notify me within five (5) days.”
Choosing an Attorney
There are many resources. You can ask friends for referrals or go online to your state’s bar association website. Here in King County, go to the King County Bar Association’s Lawyer Referral Service (www.kcba.org).
Learn about fee structures, of course, but also pay attention to a lawyer’s style of communication and his/her overall philosophy and approach to conflicts and resolution.
Speaker Contact Information
Elizabeth Hanley, Attorney at Law
Dano Gilbert, P.S.
1411 Fourth Ave., Ste. 1101
Seattle, WA 98104
ehanley@dgalaw.com
Tel. 2064521349
Twitter: HanleyEsquireNotes
Meeting organizer/facilitator: Mary-Colleen Jenkins, board member
Notetaker: Lisa Gordanier
Location: Richard Hugo House