Freelancers’ Questions: How to stop a client from stealing my work?

Freelancer’s Question: How can I protect myself from an early termination of a contract, where I have invested significant works and energy into an agreed project timeline?

There are openings where the company could unfairly take all the ideas of us freelancers and take our works in-house. This swallowing up of our works would be done at certain phases of the project while we’d likely be axed.

Are there any tried and tested ways to protect freelancer rights in this scenario? Someone told me about a ‘kill fee’ but I didn’t really understand how it could help -- but apparently it could. Please advise.

Expert’s Answer: Firstly we should stress that for a legal concern of this nature, a legal adviser or contracts specialist is probably going to be your best course of action.

Don't go it alone -- get tailored advice from a legal professional

Crucially, even if the other freelancers you work with obtain their own legal advice, there is no guarantee that their contracts for services are anything like yours.

So tailored legal assistance, with the adviser you engage being granted an unabridged sight of your full contract and any adjoining schedule, is highly recommended.

There are two additional big advantages of having legal assistance in your situation -- advantages which could make all the difference, but I will outline these towards the end of my answer.

Contractual considerations

In terms of your written contract, you should ensure that you have negotiated a termination clause in your agreement – potentially to ensure that the agreement is either ‘fixed term’ or cannot be terminated early save for very specific cases, such as for breach of contract, or the insolvency of a party.

Then, in your termination clause, you should stipulate that if the agreement is terminated early (as you fear it may be), then you, as the supplier/freelancer, would be due all sums through to the date of termination, as if the agreement had run its entire course.

What is a kill fee?

You ask about a ‘kill fee.’ In the freelancer-client setting, a kill fee is typically a fee which a client has to pay to the freelancer for the client to get out of the agreement for services.

Often, a kill fee can look a bit like a penalty but beware -- it is a penalty which is not enforceable under English and Welsh law.

That said, liquidated damages aimed at compensating a party for a genuine pre-estimate of its loss, are enforceable. Therefore, it may be possible to negotiate a fixed fee sum, in respect of liquidated damages if the client does terminate an agreement early, to compensate you for losses which you anticipate you would incur at the time that the contract is concluded -- if the agreement were to be terminated.

The swallowing of your creative works

Regarding use of your work or products (including your ideas) being stolen by a client, it is vital that you arrange for an appropriate intellectual property / confidentiality clause to be drafted, to address your concerns.

Ideally drafted by a reputable and experienced legal adviser, the clause would be included in your agreement to ensure that any intellectual property, or ideas (or even strategies), only transfers to the client once certain conditions are completed.

This is the second key reason to seek the help of a legal adviser.

What IP transfer conditions should freelancers consider?

As to what those ‘certain conditions’ might be, consider:

payment of all fees to the supplier; or
completion of the project; or
the project running the full contractual term.

Finally, enforceability...

As with all contractual provisions, which of these gets accepted will come down to negotiation between you and the client!

And this is the third major area where a legal adviser would likely be invaluable to you.

A good commercial lawyer will be well-placed to advise you on whether your clauses, and any clauses the client might suggest in return, are actually going to be enforceable. Good luck!

The expert was commercial lawyer Charlotte Gerrish, founder of law firm Gerrish Legal.