#182 - The top 3 legal problems I see for creatives, and how to deal with them
I work with a lot of creative business owners and even though my clients span numerous industries, I’ve noticed some common legal issues for coaches, creatives and consultants that leave them vulnerable.
Here are the top three legal pitfalls, and my advice on how to navigate them:
1. Scope Creep
If I had a dollar for every time I've spoken to a creative client about the pain points they face due to scope creep, I'd be a wealthy woman. Scope creep is real, and it can be a significant issue if not managed properly. It occurs when the boundaries of a project expand without proper documentation and consent, leading to extra work that wasn't initially agreed upon, often without additional compensation.
Contracts should be crystal clear about deliverables, timelines, and additional work procedures. Regularly revising your contracts and making sure they're tailored to your current needs can mitigate scope creep. Properly drafted contracts serve as a roadmap, ensuring both parties know what to expect and understand the consequences of changes.
2. Using Templated Legal Documents
Too often, I see business owners taking shortcuts by using templated legal documents. While templates might seem like a quick and affordable solution, they don’t offer the comprehensive protection needed. There is no one-size-fits-all approach to legal documentation and relying on generic templates will leave you exposed. Templates don't consider the unique aspects of how your particular business operates, they don’t adequately address payment terms, scope of work, client relationships, or the specifics of your industry.
Instead of relying on templates, work with a business lawyer who takes time to understand your business and customises your legal documents accordingly. This ensures that your documents cover all necessary legal bases and reflect your business's processes and needs.
3. Lack of Solid Processes and Systems
Another major issue creatives face is the lack of solid business processes and systems. This problem often compounds when paired with poorly tailored legal documents. Without a clear understanding of how to implement these documents correctly, creatives run the risk of non-enforceable contracts and disputes that may not have a clear resolution.
Solid processes and systems ensure consistency and order in issuing proposals, contracts, and invoices. Proper sequencing of these documents is essential for their legal enforceability. Having each step outlined from proposal to payment ensures that you cover all bases and reduce the risk of something falling through the cracks.
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[00:00:20] Tracey: One of the objectives I have in my business is to set business owners up with contracts that work so that they don't need to call a lawyer later on when things go wrong because they're protected. if you're a long time listener, you'll know that that objective is driven by My past.
[00:00:38] It's driven by my experience of more than 12 years as a litigation and disputes lawyer. So in all those years, I acted for clients, business owners, suing or being sued in and out of court because things went wrong. Most of what I saw back then could have been avoided if those business owners had have knownwhat they needed to do to protect themselves.
[00:01:00] In today's podcast I'm going to share with you the top three legal problems that I see for creatives. I'm going to share with you the best way to deal with them. I act for service based business owners and the majority of my clients are coaches, creatives and consultants.
[00:01:14] So I see a lot of the same problems come up and I see business owners leaving themselves exposed in the same way over and over again. Here are the three legal problems that I see the most for creatives. The first of all is scope creep. Oh my gosh. If only I had a dollar for every time I've spoken to a creative client about the pain points that they have in their business that relate to scope creep. It is real. It's there. I get it. It doesn't have to be that way. Scope creep Is one of the things I'm going to talk to you about. next legal problem I see for creatives is taking shortcuts with their legal documents and using templates.
[00:01:54] There is no one size fits all approach to business and as far as I'm concerned, DIY is for Bunnings, not for your legals and templates have no business being used for legal documents in a business. So we're going to talk about that. And the third legal problem I see is when a creative business doesn't have solid processes and systems in place because it leads to so many issues.
[00:02:17] So solid processes and systems is a big one and I'm going to talk to you more about that now. I want to start with taking shortcuts with legal documents and using templates. What this does. and I've seen it so many times with business owners that I work with is it doesn't give the business owner the understanding and knowledge they need to be confident that their documents have them covered and to be confident that they know how to use them.
[00:02:44] And that'll dovetail into the processes and systems. But what generally happens in my experience based on the creatives that I talk to is they're really busy and they're so excited with their business and they're in their zone of genius doing their thing with their beautiful clients, they just want a quick contract.
[00:03:01] They just want something that is going to protect them and set them up because they're not that interested in contracts. And It's not exciting and they certainly don't want to go and see a traditional boring and stuffy lawyer in some office somewhere to get it done. So they go online, they buy a template or they get something from a friend.
