CXO

Your contract or your client's contract?

As a consultant, whose contract will hold the most benefit, the one you bring or the one your potential client recommends? Here's a look at how to prepare for each possibility.


Over time, most independent contractors develop a standard contract they like to use, one shaped by their previous contracting experiences. However, many clients—especially those who regularly use contractor services—prefer to use their own.

In this article, I’ll tell you how you can gently introduce your contract and what you can do when clients want to use their own contract, even if it isn’t initially favorable to you.

The best way to introduce a contract
Generally, the party who is paying for a job—your client—will be the one to offer the contract. However, this is tradition, not an ironclad rule.

If you want to use your own contract, try to beat your client to the punch. Do it tactfully; you want to appear prepared, not aggressive.

At every client meeting, have a copy of your contract in your briefcase. You can tailor it to that client and still leave blanks for undecided details, such as payment terms and project scope. (Be sure to include a clause stating that the project scope will be decided in a separate document to be attached later, in case the contract is signed sooner than you think.)

Tighten up the contract as negotiations proceed. Once it seems negotiations are settled, you can introduce it to those with signing authority with a statement like this: “I’ve developed a contract that I believe protects both me and my clients. Why don’t you look this over and let me know what you think. We can certainly tweak it if you would like to add something.”

Your client’s reaction is likely to be one of the following:
  • “Great! We’ll take a look at it.” (This is the likely response from companies that have never bothered to write their own contract.)
  • “We have a standard contract that all contractors must use.”

If your contract meets a chilly reception, it’s wise to suggest that although it’s your standard contract, you regard it as a starting point and an example of the kinds of terms that have worked for you and your clients in the past.

Need a contract?
If you’re looking for a contract template, you can download one from us.

If the client's contract lands on the table first, don’t turn it down
If your well-prepared client brings their contract to the table before you can do so, don’t panic. Above all, don’t whip your own contract out and say, “Oh, but, I have a contract too.” You don’t want to look as though you’re itching to get into a tug-of-war with your potential client: Remember, it’s always potential until you both sign a contract.

Or, if your client uses their own contract, they may not even want to look at yours. In either case, don’t panic.

Working with the client's contract
If you end up with the client’s contract in your hands, let the client know that you need time to examine it and you will get back to them by a determined date and time. If the contract seems reasonable and appears to protect your interest, then you can simply sign and return it. If you feel it needs minor changes, such as a few words here and there, you can discuss that with the client.

However, if you’d like to see significant revision, an excellent way to introduce those changes is to provide a copy of your contract to the client with the clauses you’d like to add highlighted. Doing so not only brings attention to what you want to change, it also opens the door to the client deciding to use your contract after all.

Whenever possible, preface your comments by explaining to the client why a suggested change benefits both of you.

For example, some contracts use language that can make independent contractors look more like temporary employees. But many of the rights that independent contractors insist on, such as setting their own hours and place of work, also protect companies from getting busted by the IRS for illegally classifying employees as contractors.

If you can point out that your contract is looking out for the client as well, you’ll be more likely to get the modification you seek, as well as more respect from the client.

Dealing with client changes to your contract
If the client was willing to look at your contract and then signs it as is, you’re set. But that isn’t likely to happen. At large companies, for example, the legal department is likely to have a heavy hand in the process. Be prepared to have your contract significantly modified or even scrapped altogether.

Many of the same principles just discussed for client contracts also apply for defending your contract. In addition, assign priorities to the provisions of your contract: Decide what can go by the wayside and what will break the deal if you can’t have it your way. When the client starts modifying your contract, you’ll be prepared.

Other factors play into your negotiations, as well. For example, previous experience with the client or good references about the company from other contractors can make it easier to stomach certain contract provisions that might otherwise be questionable.

Read between the lines during negotiation
Last, remember that your contract negotiations can indicate the type of working relationship that will follow. If you see any of the following warning signs, you might want to reconsider working with this company:
  • The client is unwilling to consider your interests as well as their own.
  • The client seems to drag their feet and delay consideration of your suggested modifications.
  • The client seems evasive or glosses over certain issues.

Refusing to sign a contract after you and the client have negotiated a deal should be an absolute last resort, but remember that it’s always an option. It’s important to avoid getting involved with a nightmare client. Don’t be afraid to back out of a deal when all the red flags are there; doing otherwise could end up costing you far more in the long run.

Meredith Little runs WriteWork, a documentation consulting business she started in 1998. Based in Colorado, the company provides procedural documentation, knowledge management expertise, and solutions, such as user manuals and online help, to IT companies nationwide.


How do you get your clients to use your contract?
How do you persuade your clients to use your contract? Send us your suggestions.

 

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