For years, AURAS ran on a handshake. Clients came for specific jobs, we did them, we billed them, and they paid. But as the studio grew and the projects became more complex, and the clients were bigger entities, relying on one person’s say-so became awkward and unprofessional. We decided that for new clients and one-off projects, we would turn accepted proposals into signed contracts.
Initially, we relied on attaching a “Trade Customs” document from the Graphic Artists Guild and the Printing Industries Association. Still, the issues for modern digital design studios are much more complicated anyway. With the help of a lawyer conversant in communications law, we built a boilerplate for our contracts that have served us well for decades.
It’s not about the money. As far as payments are concerned, in 40 years of business, we have lost only about 40 thousand dollars from clients who either skipped town, went out of business, or simply did not believe we deserved the money. It is about .0008% of our cumulative gross income. It isn’t even about having a legal recourse if things go South. The studio’s overhead should cover occasional Make-goods and Acts of God. In situations where something is contested, AURAS has always taken responsibility if there was some doubt about the owner of the mistake.
The real reason for a contract is to make the client comfortable. As Reagan said, “Trust but verify.” Let’s make sure everyone knows what we’ve agreed to.
When producing periodical publications, a contract helps formalize the work expectations and provide security over multiple years. The contract ensures the client will receive the ongoing services necessary to produce their publication on schedule and at set rates. Contingencies that might make a client nervous are addressed and has a process that includes uninterrupted production even in-between contract extensions. In exchange, we commit to working as a team to make the product as successful as possible, and the insurance that we can’t be summarily dismissed. That gives us guaranteed assets over the long term. The perfect goal of a contract is to make both sides feel they have made a good deal.
It is the simplest of concepts: you agree on what you are going to do and what you will deliver. Then you do it in the time frame you promised if they perform according to schedule too. Payment is based on deliverables. Any changes in the agreement need to be negotiated when it occurs and not when an unexpected item appears in the billing.
And, let’s face it, in the event of a real crisis between the studio and a client, nothing will prevent a disaster, and we usually take the fall. We have had companies that have fired the people we have been working with, or our contacts have left. We have had shake-ups at the top of a company and the immediate insertion of their own people replacing us. We have had drastic reductions in scope and the associated fees. This is where a contract can clarify who is responsible for what, who owns what, and who owes whom.
It is easy to see when the project is going out of scope, either because it grows and begins to include deliverables, not in the original proposal, or the number of changes and redesigns exceeds the agreed-upon deliverables. In some cases, the extra work is something that needs to be absorbed into the process. In others, where the spec on the deliverables changes dramatically, the fees need negotiation before anything else happens, or it corrodes rapport.
In practice, it happens seamlessly through the normal presentations of materials and discussions of goals. Contracts aren’t for what happens when trust is breached; they should encourage a reciprocal trusting engagement. A contract protects everyone by dictating what happens when things change drastically. Unfortunately, some situations are so untenable that no contract can hold the project together, so exiting gracefully becomes an issue that is part of the contract. The contract can mitigate a total calamity.
AURAS was hired by the Kogod School of Business at American University to design and produce a magazine promoting the school. We agreed on the scope, the process, and the deliverables and signed a contract to begin the process. We even had a kick-off meeting. But before we had our first deliverable, the client called and said they changed their mind and were going with another studio. I might have just let it go In other circumstances, but we had already begun developing the first round of materials. I reminded the client that they had signed a contract. They had agreed that canceling the contract unilaterally would require 30 days, and at any rate, they still owed the initial signing fee, which was due on signing.
The one-month delay is designed to allow both parties to work out the issues causing the split. The client was adamant about dropping us unceremoniously and without any fees because “we hadn’t done anything yet.” Again, the contract stipulated that the client pays for whatever deliverables were in the process of being created if they were delivered within the month. We were in the process of writing a rationale for the project’s editorial scope and design, the second deliverable according to the contract, so we had done something. Still, there was to be no reconciliation. We delivered our rationale to them and billed the deliverable.
The client still believed they had no obligation and referred the bills and contract to their accounting department. A few days later, their head of accounting called and promised to pay the billed fees and was embarrassed at the behavior of the client because, “after all, we are a business school, and this is a contract.”
We were paid, but the ultimate aim of the contract, to retain the client and build a confident working relationship, was lost. It was a cruel blow that bothered me for months because it is one thing to lose a proposal, but we had never been fired before we even delivered anything. It was some degree of vindication that the final product that we checked out months later—far beyond our original timeline—had addressed many of the issues we identified in our rationale, and that the design work was perfunctory, and the posted document was prepared incorrectly.
Schadenfreude is a poor substitute for unwarranted rejection.
