De-risking client contracts

Winning a new project always feels good.

The client’s bought in, the team's excited, and you’re eager to get going.

Then the contract arrives...

For many agencies and consultancies, this is the least appealing part of the process.

Client contracts are long, technical, and rarely make for pleasant reading. Faced with dozens of pages of legalese, most of us are tempted to skim through, assume it’s ‘standard’ and just sign so we can get on with the work.

I’ve heard all the usual justifications:

“The risk is very low.”

“We’ve never had a problem before.”

“Our insurance will cover it.”

But the reality is there are often clauses in client contracts that genuinely put your business at risk.

And once you’ve signed, you’re committed.

The good news is that you don’t need to be a lawyer to spot the most dangerous parts. If you know what to look for, you can identify the three biggest threats in a matter of seconds.

Threat 1: Ownership of intellectual property (IP)

Creative work is valuable precisely because it generates intellectual property (IP).

But ownership of that IP is not always straightforward. Many client contracts will state that all IP rights are automatically transferred to the client the moment the work is created. On the face of it, that sounds fine: they’re paying for it, so they should own it.

But here’s where it gets risky:

• Some clauses go much further, assigning rights to all ideas, sketches, and concepts developed in the course of the project – not just the final deliverables. That means even work you didn’t share, or ideas you could reuse elsewhere, could legally belong to the client.

• Others include sweeping wording that goes beyond the scope of the actual project. Suddenly, unrelated processes, or methods you use day-to-day might be caught up in the assignment.

If you sign this without challenge, you could be giving away more than you realise. Worse, you might be restricting your future ability to use your ideas elsewhere.

Threat 2: Infringement of third-party IP

Many client contracts require you to warrant that your work does not infringe on ANY third party’s intellectual property.

Of course you don’t intend to copy anyone else’s work. But the clause often goes further than intention:

• It can make you liable if anyone claims infringement — even if it’s unfounded

• It can shift responsibility for defending those claims entirely onto you

• In some cases, it requires you to indemnify the client for all costs, damages, and legal fees associated with a dispute

Think about what that means. If a big company with deep pockets claims your design infringes on their IP – even spuriously – you could find yourself responsible for tens, or even hundreds of thousands, in legal costs.

No insurance policy is guaranteed to cover you in full. And even if it does, the time, distraction, and reputational risk can still be devastating.

Threat 3: Your exposure

The third area is the extent of your liability. Many contracts contain clauses that, without adjustment, can expose your business to unlimited risk.

That means you could be liable for damages far greater than the fees you were paid for the project – or even your company’s annual revenue.

A project worth just a few thousands could expose you to a liability in the millions.

The key is to negotiate limits:

• Liability should ideally be capped at a multiple of your project fee (often one or two times)

• Or it can be capped at the limit of your insurance coverage

• It should also exclude consequential losses – things like lost profits or future revenue, which could spiral into eye-watering sums

Without these protections, you’re playing with fire.

Why you should pay attention

As the leader of a design agency or consultancy, this is your responsibility.

Your directors, managers and designers shouldn’t be expected to read contracts with a lawyer’s eye.

But if they’re signing things on your behalf – or if you’re signing them yourself without scrutiny – you could be exposing the entire company.

Too many leaders treat client contracts as boring paperwork that just ‘Needs to get done.’

In reality, they are as critical to your agency’s survival as winning new business or delivering great work.

Negotiating fairer terms can save you from a mountain of financial and legal pain.

What you can do

You don’t need to become a legal expert. But you do need to build your – and your senior team’s – awareness of what to look out for.

That way, when a contract lands, you know which sections to check, which ones to push back on, and when to bring in specialist advice.

Client contracts shouldn’t feel like a gamble. With the right knowledge, you can turn them from a threat into a manageable part of running a successful design business.

IMPORTANT DISCLAIMER: I’m not a lawyer. For legal advice please consult with a qualified legal professional.

I’ve created a FREE 20 minute online training course specifically for design agencies and consultancies.

It covers:

✔ How to spot the three critical issues: ownership of IP, infringement risk, and exposure

✔ Why these clauses pose a genuine threat to your business

✔ How to push back with confidence and mitigate your risk, without damaging your client relationship

Praise for the training

“The De-risking client contracts training course was excellent. Clear, precise and really easy to follow.

I found myself looking back at past contracts and wishing I'd known all of this before!”

Creative Director

“Your De-risking client contracts course came just at the right moment, when I was negotiating the terms of a new client engagement.

I'm a designer, not a lawyer, so understanding what clauses to look for that could have a negative impact on my business, is invaluable.”

Agency owner

I built a 100-person international design consultancy, before selling it.

Now I work independently, providing:

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