You are growing! Fabulous! Maybe you are a boutique agency and picked up a few new clients, so you have gone from a small team to a less small team overnight.
Maybe you brought another small agency into your family in a bolt-on acquisition and you are now working on folding them into your business.
Perhaps you are a mid-size independent agency leader caught up in doing what you do best: the WORK. You might not have time to think about the little pieces of governance, risk and corporate tasks that lurk around. You know the tasks we are talking about – they are almost certainly in this list.
1. Are your employment contracts actually enforceable?
Are your employment agreements actually watertight and compliant with the law? Upon review we often find that our clients’ written employment agreements are void or voidable, unenforceable, or that the Fair Work Ombudsman may soon come knocking. Many times, this is because they conflict with the National Employment Standards (NES).
Maybe you know, or maybe you don’t, but your employment agreements must comply with the NES, 11 standards that must be incorporated into every employment arrangement and cannot be contracted out of. For instance, does your base employment agreement mandate that your employees must work 8.30am to 5.30pm every day, providing for an hour lunch break? If so, you are in breach of the NES.
2. Are your freelancers/contractors technically your employees?
Recent case law has made it even more important for your relationships with contractors to be very clearly documented. You need to know the difference between employees and contractors, and the different legal implications that exist for both. If you don’t handle this appropriately, you risk being liable to pay your contractors superannuation, leave entitlements and other employee entitlements.
3. Shareholder agreements outdated or totally lacking.
Do you own your agency? Unless you are at one of the big groups, you would be well advised to have a clear and well drafted shareholder agreement that governs your relationship with the other shareholders, and provides clear language around the appointment of directors, dealing with finances and a range of other corporate matters. If not, what happens when something goes wrong? Do you know where to start in dealing with disputes?
4. No clear set of agency documents built for purpose, ready to use for engagements.
Have you ever taken a client services agreement you had with one client and re-drafted it to be a client services agreement with another client? If that original document was drafted by the client’s lawyers, it is unlikely to be in your best interest to use it again, as it is probably heavily weighted in the client’s favour.
Or have you ever taken a talent agreement from a past engagement and tried to restructure it into an influencer agreement? Are you sure it is up to scratch?
So many agencies lack a simple set of documents and instead borrow contract documents from a previous agency, or from that engagement “with that client we had that time a few years back”. In other words, a document that was drafted for a totally different purpose, and probably to cover off on risks that are entirely different to what this current agency needs right now. Every agency is a little bit different, and has a different perspective on how to deal with certain matters. It is ludicrous (and dangerous) to copy and paste a document from a past life and use it for your current purpose without having it checked first (it may also be a breach of confidence, or of a past employment agreement, if you took the document without permission).
At the very least you should have a built for purpose Non-Disclosure Agreement, Employment Agreement, Supplier Agreement and Client Agreement that are all aligned, and that suit your risk tolerance and your specific commercial and operational needs.
Why do they need to be aligned? Well, what happens if you have a Client Agreement that says the client owns all IP on creation, but your Supplier Agreement says that the supplier retains all IP they create? Or if you are liable under your Client Agreement for any acts or omissions of your subcontractors but you have no subcontractor agreements at all and are left holding the can for all the residual liability?
Perhaps the most valuable thing about going through this process of drafting agency templates is that you get a clear idea of what you will and will not agree to with stakeholders, and you have a great base document to use which ultimately saves you time and a lot of money. It also prevents you just blindly signing whatever the client puts in front of you, which may satisfy the client but is almost certainly going to expose you in some critical areas.
5. Giving up the farm because this new client is so important and everything is super urgent
Ok, this one is pretty understandable, but just because this new client is super important to the future of the agency and the client needs to get things moving really quickly, make sure you don’t risk the agency’s future by signing up to terms in the client’s services agreement that may cripple you if things go wrong. In particular, over-the-top liability and indemnity clauses that may exceed what you can possibly control or insure against, or termination rights that give the client all the power and leave you at risk of heavy over-investment at the front end of a contract only for the client to slip out the trap-door early. While the client will (perhaps rightly) have some important protections for themselves, the agency similarly deserves some baseline comfort and protections, and this is where you need a commercially-minded and experienced lawyer working for you to make sure you are not at risk of annihilation if something goes wrong. Even a top-line sense check of a contract before signing it is prudent as you will know your key risk areas before signing on the dotted line. It may be the most important piece of legal advice you ever receive.
6. Assuming that all of your staff know what you know
This is such a common problem when agencies go from a handful of people to a pulsating hive of activity. It is very exciting, but your control and visibility of everyone’s day and their background knowledge diminishes with every hire. This is just part of running a growing business, but the legal exposure that can come the agency’s way if the person you put in charge of client contracts doesn’t know an indemnity from an insurance policy, or their copyrights from their employment rights, is significant. You can and should be covering some of this downside risk by having your lawyers work with your team on upskilling them on some key areas, like in a Contracts 101 session, or delivering a primer on intellectual property issues, or a “key legal issues in marketing and ad clearance” round table. If your lawyer doesn’t help you get out in front of these issues by running these sessions for free, get a new lawyer.
7. Advertising clearance checks not getting done, or getting done way too late
It is one of the most common issues in the advertising industry, especially where the contractual position is slightly unclear – who is actually responsible for clearing advertising content before it is published, and who needs to pay for this process? Between the creative agency, the production house, the client, the client’s in-house or external lawyers and all of the other stakeholders in the mix, who is the one taking responsibility for legal issues with a campaign? The simple act of getting something sense-checked with a lawyer may save hours and hours of messing around later when you do find out something is problematic, whether because performance claims need to be substantiated (and they can’t be) or the pricing disclaimer isn’t up to scratch. Anisimoff for instance offers a quick clearance check with a same day turnaround from $350 plus GST for most clearance requirements, and many simple sense checks don’t come with a fee at all. No complex engagements, we are just an email or call away. Don’t get too far down the road with a concept before realising it can’t be done – not when you can check in so quickly with a lawyer who knows what they’re doing and has your best interests in mind.
8. Underestimating complexities when engaging influencers, the new Wild Wild West
With the growth and development of the influencer marketing space in the last few years, brands are taking notice and are increasingly keen to gain exposure in this area, and agencies are also keen to provide these opportunities. However, given that influencers are difficult if not impossible to control, who is liable when an influencer goes off script, doesn’t properly disclaim their connection to the brand, or worse… somehow turns a simple advertisement for face cream into an opportunity to racially vilify a minority group? So often, brands want the upside benefit but none of the downside risk of engaging with influencers, so are more than happy to treat influencers like sub-contractors of the agency. However, influencers are content creators with a distribution platform and so really, they are more akin to media providers than talent or brand ambassadors. If you are liable to your client for the influencer’s act or omission as if the influencer is your staff or your sub-contractor, what are you on the hook for? At the very least you need a firm contract with the influencer, but ideally you won’t be in this position at all.
If any of the above 8 pitfalls sound familiar, it may be time to contact us and have a quick, obligation-free chat. You will find that working with a lawyer that knows your business, gets your problems and wants to work with you to solve them, is easier than you thought.