[00:03:18] They will change the names. They'll have a quick read. Most of it won't make sense, but they'll make a few adaptions along the way so that they've got something to use for their clients. What this does is it leaves the business owner exposed because they don't understand the intricacies of the legals.
[00:03:35] They don't understand what's needed to protect them and they don't understand their obligations under the Australian Consumer Law. So what that means is They don't know if everything they need is in there, and if it's not, by the time it gets tested, it's too late and that document may well not be worth the paper it's written on.
[00:03:54] if something goes wrong, it may be that they're not entitled to rely on the document that they have because it doesn't have what it needs to have, and the sequencing was all wrong. So there's a lot that morphs from this one little dot point here of one of the top problems I see for creatives is taking shortcuts and using templates. There's a lot that comes from it, but first and foremost,it has the tendency to leave business owners exposed because they don't know what they don't know and they don't know if the template is suitable for their business and the way that they operate their business.
[00:04:32] No two businesses are the same. I say that so often on here. this is not the time to be taking shortcuts.
[00:04:39] Template documents
[00:04:41] don't cater for how that client or how that business operates. So it's not tailored to the way they issue their scope of work or proposal. It's not tailored to their particular payment terms. It doesn't often deal with whether deposits that are paid are refundable or not, and how that's going to be dealt with if somebody has a change of mind.
[00:05:07] Templates typically don't flesh out in detail a proper payment.termination clause, which doesn't breach the unfair contract law provisions. And it often has very generic warranties and liability protection clauses because, Hey, it's a template. So, one size fits all and we'll do something very high level and generic. It often doesn't go far enough to protect the creative business owner. So they're the most common flow on effects that I see when a creative business owner takes shortcuts and uses template legals. They're the most common issues that I come across when those templates leave that creative business owner exposed.
[00:05:49] That's a nice segue into point number two, which is the lack of solid processes and systems. this is a big problem, which is enhanced even further when the business owner is using templated legals because there's a lack of understanding and knowledge then around how those legals need to be issued and used. So it's a sequencing issue. Sequencing is big when it comes to processes and systems, especially for creatives because there's multiple documents often which form the contract. So it's usually a scope of works or a proposal document and terms and conditions or a client service agreement.
[00:06:28] It's usually both of those that need to be read together because both of those together when accepted form the contract. But not having solid processes and systems in place can mean the sequencing's out of order and if we don't get the sequencing right when we're issuing these things to business owners, what it can ultimately mean is that they're not enforceable.
[00:06:48] So the creative business owner needs to understand that the Australian consumer law applies to creative business owners. It applies to all of us as service based business owners and we have obligations as to what it is that we're telling our clients in our terms and conditions or our legals and how and when we're telling them and how and when we're sharing our documents and how we're getting them to agree.
[00:07:11] So what I say too often is a proposal will go out or an invoice will go out and when the client pays the invoice, the business owner saying, you now agree to my terms and conditions here they are, something like that. That unfortunately is all wrong and despite best intentions, that can leave the business owner exposed because at the end of the day, if that client challenges something later, what it can mean is that all of those documents can be set aside because they weren't issued in the proper sequence and because the business owner doesn't have the understanding and the knowledge because they may have used a template, and because the processes and systems aren't solid.
[00:07:52] So it can lead to a lot of headaches and real risk and exposure. The reason we have our legal documents in place is because it's part of our risk mitigation strategy as a business owner. So for a creative, having your legals tailored for your business, the way you operate so you know that they work for you is critical because this is how we're reducing risk.
[00:08:17] Then making sure that the processes and systems are set up in a really solid way so that it's set and forget and everybody gets the same process when you're issuing those documents is vital. Because we don't want to end up in a situation where our documents aren't enforceable. So we need to make sure that the processes and systems around issuing the proposal and the scope of work and issuing the terms and conditions or the client service agreement and issuing the invoices and issuing the updates that it's all happening sequentially and it's all happening consistently.
[00:08:49] And that's what happens when we have solid processes and systems in place. Exposure is what we want to avoid. Risk is what we want to reduce as much as possible and having properly tailored legals in place with solid processes and systems where you can be sure that nothing falls through the cracks is so important.
