“Contracts are an opportunity for designers to create a great relationship with clients.”—Josh Barrett, CreateLegal

Unfortunately, you don’t have to go far to hear the bitter sob story of a designer getting denied payment for work performed—often due to nothing more than miss-matched expectations between creative and client. Even if it’s a misunderstanding, the resulting non-payment is a tough pill to swallow.

Fortunately, we have Josh Barrett. Josh is the best kind of fairy godmother the creative community can have; one with valuable tips on how to avoid this situation in the first place. After 14 years working in corporate firms, Josh started CreateLegal here in Portland in 2011, so he would be able to spend his days representing his favorite clients—us creative folks. On April 3, he laid it all down in an incredible Career Tools quarterly breakfast series at 52 Ltd, titled  Where Facts and Creativity Meet: Building an Effective Statement of Work.

If you missed his talk, don’t worry—we’ve summed up some of the most useful tidbits here. He also prepared a skeleton document for you to use as a template to build your own SOW, which you can download here.

The first distinction that must be made before we get started is, that your contract with the client is not just a document. In fact, Josh asserts that many things really make up your full contract with a client, including:

• Statement of Work
• Terms & Contidions / Master Services Agreement
• Industry-Accepted Best Practice
• Anything written (even texts!)
• Conversations

Now that that’s been cleared up, let’s dive into 10 things creatives need to know about statements of work:

1. A solid SOW lists the responsibilities of the creative as well as those of the client.

You heard me—the client has responsibilities to keep for the project to be successful. There is an opportunity for you to hold the client responsible for certain tasks before the project can continue to move forward. For example, you might stipulate that the Creative Brief must be approved by a certain date in order to enable you to meet a final deadline for the project. Or, the client must agree to respond to proofs within 24 hours with feedback, otherwise the schedule will be bumped by 1 day for every day the client delays in responding. You might put a statement in there that nonpayment on an invoice that is more than 30 days overdue will entitle you to halt all work until outstanding fees are paid in full.

2. A signature is just a present intent to authenticate.

In other words, a signature is simply someone indicating their intent to approve something – it could even be a written “X” in lieu of a signature. Digital signatures hold the same legal weight as physical ones on paper. You can even email your client a contract document and write in the email, “If you agree to the attached contract, reply in an email confirming your approval,” and their emailed positive response will count as a legal approval equal in weight to a signature in the court of law. Same thing for .pdf form documents that they write their name into, save, and email back to you.

3. Repeating the clients words back to them can get you paid more.

A “Goals, Background, and Project Summary” section in your SOW serves to establish the context as to why this contract is in place. Show you understand the client’s business goals by stating them, and Josh asserts that this “will help justify a healthy fee”.

“Background” means a summary of who the client is, not who you are. “Goals” are the goals of the project. However be sure to communicate clearly with clients that your services are in no way a guarantee of results – there are too many factors involved in the achievement of goals to hold you solely accountable for success (market fluctuations, client sales team performance, competition, etc.). “Project Summary” can be phases within your creative process, what they include, and a quick explanation of how they turn into the final deliverables.

4. Saying what is not included is just as important as saying what is included.

Some things you’ll want to be sure to list if they are not included: trademark clearance services (unless you are an intellectual property lawyer), copyediting and copywriting (unless you are a professional copywriter who will be held responsible for any and all typos and grammatical errors, even if the client makes them), and extended licenses for stock imagery (unless you purchased them on behalf of the client).

5. Even if a creative project is fueled by specific client business goals, a signed SOW does not guarantee achievement of those goals.

There are simply too many other factors that influence the achievement of client goals which are outside our control as creatives. If you’re thinking you’ll just talk about goals in person and not make them part of the signed contract just remember, whether or not goals are stated in your SOW or in a conversation, they can hold the same legal weight because all the things mentioned in the bullets at the beginning of this article are part of the contract between you and your client.

Part of your job is reminding the client that while it’s important to understand the business goals of their project, you can’t 100% guarantee results. Repeat as needed.

6. Listing the end deliverables is just as important as defining how you’ll get there.

Be sure to mention anything that is delivered as part of the process such as what number of revisions or iterations are included at the price given. If your creative process includes delivering proofs as physical mockups, write that out or explain that proofs will all be digital .pdf’s if that is the case. If you don’t tell your client what to expect, they might become dissatisfied with the level of service you are providing and press you for more work to feel they got their money’s worth – an undesirable situation for all involved!

It can also be helpful to manage your client’s expectations about the level of customer service you’ll be providing during the work engagement, such as, are you expected to answer the phone 9am-5pm Monday through Friday, or are you simply agreeing to return their voicemail with a phonecall within 24 hours? Again, by setting their expectations in the beginning, you can ensure that both parties feel you are upholding your end of the bargain.

7. You can and should charge a termination fee if a client backs out of a retainer agreement early.

Typically, retainers give clients a guaranteed number of hours or dollar amount of services provided by a creative on a monthly basis, for a certain number of months. The client is often given a bulk rate discount since they are ensuring steady business for the creative in the future—often 6 months to a year. However, if the client backs out of the retainer agreement early, the security the creative was getting from the arrangement is removed. Part of the reason creatives offer discounts for retainers is because the creative knows that they don’t have to hit the pavement looking for new business to maintain income levels—they are guaranteed the business provided by the client on retainer. When this gets pulled out from underneath them, the designer is surprised and has not filled the pipeline and could experience some serious dry spells of work as they hustle to get new business. For this reason, Josh recommends creatives protect themselves by writing a termination fee into SOW for engagements that are on a retainer basis to make up for the potentially lost time seeking new business to replace that income.

8. Smart designers offer to CC the accountant on invoices.

The designer that gets paid fastest is the one that asks their client contact, “Can I send invoices directly to your accountant in addition to you?” This way you don’t have to wait for your client contact to send the invoice along to finance, who might only be in the office a few days a week or only process invoices once a month.

9. “Statement of work” is preferred over “estimate” or “proposal”.

Josh feels that having the client sign an “estimate” or a “proposal” holds less water in the mind of the client. These documents don’t sound like a final deal. Call it a “statement of work” to show that you mean business. Your SOW can include the elements of an estimate or proposal—an estimated cost, scope, rough schedule, terms and conditions, and additional details about the project. Give each SOW a number and if anything changes over the course of the project, issue a revised SOW with a new number and have everyone sign it.

10. The secret to avoiding contract difficulties with clients is to explain everything and communicate constantly.

Contracts are a tool for communication, not a substitution for communication. You have to sit clients down and explain the contract, your SOW, and constantly manage expectations through clear communication.

Thanks, Josh, for the great advice!

If you’d like to continue the conversation on SOWs, you can reach Josh at @createLegal with the hashtag #aigaportland. Share your thoughts and then wander over and subscribe to our email newsletter to stay current about our next Career Tools talk—where industry experts give you the tools you need to get to where you want to be. See you next quarter!