Contracts in digital: a brief guide for non-lawyers
This material is a small part of the course on managing digital projects , and will be useful, first of all, to project managers, account managers and managers on the side of agencies.
We decided to share our experience for a reason: unpleasant cases from colleagues in the industry and self-filled bumps suggest that this topic is painful for many (and not only in IT). Read in the material what contract structure to choose when working on SCRUM (and why), and most importantly - how to defend it from the lawyers of the customer. Layfkhaki in coordination, 5 rules of precaution, a couple of real stories, as well as the workflow process in the studio Siberiks from the inside - here.
Few people write a contract for each client from scratch. Almost every company has a template, most often taken from the Internet and edited. We started about the same. When working on a waterfall model with a document flow, it was simple: the works were immediately evaluated and recorded in the contract at the sale stage.
About 8 years ago we started working on SCRUM - the first in web development (a separate post with holivar on this issue is already in the archive;). It was very cool, but our familiar and cozy contract template did not fit well with the new processes.
The key was the idea to make a framework contract plus an annex to it at each stage of development. Such an agreementdetermines the general procedure and conditions of work, while the risks are borne by us and the client only within the framework of the current Annex - in other words, within one stage of work.
We gradually made changes and additions to this template, based on all the cones we had stuffed. It gradually grew, became difficult to read and understand. The checks, revisions, approvals began to leave indecently much time. There was a question “do we need a lawyer”?
We understood very well that we didn’t want to have a lawyer in the state (he doesn’t produce anything, which means it will enrage the director). That managers do not have much time to work with documents. At the same time, we really wanted to make the workflow safe. Therefore, we have refactored the templates with the help of lawyers Runetlex, and introduced special regulations, which greatly reduced the complexity and likelihood of errors.
For example:
The most unpleasant, but inevitable is the changes from the lawyers of the Customer. And they also need to be checked and evaluated for potential risks. The solution is to have a proven contract template for each type of service and a checklist for dealing with objections (we share our template here ). Then for negotiation you need not so much time and enough common sense.
There are three types of edits, for working with which we use different algorithms:
The first step is to provide in advance in the contract items specifically designed to show flexibility and adapt to the particular customer. These may be provisions that duplicate the norms of legislation, or regulate the nuances of work that are convenient for you, but not fundamental. Those points that you are willing to sacrifice. Their absence will not greatly affect the complexity, time, cost, processes or risks. So, if the lawyers of the customer will be very ask, you can safely exclude them, first protecting.
In our templates, such items are highlighted in color, and managers can make decisions on them independently.
Unfortunately, besides the points that you did not really want in advance, there are others in the documents. For you, they are not just important, but principled. When lawyers of the customer send edits on them - it is necessary to agree. There is no, and there can not be a single algorithm, it is always a process of negotiation.
On such points, in the first place, it is worth proposing an alternative formulation. Even if the other version contains only minor concessions or clarifications, and in general is almost the same as before, it will often be missed.
Compare - this wording lawyers have not agreed:
And this one was missed:
It is even better to first make a list of points on which differences often arise, and prepare alternatives in advance. The bonus of such a list - it allows you to partially delegate the discussion of edits to account managers and project managers.
If you cannot agree on any points, you can try to transfer the negotiations to a higher level. It is often enough to say that you do not have enough authority, and the issue can only be resolved through the CEO. Escalation is always resource-intensive for both parties, so on non-critical points, issues are likely to be resolved without it.
If the customer asks you to add sanctions to the contract - for example, for late work, think about whether he himself can’t expire in the same way. If so, add two mirror points: for yourself and for it. We are not against responsibility for the parameters that are completely in our power. But responsibility is a two-edged thing. And this is an occasion to once again overestimate the risks and, possibly, to refuse from sanctions in general.
In the file of arbitration cases there is a judicial history of the customer. Many claims to suppliers? Yes, he may be really unlucky all the time, but rather his legal department benefits and makes money from loopholes in documents. Take this into account when assessing the risks and profitability of a project, as well as when agreeing revisions. For example, this is an important argument when agreeing a clause on jurisdiction.
