By: Sharon Toerek, Principal, Toerek Law and Author, the Agency Protection System

One of the most challenging times for agencies is the first business relationship or project with a client.

It’s exciting to land new clients, or to get new business with existing clients. Your team is eager to get started, and so is the client. But this is when the agency needs to take a pause and make sure that the relationship is started with a solid legal foundation. How do you protect the agency legally, while keeping momentum with the client as you begin work? What’s the best way to document the agency’s business deal with its client? And what should that document say or include? 

The solution is a well written Client Services Agreement – referred to frequently in the ad world as a Master Services Agreement. The Agreement is your legal contract with the client – it describes the work, the relationship, and the responsibilities of both parties to the transaction.

Let’s walk through the Client Services Agreement, including when to use it and what points it should cover to protect your Agency. Consider this your “checklist” for a solid Agreement, and use it to be ready for your next business opportunity.

When should you use a Master Agency-Client Services Agreement?

Use the Agency-Client Services Agreement when your Agency initially engages with the client. This Agreement serves as the master contract between the agency and your client, and documents all the important legal and business terms of your deal with them:

  • It says which of the parties is responsible for what actions, and what will happen if they don’t perform those actions .
  • It describes the work that will be done, and the compensation that will be paid for the work.
  • It defines the legal relationship and roles of the parties, including issues like liability.

My recommendation is that the Agreement should be flexible enough to incorporate your agency’s standard proposal, statement of work, or scope of work document as an exhibit.  

Once the agency has engaged with a client, additional or later proposals or SOW’s can refer to, or incorporate, the Master Agency-Client Services Agreement, so that the legal terms don’t need to be repeated in each new document.

What’s in the Agency-Client Services agreement?

It’s helpful to have a summary of the legal points that every Agency should be sure to include in its Client Services Agreement. So here are 10 of the most important ones:

  • Scope of Agency Services – This provision appoints your agency on behalf of your client and refers to the specific proposal, statement of work, or scope of work document that will describe the specific work. The language also says that additional out of scope work will be separately negotiated and documented in an addendum to the agreement.
  • Intellectual Property Ownership – It’s crucial to include language that states that your agency retains its IP in all work until your client has paid for it, and that IP in any unaccepted work reverts to your agency. While your client will expect to ultimately own these rights, you want ot make it clear that the Agency needs to be paid before it will transfer them – an essential leverage point for matters like timely payment of your fees. The Agency should also state that it reserves portfolio rights to display client work for its own promotional use.  
  • Term – Make sure to identify the term of the engagement (one year is the recommended default), and describe the procedure for the parties returning assets and information to one another when the engagement ends. Adjust your term depending on the type of engagement, client, or specific work the Agency will perform.
  • Compensation and Billing Procedures – You’ll need clear language about your compensation structure and billing policies. How will your Agency charge the client (Hourly? Flat fee? Retainer offset by hourly fees?)? When will the Agency bill the client? Also – remember that your Agency won’t be able to enact protections like interest for late payments, or recovery of collection costs and attorneys fees unless those provisions are in writing in the Agreement.  
  • Client Approvals and Authority – Inevitably, the Client will have to provide approvals, information or feedback throughout the engagement. So, make sure to include language that describes your client’s responsibilities to to provide these to your Agency in a timely fashion. State clearly in the Agreement, also, that your client is responsible for any increased costs or delays caused by their late approvals or feedback. And it’s helpful as well to require that the client designate the people who will have decision-making authority about the work and expenses.
  • Confidentiality of Information – Both parties will need a commitment of confidentiality in the Agency Services Agreement. The client obviously will need and expect the agency to maintain confidentiality about the work and about their proprietary information; however this provision is equally important for the agency. Why? Your agency’s proprietary methods, recommendations and pricing are matters it probably wants to keep confidential. Also, the promise of confidentiality means that the client is less likely to implement your ideas and recommendations without your involvement (or, at least, your permission).
  • Conflict Standards and Nonsolicitation – In some agency Client Services Agreements, it will be important to address matters such as industry conflicts – such as whether the agency can service other clients in the same industry, and nonsolicitation – a promise that neither the client nor your agency will solicit employees, contractors or opportunities from one another during the relationship.  
  • Indemnities and Limitation of Liability – Make sure to include clear language addressing your agency’s legal liabilities to the client in the Client Services Agreement. Your client should be expected assume responsibility for legal review of your agency’s work, and liability for any claims or losses related to the information it provides your agency. Your agency will probably be expected to assume responsibility for any intellectual property infringement related to work it creates. It’s also important to include language that limits your agency’s liability to the total amount of compensation received from your client.
  • Insurance – If the client will require the agency to have specific insurance coverage, make sure to state clearly the type and limits of that coverage in the Client Services Agreement.
  • Obligations or Expenses to Third Parties – Finally, include language that outlines your agency’s policies on out of pocket or third party expenses like media, production costs, and travel. It’s also wise to state a sequential liability policy for media purchases or third party expenses advanced by your agency, so that the client understands is ultimately responsible for making the agency whole for these costs.

What’s the easiest way to make sure the Agency doesn’t miss something in the Client Services Agreement?  The answer is having a consistent process and good tools, ready to use. By being proactive and having a toolkit of ready legal agreements, templates and checklists prepared and available for your agency and client relationships, as well as the many other routine legal matters the Agency will face regularly, your team will save time, stress, and money – and it won’t need to “reinvent the wheel” every time it signs on a new Client.

I hope you found this information helpful! To make the assignment process as efficient as possible, I included an easy-to-use template for a Master Agency-Client Services Agreement (and other documents the Agency will need to manage its legal affairs) inside my Legal + Creative Agency Protection System. You can learn more about the system here.

And while you’re there, you can also download a number of free checklists and tools that your agency can use right away, including one that’s exclusively focused on the Agency-Client relationship.