The Art of Business: When Things Go Wrong

Eric J. Adams

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Motorcycle enthusiasts are fond of saying: There are two types of riders, those who have gone down, and those who are going down.

Tweaked for the creative world, it can be said: There are two types of creative professionals, those who have had contractual problems with clients and those who will.

Here are a few things you can do to help prevent contractual problems from occurring in the first place and a few more when and if problems do arise.

BEFOREHAND

• Create a rock-solid contract. There’s no two ways around it: the best way to avoid contractual problems is with a well-conceived, appropriate contract to begin with. Many legal disputes concerning the big three — payment, scope of work, and cancellation — arise from the lack of a contract or one that’s poorly written. Make sure you understand all the provisions of the contract, particularly for one that involves royalty and licensing issues, multiple markets, lengthy schedules, or penalties. You can get contract ideas and boilerplate contracts from such books as “Business and Legal Forms for Graphic Designers” by Tad Crawford and Eva Doman Bruck, “The Business Side of Creativity: The Complete Guide for Running a Graphic Design or Communications Business” by Cameron S. Foote, and “The Graphic Arts Guild Handbook: Pricing & Ethical Guidelines” (reviewed recently in this column). You can also subscribe to the Graphic Artists Guild free e-mail newsletter, The “Contract Monitor” for ongoing insights into contracts and their intricacies.
• Network. The nature of the business is always changing and the contract you drafted two years ago may be outdated. Talk to your legal advisor about potential updates to your standard contract check with friends, colleagues, and associates to discover what new and creative contractual problems they’ve discovered lately.
• Establish an audit trail. Jot down notes following all phone conversations and keep copies of every piece of correspondence that comes your way. Better yet, be proactive by creating an e-mail audit trail. Send regular e-mails to everyone working on the project, so there’s no denying that your missives were ever sent or received. If your e-mail messages are crafted correctly, no one will have to know that you’re actually creating an audit trail as you go, nor will they feel offended by what you are writing. Use the e-mails to update partners on the current status of the project and alert them to potential pitfalls ahead. These are your little crumbs you leave along the way when the big, bad wolf comes chasing you down to accuse you of not fulfilling your contractual obligations.AFTERWARD
  If, despite your best efforts, you run into a problem with a client, try these steps:
  • Offer a quick remedy. You have a problem but do you have an equitable solution? If you do, offer it in a formal letter or e-mail. No one likes contention and there’s a good possibility that your client will accept your solution just to avoid a protracted dispute. If nothing more, you’ll at least help frame the debate to come if you act first.
  • Negotiate face-to-face. Before calling for outside help, try one more face-to-face meeting. Find common ground by pointing out that no one gains from an acrimonious dispute. Listen more than you talk and truly take into consideration your client’s point of view. The solution you create together may not be perfect; in fact, it may make you downright angry. But put your ego aside ask yourself with brutal honesty: is this solution, with all its shortcomings, better than hiring and paying for an attorney, protracting the problem, and wasting your time and energy? Sometimes taking a loss is the better business decision, tough as it might be.
  • Use the resources of a professional organization. Check with your local graphic artist organization to see if they have the means to help you with dispute resolution or if they can guide to you people who can. The Graphic Artists Guild has a Contract Point Person available to members for dispute counseling.
  • Use a mediator. Mediation involves the use of an impartial and skilled mediator to help you come to some sort of settlement with your client. For better or for worse, a mediator’s conclusions are non-binding, but a mediator can help reconcile parties and suggest creative solutions. Check your local volunteer art-related lawyer groups for more info mediation and to find a suitable mediator.
  • Use an arbitrator. Check your contract. You may have already agreed to binding arbitration in the case of dispute. Even if your contract says nothing of the sort, you can suggest binding arbitration to your client as a less-expensive alternative to going to court. To find out more, check out The American Arbitration Association.
  • Go to small-claims court. If your dispute is strictly monetary, there’s always small-claims court, designed to give you access to the legal system without the costs and formality of court proceedings. There are, however, disadvantages to small claims court. For one, courts focus largely on monetary judgments with established dollar limits that may be less than the amount in question. Most importantly, if a judgment goes your way, small claims judgments are rarely enforced, and even less so if your client lives in another state.
  • Hire an attorney. If you’ve tried everything else, bring in the big guns, you may have no choice, just make sure your attorney specializes in art-related law. A single letter on official attorney-at-law stationery may be all it takes to prompt a resolution. For large and complicated projects with lots of money at stake, you might want to forego the preceding steps and head right your lawyer’s office.

  The trick is to avoid contractual disputes at all costs and resolve them as quickly as possible because the longer they drag on, the more costly they are in terms of real dollars and creative energy.