In addition to the script for the approval of amendments, our regulations have a number of precautionary rules that will be useful in any industry:
Rule 1. No documents in Word. To the customer, we give the documents in edit mode in Google, or (if the lawyers of the customer need the file) a pdf file. It is easier to transfer items from the dispute protocol to Google.Docs, than to completely check the text from the Word for the presence of unchecked changes.
Rule 2. Verify documents. It happens, customers add 2-3 edits in edit mode, and the rest make quietly, in the hope that no one will notice. We had two such cases: the terms, amounts and processes changed.
Rule 3. Check the version of the originals from the customer.They may suddenly differ from the agreed document. Unfortunately, in our practice this option has been encountered several times.
Rule 4. Require a power of attorney if the contract was not signed by the general director. And check that it is not expired. Otherwise, the contract can be considered invalid by the court, and no matter how well you do your job, you will have to return the money. Case is not fictional (shared by colleagues).
Rule 5. Check signatures. The signature on a specific document must coincide with the signature sample in the framework agreement (and in the company's constituent documents, you request copies of them from contractors, yes?) And have something in common with the signatory's name. Due to a dubious signature, documents may also be declared invalid.
We believe that the agreement should as accurately as possible reflect the real agreements and rules of the game. It should not interfere with work. In the case of controversial situations, waving paper in front of your nose is a weak and dubious idea. But the order in the documents should be. The rest is enough to be guided by common sense and intuition.
We decided to share our experience for a reason: unpleasant cases from colleagues in the industry and self-filled bumps suggest that this topic is painful for many (and not only in IT). Read in the material what contract structure to choose when working on SCRUM (and why), and most importantly - how to defend it from the lawyers of the customer. Layfkhaki in coordination, 5 rules of precaution, a couple of real stories, as well as the workflow process in the studio Siberiks from the inside - here.
Few people write a contract for each client from scratch. Almost every company has a template, most often taken from the Internet and edited. We started about the same. When working on a waterfall model with a document flow, it was simple: the works were immediately evaluated and recorded in the contract at the sale stage.
About 8 years ago we started working on SCRUM - the first in web development (a separate post with holivar on this issue is already in the archive;). It was very cool, but our familiar and cozy contract template did not fit well with the new processes.
The key was the idea to make a framework contract plus an annex to it at each stage of development. Such an agreementdetermines the general procedure and conditions of work, while the risks are borne by us and the client only within the framework of the current Annex - in other words, within one stage of work.
We gradually made changes and additions to this template, based on all the cones we had stuffed. It gradually grew, became difficult to read and understand. The checks, revisions, approvals began to leave indecently much time. There was a question “do we need a lawyer”?
We understood very well that we didn’t want to have a lawyer in the state (he doesn’t produce anything, which means it will enrage the director). That managers do not have much time to work with documents. At the same time, we really wanted to make the workflow safe. Therefore, we have refactored the templates with the help of lawyers Runetlex, and introduced special regulations, which greatly reduced the complexity and likelihood of errors.
For example:
- A new contract should always be prepared from a template, and not from a contract from a previous customer. It’s already unpleasant to apologize for someone else’s name in documents, but there are still works on the NDA ....
- Places where data can change are highlighted in color: it really saves 20 percent of time when preparing documents from templates.
- Before sending the contract to the customer, in any case it is necessary to check it once more. And it is very desirable - by another person. The problem is that such a person is usually in the company alone. And there may be a lot of documents (for example, we have more than 400 per year).
- And not only - the regulations are actually rather big.
The most unpleasant, but inevitable is the changes from the lawyers of the Customer. And they also need to be checked and evaluated for potential risks. The solution is to have a proven contract template for each type of service and a checklist for dealing with objections (we share our template here ). Then for negotiation you need not so much time and enough common sense.
There are three types of edits, for working with which we use different algorithms:
- Updates on the processes. Most often come from project managers on the side of the customer. It is usually enough to tell again why the work will be built in such a way and not otherwise, and what advantages it gives to the client.
- "Knocking out" more favorable conditions. More iterations of edits, less time, lower prices. What to do? Connect common sense, show that the cost and timing are directly dependent on the complexity. We need more iterations of edits - ok, but it will take more money and days. It should be cheaper - we reduce the workload: you can always throw out some of the functions from the estimate. Free work is a sin.
