BlogHer U: Partnerships -- Understanding Typical Legal Terms and Arming Yourself for Contract Negotiations with Chrissy Watson and Kristen Herwitz
Partnerships: Understanding Typical Legal Terms and Arming Yourself for Contract Negotiations.
Chrissy: I do dispute litigation for partnerships and have
Kristen: I'm the in-house attorney for BlogHer, doing commercial contracts, and miscellaneous trademark, copyright, etc. I try to work front-end prevention with good contracts as opposed to litigation.
DISCLAIMER - This is NOT legal advice!
EVERYTHING IS NEGOTIABLE.
Kristen: the 20-page contract looks scary but you're there for a common goal.
Before you start:
Know what you need
Know what you want
Know your limit.
Chrissy: And what you want is the gravy. That is what makes the deal sweet, not what you need. Ask for a lot more than you can live with so you give the other side room for pushback.
Chrissy: An agreement over coffee is a contract. But get it in writing.
Make sure everyone's expectations and requirements are clear.
You can refer to it in a dispute -- not even to an escalation but something like "Why haven't you done this yet?" and you can point to the contract which smoothes things along. You're not playing the blame game; you're blaming it all on the contract.
If you DO escalate -- the contract will govern your dispute.
Amount of payment, date (when, lump sum or increments), terms (based on performance? ), form (check, PayPal, alternative?)
Chrissy: Scope of work
These are the services.
Include who's doing what work as specifically as possible. Carve out what you don't want them to expect you to do, as well. Like: I'm not going to be responsible for liability insurance, in an event production contraction.
You'll see SOW in the contract but will also see it as an Exhibit. Those are helpful for continuing relationships, because you can add new exhibits for new projects.
Define who will be in control of changes to the schedule -- you, the other party, mutual agreement, a third party. Who defines that those changes are acceptable? How will you get those changes in writing (for schedule changes, allowing for email is most flexible).
Do you want the relationship to end automatically after you complete the service with no further obligations or ties? Or do you want a continuing relationship? Is there an option to renew?
How can you/they get out of the contract? We all go in with the best of intentions but sometimes they don't work out. Maybe one side goes out of business, maybe a partner has breached provisions, or maybe you've had a change in direction and no longer need them. And you want to give notice by email or fax -- definitely writing.
In the contract, specify alternative ways to deliver this notice -- often it's because the specific person has left the company and email doesn't work.
Chrissy: Intellectual Property
Your brand assets include your blog posts, slogan, blog trademark (if you have done so), your likeness (name, photo, quotes). You want to manage how they do that so you manage your own brand. So put things in "press release approval" -- make sure there's an approval mechanism on your end. My blog, Outlaw Mom, is a registered trademark. I ask people to use the R with a circle so I don't lose my trademark. I could lose my trademark if I am not using it properly.
You also have control with respect to licenses. You want to share your assets but usually don't want to sell them. Negotiate that you're just giving away the right to use that, and define it to specifics -- one particular campaign or time frame. Red flags might be "exclusive," "in perpetuity."
What exactly is the information you're sharing that you want to remain confidential. The terms in that particular agreement. Proposals you're discussing. Trade secrets. Client lists.
Create a term limit on those items. Confidentiality for the next 100 years may not make sense for your agreement.
Think about cases where you don't want confidentiality to apply. Say you get slapped with a court order and they need you to provide those specifics. Or say that confidential information became public another way, you should be able to talk about it after that.
Chrissy: Push back. If you don't think something should be confidential then ask why.
Chrissy: Boilerplate terms.
Limitation of liability -- like "act of god." Tailor to your specific service -- say you're doing an event, note which weather circumstance would make it impossible. Make sure limitation is reciprocal. You can get indemnification, so if you get sued, the company will pay for your defense.
Kristen: Law/forum -- you may not always be able to negotiate especially for large brands, but try. Ask for local forum (court) as possible to be convenient to you. You don't want to be hauled across the country if it comes to dispute -- it's expensive.
If you have formed an LLC out of Delaware, as many companies do these days, that can be a more neutral forum.
