Negotiating as an Independent IT Contractor? 42
C3ntaur asks: "I've been doing IT work -- System and Database Administration -- for over 10 years now, and I recently decided that it's high time I went freelance. I had done occasional side work before, but now I'm in the thick of it, with most of my income generated by contract work.
One of the challenges I've encountered is in negotiating a fair contract, and I'd like to pose it to the Slashdot community: How do you deal with the PHB types who hand you boilerplate contracts that they themselves haven't read, let alone understand?"
"I've patiently tried to explain my objections to legalese that translates to 'we own anything you've ever invented, or ever will invent', and 'you must obtain our written permission before working for anyone we deem to be a competitor', but it falls on deaf ears. In fact, I'm often told that it doesn't mean what I think it means. I am willing to hand over all rights to work I do within the scope of a contract, and I'm willing to protect and keep confidential a customer's IP and trade secrets, but the contracts they want me to sign are far, far broader than just that.
IANAL, but I do have a pretty good understanding of the English language. So unless these contracts are written, interpreted, and enforced in some Orwellian world where the lingua franca is Doublespeak, they could seriously hamstring my ability to earn a living. I cannot sign them, but my would-be customers won't do business with me if I don't. Any ideas?"
Simply put... (Score:3, Insightful)
Well put (Score:5, Insightful)
As far as negotiation tricks go, it is good to have a lawyer-friend. Find a trustworthy attorney and arrange a low cost deal. All you need is his stationery, signature, and sometimes advice. When the PHB hands you the contract, say "I will have to have my attorney take a look at this" and take it with you. Forward your copy of the contract with your objections noted to your attorney and have him send a letter delineating HIS objections to the potential PHB. Usually folks will negotiate if they see that you mean business.
An alternative is to incorporate, at least as an LLC and get an EIN. Then they don't "hire you" rather they contract for services from your company. The types of contracts for corp-to-corp are generally much more flexible and since your corp can be under contract with several other corps at once, usually they can be reduced to a simple NDA. There are other advantages, as well as costs, to this approach, but overall if you are going to work for yourself, I think it is best to incorporate.
An alternative that I have voiced before is to simply say that you cannot sign in good faith. Say that this contract conflicts with other, previous contracts, and you are not at liberty to say who those other contracts are with due to an NDA. If they still don't budge, display your spine and walk.
Why not... (Score:3, Insightful)
After all, *you* are the one selling your services to them.
Easy (Score:1, Funny)
Re:Easy (Score:3, Funny)
Problem is. . . (Score:2, Troll)
Suggestions (Score:1)
My thoughts:
The most common reaction is to just sign the contracts, and ignore them. The companies you are working will probably never do anything, even if you are technically breaking conditions in the fine print. This will probably work... but of course you do run the risk of being really screwed if a company decides to come after you because of some percieved danger to them.
Nice (Score:4, Insightful)
Being an independent, I am usually the one who provides the contract, as they are paying me for my services and produced product, not the other way around. Usually, I run into NDAs, and that's pretty much it. If someone were to hand me a crazy contract (overly restrictive terms) and my lawyer gave me a thumbs up anyway, then my fee would just go up to cover the additional restrictions.
I have lost a few contracts when there was a strong disagreement regarding terms, but my time is too valuable to take any old job that could end up screwing me out of future business. I also don't do charity work (except on odd weekends) when I could be out beating the bushes for the next gig.
The Power of Attorney (Moohoohoohahahahahaha) (Score:5, Insightful)
You don't need to spend a lot of money believe it or not (and you can write it off as a business expense). Use the resource wisely: If you can only afford to consult with him/her once, then just do that. Ask about the legal ramifications of insisting on the types of contract changes you want. Ask for advice in speaking to the PHBs (a lawyer's job is language). Ask for advice on making such arguments for changes and coming across as more professional than the PHB (which always works). If you can, come up with your own boilerplate contracts and have the lawyer edit/check them - when the PHB hands you a boilerplate contract counter with your own. This technique works well.
If you can afford to tap the attorney occasionally (lawer friends are great to have), then tell the PHB that you need to pass the contract by your "legal department" and ask if there is a contact person at the client company that you should coordinate contractual changes with. This gives you more bargaining power and eliminates the "well that actually means" responses.
Basically it comes down to treating yourself as a business. Always keep in mind what your "staff" is and who will want oversight of particular things (even if the only people are you and you). If you were an employee of a large company negotiating, you would have to pass the contracts by the legal department right? Then the company of you has to as well. I know this is starting to get metaphysical - think of it this way: departmentalize yourself. Think of the different aspects of your "business" as it's own department like you would in a company (accounting, legal, billing, customer service, janitorial, security). If you sould like a mega-corp, the PHBs will treat you with a different level of respect.
