Every business relationship benefits from having a set of guidelines to help work through potential issues, including relationships with marketing agencies.

In my experience, clients of all sizes pay less attention to the details of the contract than they should. That being said, getting lawyers from both sides involved in contract revisions can sometimes seriously delay or even threaten the possibility of reaching an agreement. Find the right balance based on the contract amount and your organization’s tolerance for risk and make sure you understand key provisions around copyright and ownership.

NON-DISCLOSURE/CONFIDENTIALITY AGREEMENTS

We typically offer to sign confidentiality agreements in the beginning of the sales process, which is outside our master service agreement. This allows early conversations to be open. We typically expect these to be mutual for both the agency and the company. I recommend companies ask for these early on in the process. The nature of the confidential information should be narrow and specified, and the length of the agreement should be explicitly defined.

HOW IMPORTANT IS THE CONTRACT?

Incredibly important. I wish more of our clients would really read through ours and ask for clarifications on any questions they have. We used to offer a straight-dope, standard language document of the more important provisions so clients had a better understanding of our agreement, but it was frowned upon by our lawyers.

The contract sets the parameters of your relationship with your agency. It should be well thought out and not just a template someone at the agency grabbed off a website at some point.

The rules set forth in the contract should protect both parties. A good contract answers questions about both parties’ recourses and responsibilities if a dispute does arise, and hopefully provides a guideline for resolving those disputes without going into litigation. At S4, we’ve never had to go into mediation, arbitration, or litigation over a dispute with a client. However, the clarity of our contract was comforting to rely on when a client refused payment but launched a website we had done for them. The course of action was clear: Pay your bills or take down the site, as copyright is transferred upon payment.

DISPUTE RESOLUTION

A friend, who also owned an agency, told me a third agency owner (who regularly faced litigation with clients) once asked him, “How does your agency handle lawsuits?” My friend replied, “We handle them by not getting sued.”

That about sums up my thoughts. By the time both parties are consulting lawyers, everyone has lost (well, except the lawyers). As I said above (and will say repeatedly), S4 has never faced any form of litigation with any client past or present. This doesn’t mean that we haven’t had disputes or disagreements with clients, or that every client relationship over the last decade has been perfect. It does mean that good business practices combined with willingness to work through problems can go a long way.

That being said, when things do break down there are a few options...and most of them suck.

MEDIATION

If negotiating directly with the agency doesn’t result in a way forward, there are 3rd-party mediators that can be pulled in to try to find a solution that is acceptable to both parties. This is typically non-binding and cost-effective compared to the other options. 

ARBITRATION

You avoid court and work with 1-3 arbitrators who can issue a final judgement. However, this doesn’t remove the need for hiring (and paying) a lawyer. Typically, this can result in a faster judgement. However, since you’re paying for arbitration and lawyers, it’s not necessarily cheaper. 

LITIGATION

Taking it to the courts means going in front of a judge or jury. This option might be comparable in cost to arbitration, but the case can end up being stuck in the system and take forever to resolve.

CONCLUSION

Make sure to thoroughly review the relevant provisions in an agency’s contract. In the event of a disagreement, some will force you into arbitration, which may not be in your best interest. Again, I’m not a lawyer and a reputalble attorney should be able to give you much better advice on all of this. Do yourself a favor, and talk to them before you sign a contract. 

Excerpted from Pitching a Fit: A Guide for Choosing the Right Marketing Agency by Chris Olberding.