- Right from the lawyers of the customer. There are many of them, or rather MANY. Especially when a lawyer tries not to solve some real problem, but to create the appearance of work. Edits may not be particularly rational and understandable. Let's see how to work with this in order to reconcile documents with minimal losses.
The first step is to provide in advance in the contract items specifically designed to show flexibility and adapt to the particular customer. These may be provisions that duplicate the norms of legislation, or regulate the nuances of work that are convenient for you, but not fundamental. Those points that you are willing to sacrifice. Their absence will not greatly affect the complexity, time, cost, processes or risks. So, if the lawyers of the customer will be very ask, you can safely exclude them, first protecting.
In our templates, such items are highlighted in color, and managers can make decisions on them independently.
Unfortunately, besides the points that you did not really want in advance, there are others in the documents. For you, they are not just important, but principled. When lawyers of the customer send edits on them - it is necessary to agree. There is no, and there can not be a single algorithm, it is always a process of negotiation.
On such points, in the first place, it is worth proposing an alternative formulation. Even if the other version contains only minor concessions or clarifications, and in general is almost the same as before, it will often be missed.
Compare - this wording lawyers have not agreed:
The Customer grants the Contractor the right to use his own name (name), logos, trademarks, commercial designations in the portfolio and information materials of the Contractor. The Customer shall provide the Contractor with the right
to announce the results of all works under the Contract.
And this one was missed:
The Customer grants the Contractor the right to use its name and logo in the Contractor’s portfolio and information materials, as well as to announce the results of all works under the Contract, subject to prior approval of the announcement text with the Customer, by sending an e-mail to the responsible person of the Customer no later than 2 business day before the proposed publication.
It is even better to first make a list of points on which differences often arise, and prepare alternatives in advance. The bonus of such a list - it allows you to partially delegate the discussion of edits to account managers and project managers.
If you cannot agree on any points, you can try to transfer the negotiations to a higher level. It is often enough to say that you do not have enough authority, and the issue can only be resolved through the CEO. Escalation is always resource-intensive for both parties, so on non-critical points, issues are likely to be resolved without it.
If the customer asks you to add sanctions to the contract - for example, for late work, think about whether he himself can’t expire in the same way. If so, add two mirror points: for yourself and for it. We are not against responsibility for the parameters that are completely in our power. But responsibility is a two-edged thing. And this is an occasion to once again overestimate the risks and, possibly, to refuse from sanctions in general.
In the file of arbitration cases there is a judicial history of the customer. Many claims to suppliers? Yes, he may be really unlucky all the time, but rather his legal department benefits and makes money from loopholes in documents. Take this into account when assessing the risks and profitability of a project, as well as when agreeing revisions. For example, this is an important argument when agreeing a clause on jurisdiction.
In addition to the script for the approval of amendments, our regulations have a number of precautionary rules that will be useful in any industry:
Rule 1. No documents in Word. To the customer, we give the documents in edit mode in Google, or (if the lawyers of the customer need the file) a pdf file. It is easier to transfer items from the dispute protocol to Google.Docs, than to completely check the text from the Word for the presence of unchecked changes.
Rule 2. Verify documents. It happens, customers add 2-3 edits in edit mode, and the rest make quietly, in the hope that no one will notice. We had two such cases: the terms, amounts and processes changed.
Rule 3. Check the version of the originals from the customer.They may suddenly differ from the agreed document. Unfortunately, in our practice this option has been encountered several times.
Rule 4. Require a power of attorney if the contract was not signed by the general director. And check that it is not expired. Otherwise, the contract can be considered invalid by the court, and no matter how well you do your job, you will have to return the money. Case is not fictional (shared by colleagues).
Rule 5. Check signatures. The signature on a specific document must coincide with the signature sample in the framework agreement (and in the company's constituent documents, you request copies of them from contractors, yes?) And have something in common with the signatory's name. Due to a dubious signature, documents may also be declared invalid.
We believe that the agreement should as accurately as possible reflect the real agreements and rules of the game. It should not interfere with work. In the case of controversial situations, waving paper in front of your nose is a weak and dubious idea. But the order in the documents should be. The rest is enough to be guided by common sense and intuition.
The master contract template and its annexes can be downloaded here .