Getting Paid: Freelance Contracts 101

Getting Paid: Freelance Contracts 101

Freelancers: the terms that should be included in all of your contracts.

Section One: Getting Paid.

Independent work is on the rise in the United States. One report estimated nearly 17.7 million independent workers in 2013, an increase of 5% from 2012 and 10% from 2011.

Indeed, I work with a number of freelancers – project­-based as well as independent workers. Most of them have no problem attracting clients or getting quality work completed.  The most common problem they face is that, when they invoice for work, they do not get paid in full, or get paid on time, or sometimes – unfortunately – they don’t get paid at all.  In fact, according to a 2010 survey by the Freelancers Union, 40% of the respondents reported trouble getting paid on invoices.  These are such common occurrences that the video “Don’t Get Screwed Over” went viral:

Section Two: Getting Protected.

If you are a freelancer, what can you do to maximize your chances of actually getting paid for the work that you do? Always execute written contracts with clients.  (The 2010 Freelancer Union survey reports that only 33% of respondents always use written contracts with clients).  

What should these contracts say? At a minimum, a written contract should address the following questions:

  • Who is the client?
  • What is the scope of project?
  • What are the deadlines?
  • How is the fee calculated?
  • When is payment due?
  • What is the method of payment?
  • What happens if the contract is terminated?
  • What expenses will be reimbursed?
  • Who owns any intellectual property that is created?
  • Where and how are disputes to be resolved?

A much more detailed discussion of how the contract should address these questions is available in my article “Getting Paid in the Naked Economy,” published in the Hofstra Labor and Employment Law Journal. 

Section Three: Getting Started.

How do you get started on that contract? There are do-it-yourself (“DIY”) resources that might be helpful to you. Docracy provides a free online repository of sample contracts. ShakeLaw is a free mobile app that, based on answers to a series of questions, prepares a written contract. The Freelancers Union also provides a free online contract creator

Using one of these generic services is probably better than having no written contract at all, but there is no "one size fits all" approach to contracting.  Moreover, the “DIY” approach can create more problems than it solves – for example, I once had a client come to me with a contract he had prepared with the aid of LegalZoom.  In that contract, as a venue for disputes, he chose "federal court located in Queens, New York." There is no federal court located in Queens, New York.  Just as you probably wouldn't read a blog post and think you could build your own house, be careful with legal DIY:

The best case scenario is that you hire an attorney to draft a tailored “fill in the blanks” agreement to be presented to a client before you begin work. If this contract averts even one dispute, it was a worthwhile investment.