What Legal Documents Do I Need to Freelance?

What Legal Documents Do I Need to Freelance?

For many, freelancing can be a perfect way to live your working life on your terms. You choose your hours, clients, and location. And if times get tough and you have the ability to temporarily take on full time work at various stages that can be even better. Then there are others for whom freelancing is less of a choice and something that has emerged by necessity. Whatever brought you into freelancing, there are a few of pitfalls to be wary of – many of which can be dealt with via a strong contract, some legal assistance, and some keen negotiating skills.

As a freelancer you are operating as an “independent contractor”, which is dealt differently legally from an employee. Independent contractors are engaged to provide certain services, and as such are engaged under a commercial contract rather than an employment contract.

In some cases your client may provide you with a contract, while others will expect you to provide them with one. Legally, you have the same rights as your client to manage the terms of the contract. 

Common issues with freelancing include ambiguity and conflicts over the exact deliverables that will be provided (aka scope creep), confusion over the amount of amendment rounds, not getting paid or being paid late, and undefined (or non-existent) intellectual property clauses. 

The Freelance Contract

The contracts freelancers use can go by a few different names, eg Service Agreement, Client Service Agreement, Freelancer Contract etc. The name is not especially relevant, as long as it covers the following key areas detailed below.

It’s vital that you have a contract between yourself and your client. Make sure the contract is signed by both parties with a copy kept by both parties.

Scope

It is critical to define the scope of the services you will be providing. The more you can describe your services unambiguously the easier it will be for you and your client to agree on the nature of the service mutually. It will make it easier for you to push back on a client making additional requests for work or additional rounds of amendments. Your scope can also define the timeframe, hours of work, delivery formats, and anything else specific to the work. 

It can sometimes help to anticipate areas of work that could be requested or where a grey area exists and list them as specifically being outside scope (aka exclusions). 

Scope can be defined within a contract. Alternatively the contract can state that scope will be defined elsewhere, such as in a quote, invoice, or statement of work. The advantage of this approach is that it will allow you to have a single contract that doesn’t need to be modified for each piece of work.

Most disputes between freelancers and their clients are over what is and what is not within scope. In the rush to try and secure a new job or client don’t forget that defining scope tightly may be your best defence to preventing conflicts down the track!

Payment

Your contract needs to state what you will be paid. This can either be in the form of an hourly rate or a cost per delivered item. If there are likely to be third party expenses, these should be listed, with an estimate provided. 

The payment terms should be defined. If an initial deposit is required, that amount should be outlined (and shouldn’t exceed 10% of the total fees). Terms should also state whether you require payment in instalments, a lump sum on delivery, or another arrangement.

Confidentiality

Working on a client’s business may at times require you to access information of a confidential nature – for example mailing lists, or financial information. Your contract should have a clause that addresses confidentiality to prevent either party from sharing confidential information about the other. You may have clients who ask you to sign a Non Disclosure Agreement (NDA or Confidentiality Agreement). Assuming these documents are reasonable and well drafted they should help build trust between the parties. Naturally tread very carefully when discussing anything on social media to do with your client.

Intellectual Property (IP)

Many freelancers will be producing some form of IP in the course of their work. IP can be defined as anything written, designed, created, invented by an individual. Your contract should specify whether intellectual property created by you will be either “assigned” or “licensed” to your client.

Assigning IP means that you are giving the other party ownership of the work. This is the typical arrangement if you have been engaged to provide work for another.

Licensing IP means that you maintain ownership of the work while allowing your client to use the IP under specific terms. If the material is being licensed, the terms of use will need to be carefully defined.

Freelance Termination Clause

The contract should state at what point the contract comes to an end. This will ensure that your contract doesn’t exist in perpetuity. The contract should outline under what circumstances either party can terminate the contract (before the end date). Termination clauses will protect the parties from breaches of the contract or if circumstances outside of their control have arisen that make it unworkable. 

Dispute Resolution Processes

All commercial relationships have the potential to turn bitter, and a mechanism should be outlined for dealing with managing disputes should they arise. This allows for disputes to hopefully be settled through a mediation before it gets escalated into the court system (if mediation doesn’t settle the conflict). 

Lastly

While you’re freelancing, you are not alone in your journey. Freelancing is increasingly becoming a popular way of conducting work. It’s important to have solid legal documents in place and to consult with a business lawyer to ensure your freelancing runs smoothly. Feel free to chat with us about your freelancing and the contracts you need.

Let the lance run free!

About Ezra Sarajinsky

Ezra SarajinskyEzra is a founder of OpenLegal. Having spent the last decade working with startups, small businesses and corporates, Ezra is evolving a client-centric experience that tightly integrates digital technology with project managed services. His legal focus is employment, corporate and migration law.