Re:The Power of Attorney (Moohoohoohahahahahaha) (Score:3, Interesting)
You do. But in this world we call it legaleze. Its a trick where you create a sarcastic or humorous word for something so that the people ignore the true meaning.
I am a contract worker as well, and so far, the only thing I've had to sign are NDAs. Decent NDAs too. I find that most boss's won't argue with you over the wording - they will just send you to the HR or legal
Contracts are merely ink on paper (Score:3, Insightful)
Bingo! We have a winner.
Contracts are nothing more than ink on paper until both parties sign them. They are not leveraged buyout instruments, nor implements of destruction, nor are they non-negotiable. They are a boilerplate template some clown in legal copied out of a book.
If you are reading through the contract and hit a part that says 'we own every idea you have ever had in your life and you can't work for anybody in the same countr
Re:The Power of Attorney (Moohoohoohahahahahaha) (Score:2)
Anybody who signs contracts should absolutely have a professional look them over. Not only can they tell you which parts are scary, they ca
Legalese isn't english -- hire a lawyer. (Score:3, Insightful)
What a contract actually means is determined not by common sense, but by relevant contract law (which you don't know) and case law (which you don't know). If you really care about what a contract is actually enforcably commiting you to, hire a lawyer.
Re:Legalese isn't english -- hire a lawyer. (Score:1)
Amen to that. We all know what happens when amateurs write source code; similar things happen when amateurs write legal code.
Re:my experience (Score:1)
Get a lawyer (Score:1)
Consult a lawyer,require time limits with retainer (Score:5, Insightful)
1) Ask if you can have the document examined by your lawyer. If the PHB quibbles, say that you are just following the advice you have had from your business adviser.
2) Actually consult a lawyer -- I mean it. Even if is only the lawyer from your local Citizens Advice Bureau (CAB) or local small business/enterprise bureau. If your strapped for cash either agency is usually able to point you to a local lawyer is quite willing to do a quick consult on the expectation of future business.
3) If the contract limits your ability to do work for other customers then ask your lawyer to add some form of time limit ( sunset clause ) to the contract, with a clause demanding a suitable retainer to cover the time your restricted. Have your lawyer add an opt out clause so that the PHB can decide to stop the retainer with the automatic effect of you no longer being obligated by the terms of the contract.
In most cases the business in question wont even bother with the retainer and will just cross out and initial the offending restrictive clauses in the contract. If they choose to keep paying the retainer, and yes it happens, you may just have to renegotiate or just wait until the sunset clause applies.
Cross out clauses you don't like (Score:2, Interesting)
I've hired a lawyer in somce cases to review a contract (about $250, IIRC), but many times I don't if the risk is fairly small. Personally, I'd rather do work for a company with a good reputation that pays me in a timely manor than for a lousy company under a good contract.
Good idea. (Score:3, Funny)
So, I changed them. A whole bunch of stuff in there which sidestepped a number of possible legal issues with OSS I have released and will release in the near-term. Hell, I stopped short of writing myself in a gold
Re:Good idea. (Score:1)
Did you add the clause to call managers 'Knobface'?
Re:Cross out clauses you don't like (Score:2)
You get paid in property?!
The emerging trend for dealing with this (Score:2)
You can change the contract. (Score:2)
The important thing is that you both sign it off and both keep a copy. Unless it's a really uptight company they won't have a problem with
Protect yourself by incorporating (Score:4, Insightful)
Write yourself a little contract with your company that it gets none of your ip and everything you do is your property. You don't really need a lawyer for this.
When you contract out, you are contracting out through your company. Never sign a contract from person to customer. Only sign from your company to customer.
Now you can sign anything they hand at you. No worries. Worst case? Dissolve your company and incorporate a new one. You are protected by the corporate shield.
Re:Protect yourself by incorporating (Score:3, Interesting)
Alright, I'm going to have to pull an IANAL, but clearly neither are you. First of all, I believe incorporation normally requires a flat fee [state.co.us] around a hundred dollars to file the form, so it's not entirely painless to make another company. Secondly, this sounds questionable as far as taxes go. The company would be making profits from these contracts, so there would be corporate taxes on that. Then the company would be paying those profits to its sole worker, CEO, and shareholder who would then have to p
Re:Protect yourself by incorporating (Score:5, Informative)
I did have to sign personal non-disclosures, of course. And my company did have to honor the requirements of my clients in terms of intellectual property (e.g. work for hire). But the corporate shield protected all of my prior work as well as non-related work.