Kristen: Arbitration -- alternative to court. Large companies often include arbitration to make sure court costs don't skyrocket. It's often a judge or panel of judges. It tends to be cheaper, and big brands may say no to your request but try
Chrissy: Assignment of the contract -- having someone do the work for you. Sometimes you want that, but if the person you're in contract with is unique in some way, you don't want to. Delegation of duties -- similar but not whole contract, just specific duties, like farming out to a vendor. Be specific: Will you do the work? Will your partner? Will a vendor?
Kristen: Uncertain terms -- if there's anything in there that doesn't read right, there's no reason not to ask. Often companies are working from boilerplate and don't even understand that there are parts that don't apply to you. There are also just a lot of bad, unclear contracts out there. Don't ever feel you need to sign without asking. Just ask.
Chrissy: Dealing with deadlock
Everything IS negotiable when you have common goals. When your individual goals clash, take a step back.
Choose another form of communication -- when you're negotiating it's with a person. So maybe you're talking to someone whose boss told her something specific, and she wants to work with you but feels like she doesn't know how. Pick up the phone; establish a rapport, ask "what is it you really need? How can we make this happen?
Kristen: If that person doesn't have the authority, ask to speak to the decider.
Kristen: Bottom line, approach with confidence. Don't be afraid to ask for things you need/want or for things that aren't clear. Don't be afraid to walk away if you aren't given what you are ready to accept. Especially big brands often have a lot of advantage written into the contract. But everything is negotiable, and you don't have to accept the advantage.
Chrissy: Sometimes even the lawyers don't know what they're talking about with the contract. It could have been written by someone else or it's the first of this type of partnership. Don't sell yourself short.
Kristen: Keep in mind the scope/duration. If it's small, it may not make sense in the attorney's fees, and lots of brands won't put up with a back and forth for a simple agreement, so again know what your walkaway points are beforehand.
Question: If you're just starting out without financial resources for lawyers, are there economical ways to seek legal help that you can recommend?
Chrissy: If you can afford to get an attorney, you should. It's personalized. There are attorneys in the area that specialize in working with bloggers. Or LegalZoom and things like that, but take them with a grain of salt
Kristen: You can have an initial consult with a lawyer; large firms often offer that for free. Or do a simple job of setting up customizable boilerplate for partnerships and a mutual nondisclosure agreement.
Chrissy: It's easy to get free legal advice if you go to an attorney and ask how do you think you would be able to help me? Some people do that serially; I don't recommend that.
Kristen: Nontraditional firms in the Bay Area with former in-house attorneys -- Paragon Legal, Axiom. You can hire them on a project basis and they're often cheaper.
Question: I had intellectual property questions and did online research to find someone to hire. I couldn't find anyone! Either megafirms or the divorce guy down the street. You just named 2 potentials, but how does one research?
Chrissy: Come to my firm!
Kristen: Go to state bar websites, they will help you.
Question: When in my business should I trademark?
Chrissy: Try to trademark right away. Contact a trademark lawyer for specialized advice.
Kristen: General advice. Also negotiate with your attorney! When you're just starting out often attorneys will be willing to negotiate for the first work they do for you.
Chrissy: Silicon Valley attorneys are used to dealing with startups.
Question: What's the cost of legal fees for trademark?"
Chrissy: Attorney fees and then fees you pay to the US Patent and Trademark Office. It would depend on how much time your attorney puts in and the firm itself. But I'd ballpark as a couple thousand up front and then the bulk you might pay later if it goes on, because trademark can be a long back and forth. That includes the USPTO fees.
Question: Talk more about LLC - limited liability company
Chrissy: That's a whole nother couple of hours. Really quick answer: There are a lot of ways to enter into a partnership. It's the newest type of company. There's not a lot of guidance on whether it's a good idea or not. It's supposed to shield you from liability so someone can't sue you for your house or car. It's what bloggers tend to do but if you're starting a business you might want to start a corporation. VCs tend to like corporations. Ask yourself why you want to form a company, and in California it's $800 annual tax even you make NO money.
Kristen: If you form a corporation you have to file a whole extra tax return, LLC is just an extra schedule to file with your normal return, it's more passive. Ask your attorney.
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