[00:09:10] That then is a lovely segue into my third point, which is scope creep. And this is the third legal issue I see so often for creatives. Scope creep. And you can understand now, presumably from the way I've explained this, that when a creative doesn't have tailored legals and doesn't have solid processes and systems, you can see how that creative is leaving themselves open for scope creep because it's very difficult to manage the client expectations when things aren't happening consistently and properly. It's very difficult to manage client expectationswhen we don't have legals that are designed for how we do business, when we don't have processes and systems that are executed consistently and things can fall through the cracks, which means if a client gets an invoice Months later and they weren't expecting that invoice because it wasn't properly set out or dealt with, or there's no variation clause, for example, in the legals, you can see why it becomes such a mess.
[00:10:11] Scope creep is real and it happens all the time. And if you're a creative business owner, I've got no doubt that you are nodding along because you'll be able to draw on an experience where it's happened to you. Absolutely. This can be avoided. So what to do about it? So these are the legal issues I see, but what to do about it?
[00:10:30] think, you know, the answer. So the first thing to do is make sure the legals that you have are tailored properly for your business by a business lawyer who knows this stuff so that they can spend time with you to understand how you operate, what's important to you, what are your pain points, get them drafted and tailored for you, get them done once properly, and then you don't have to worry about it again, unless you change something in your business and you just get them updated, but having those legals drafted from someone who knows what they're doing, from someone who's prepared to spend the time with you to understand your business and the intricacies and how you work.
[00:11:05] That's key. That's the first thing. Do that. Then, in that same work with that business lawyer, and I'm explaining my process, as you've probably guessed, take the time to understand sequencing. How do you have to issue these things in order for them to be legally binding so you're protected? As a creative business owner, this is so vital because having the right support around you to develop this system and process is so important, and then once it's set up, it's set and forget for you, execute consistently, and then you can focus on your zone of genius, which, let's be honest, is not contract drafting, and nor should it be. So having those solid processes and systems in place is really important but the first thing is that you need to understand them.
[00:11:49] need to understand what they need to be. So that's the sequencing. Whether you issue proposals or quotes or scope of works or however you do it, work with someone who takes the time to understand that so they can work with you to set up your processes and systems with you. Explain what it needs to be.
[00:12:06] You do it this way? Well, you need to do this, this, this and this. What email do you send? What does it say? Include this wording and then issue the document. And then once your client has said yes, then do this and this. That's where the magic happens. Understanding how you like to operate. What's legally okay?
[00:12:26] What's legally required, what needs to change so that you've got confidence that your processes and systems are set up to not leave you exposed, because then you'll find scope creep will fall away because you've already explained to your client what you're doing, what you're not doing, when you'll treat a request as a variation, so their expectations are managed that, Hey, I'm going to get an invoice for this. What that means is the flow on effect quite beautifully is invoices getting paid on time because You've got processes and systems set up now so you're issuing the invoices on time. Nothing worse than something falling through the cracks because you're so busy and invoices aren't going out on time, which means clients then respect less the urgency to pay or the immediacy of paying an invoice because, Hey, they sat on it for months and didn't get it to me. They mustn't care too much. Oh, I've heard that so many times. So we can avoid all that in a creative business if you have the properly tailored legals in place that are set up the way they need to be with solid processes and systems that work every time you will find then that scope creep will fall away, client complaints will fall away and delayed invoices will fall away.
[00:13:37] And I say that based on my experience. I work with so many creatives and I can't tell you the amount of times I've had feedback saying my life has been changed. Thank you so much because now I'm not stressed about this, I don't have to worry about this, my whole team know how things need to happen, why things need to happen and I'm so confident when an issue arises with a client, because I can nip it in the bud really quickly because we've got the documents we can rely on. And we've dealt with that in the document.So that's what I wanted to share with you in today's episode around the three legal problems that I see so often for creatives and I wanted to share the context behind those problems and how you can really dive in and do the work to make sure that they don't happen to you or that they don't keep happening to you if this is something that you're nodding along to, because you get it because this pops up in your business
[00:14:25] If you have friends or colleagues that you think would benefit from this episode also, I would be so grateful if you would share this episode with them because together, that's how we get the podcast into the ears of even more business owners. As always, thank you so much for joining me. I'll catch you next time.
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