As far as taxes go, professional services are not taxed and if you choose an S Corp, you will not incur double taxes (because an S Corp profits fall down to the principals).
You can dissolve a company at any time, but of course it does not relieve the company from financial responsibilities. The company is still responsible for it's debts and bancruptcy can cause you problems (e.g. you could go to jail for fraud for taking a company into bankruptcy just to avoid debt).
You can and should dissolve a company (that is just you consulting) in a case where a client is harrassing you badly (i.e. "Okay, I give up, I will close my company"). That doesn't prevent them from trying to file suite, but they will look pretty silly suing a company that is out of business (not to mention making it rather difficult for them to get any remedy). But generally, things never go that far. In 10 years of consulting, I have never been threatened with a suite. Why would a client bother?
On top of all of this, a corporation is an excellent tax shelter. You can expense things you never thought of before it gets posted to profit (and therefore declarable on your income). There are many benefits.
The thing to remember is that contract law and doing business is nothing like programming. Wetware dynamics revolves around perception and boundaries, not strictly adhered to executable recipes. Many software professionals get this confused because their minds are so trained to think in terms of strict cause-and-effect.
Don't take things too seriously in the business world, most of what you see and hear are there to confuse, impress and intimidate you, not to actually be executed against you.
The Nader Move (Score:1)
You have to be able to walk away (Score:2, Informative)
Have your own company, keep it very simple. Write a standard contract that your company uses to offer your services. Keep it short and minimalist, mine is under a page. Include the basic stuff clients typically want, NDA, etc. Have a simple termination get-out clause for either party. Have it reviewed by your lawyer (once).
Make that part of the terms of your standard service offering (you are the one offering services, not them). If they want changes, and you are willing to consider th
Confidence buddy... (Score:2)
Size the company up, and it's industry. Is it a rough-edged factory? If so, you'll likely have more flexibility in other areas, but not as much in the finance area. Is it a well-heeled Law Firm? If you may be able to work harder numbers, but they'll expect more from you as far as time/effort/perfection/etc.
Really, it boils down to experience. I h
Use your own contract from your own lawyer (Score:3, Informative)
My standard contract was developed by a lawyer who specializes in software, who went over it with me very carefully. I know the importance of each clause. I also know that it is fair to both sides, unlike some clients' contracts I have been presented with. Sometimes, clients are just testing to see what they can get away with, since most contractors are naive about such things.
One thing I learned is that contracts drawn up by clients do not say that you must be paid before they own the intellectual property. Something this basic could be disputed if they didn't pay you in full! My standard contract says my clients must pay me in full before the IP rights transfer to them. Obviously, no PHB or lawyer can with a straight face suggest removing that clause from my contract, but many have tried presenting contracts without saying exactly when the rights transfer. This is a subtle point I would have missed had I not spent time with an attorney.
Re:Use your own contract from your own lawyer (Score:3)
Re:Use your own contract from your own lawyer (Score:2)
A lawyer who has worked in software before is only going to charge you a few minutes to piece together the boilerplate appropriate to your needs, and then for the time you spe
Crossing off does work... (Score:2)
Gave the company the rights to use what I was providing for them from now until eternity in whatever medium existed and could exist
and
Gave the company blanket immunity from anyone seeking damages and that I would basically take the heat.
Needless to say, I took out my Sharpie® and just made most of the page BLACK , signed it and faxed it back.
They used the stuff I sent them ev
Own contracts? (Score:2)
Is it possible you could start handing over your own contracts? Then it'd be up to the companies' lawyers to sort out whether they're comfortable with the contract. Might not work for bigger companies, but if there's any chance it could work for some, it'd also give you a more professional look. After all, it's you who constantly deal with contractorship papers, not the companies -- you ought to know better what's required to make everybody happy.
Put in there anything that's relevant and nothing more, no
You really need limited liability (Score:1)
It's clear that many of the people here haven't worked as a contractor, and don't really understand the concerns of the corporates who might hire your services.
I should preface by saying that my direct experience applies to the UK. I guess that you're in the United States, although you don't say (it's wise to do so when asking legal-type questions). However, since the US has a similar legal system to the UK, at least some of what I say is likely to be applicable.
I've worked in all of the different posit
Good ideas so far (Score:2, Insightful)
Takeaway (Score:2)
9 out of 10 times they blink. The other one time, you were really going to get screwed.
Move to NC (Score:1)
In other states IBM get rights to anything you do anywhere, anyhow, etc. Not in NC.
Just another reason NC is better that CA and the Yankee kingdom up north!