Client Services Agreements: Making Your “Main Event” Agreement Understandable, Functional, and Advantageous

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Back in March we wrote about the four foundational agreements for every business: NDAs, client services agreements, employment agreements, and independent contractor agreements. Most recently we did a deep dive on NDAs, so this month we’re focusing on client services agreements. After all, running a successful business isn’t just about the quantity of clients (every business needs clients), but the quality of client relationships, and a successful client relationship needs a protective, understandable, and functional client services agreement from the start. Let’s get to it and dissect the key terms of your client services agreement.

Defining the Services: Your Superpower, Explained

First things first: what are you actually doing for your clients? Spell out your services clearly. What’s included is great, but what’s not included is just as important. Focus on deliverables, and not guaranteed results (more on that below 😉). And have a defined approval process in the event that the client wants to narrow or expand the scope of work mid-term.

Payment: Show Me the Money!

How much are you being paid? When? How? What happens if payment is late? What happens if a client disputes an invoice, but only part of it? Lay out these terms so that it’s undeniable when you’re owed your money. This is especially important if you have payment conditioned on achieving certain milestones, deadlines, deliverables, etc.

Term and Termination: From Start to Finish

All good things must come to an end . . . so you might as well prepare for the end in your agreement (as lawyers, we’re your legal “doomsday preppers”). When does the contract begin and when does it end? How can parties terminate sooner (if they want) and under what scenarios? As the service provider, are you able to terminate immediately in the event of non-payment? How much notice does the client need to give you if they want to call it quits? Importantly, even if you do have to terminate, your agreement should ensure payment for all services (and approved expenses) through the effective date of the termination.

Representations by Client: Keeping it Real

Your clients need to bring a few things to the table too. Specify what information, access, and resources they’re expected to provide. Have them be responsible for the accuracy and completeness of the information they provide to you – that way, if you rely on it and it’s bad information, it’s on them.

Intellectual Property: Who Owns What

This is worthy of its own treatise, but we’ll do our best here. In short, protect your current material. Make it very clear who owns what, including both pre-existing materials and materials created for the client. And remember – some things can/should remain yours but licensed to the client for their use on certain terms (or vice versa).

Disclaimers: No Guarantees, Sorry!

We know we left you with that cliffhanger from Point # 1 above, so here it is – you are delivering your services or products. You are not delivering specific results (unless you really are, in which case be specific!). Say that back to us. Disclaim promises, guarantees, and warranties to protect yourself from unrealistic expectations and legal claims. What’s that translate to? Just think of your favorite cheesy lawyer commercial reminding you that “prior results do not guarantee future outcomes”. Said differently, “we promise you we’ll deliver great legal services, but we won’t promise that you’ll never get sued or have a contract dispute.” Two very different things.

Indemnification: Shield Yourself

Indemnification is like having a trusty sidekick ready to step in and protect your interests/take accountability. It means your client will cover you if something goes wrong because of their actions (or inaction). Spell out these terms to keep your cape clean. Indemnification for their breach is great, but what if they give you materials that infringe on a third party’s intellectual property rights? Get indemnification for that too (remember those client representations we mentioned above?). What if they alter your products or services and, in doing so, harm someone else? Get indemnification for that. You get the idea.

Limitation of Liability: Cap Your Risks

Lawyers love this provision – and for good reason. You’re great, but nobody’s perfect. Limit your liability in case things go south. Define the maximum amount you could be liable for and the types of damages you won’t cover. This is your safety net. For example, cap liability at 50% of all fees earned by you in the prior 12 months. Not only does that stop the bleed, but it also discourages inflated demands and certain types of claims that could snowball.

Non-Solicitation: Keep Your Team Intact

A lot of people miss this one. But if you love your team, chances are your clients do too! So don’t let your clients poach them. Include a non-solicitation clause to prevent clients from hiring your employees or contractors away. We’ve even seen provisions that require your client to pay a fee in the event they do hire your people. But tread carefully – those are very, very heavily scrutinized and you want to draft that correctly.

Non-Exclusivity: You Get A Contract! You Get A Contract! Everyone Gets A Contract!

Saying “yes” to the dress and working with a client shouldn’t mean you have to say “no” to someone else. Be careful to avoid client demands that you provide services exclusively to them – or, that you won’t provide services to their competitors. This devil comes dressed in many forms, so read the agreement carefully. No exclusivity, no industry restrictions.

Wrapping It Up: Your Contract, Your Shield

This isn’t everything, but it’s enough to get your head spinning ensure you have a solid agreement in place. Remember, your client services agreement is more than just paperwork. If things get rocky, it’ll be your guiding light (and your lawyer’s Exhibit “A”). So invest in it upfront to avoid legal landmines down the road. Make it clear, make it comprehensive, and make it work for you. Now, go forth and conquer, knowing your contract game is as strong as your hustle.

And, as always, if you’ve got questions, you know we’ve got answers. 

~ The W + K Team

ABOUT WEINSTEIN + KLEIN P.C.

Established in 2019, Weinstein + Klein is a boutique law firm focused on labor and employment law, business matters, and litigation. W + K works with businesses, individuals, and entrepreneurs to protect their legal interests. In addition to advising clients on employment matters and working with businesses to minimize their risk of litigation, we advise small businesses and start-ups on various business law matters. 

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