Corporate lawyer here.[1] There actually isn't too much in this that I would object to if this came across my desk… except the indemnity clause. It’s so broad I would imagine any lawyer worth their salt would request at least specifying the scope of the indemnification. Even knowing it likely won’t be executed as-written I would still suggest you consider adding:
> The Client agrees to indemnify, save, hold harmless and defend[2] the Contractor from any and all damages, liabilities, costs, losses or expenses arising out of any claim, demand, or action by a third party (including reasonable attorneys’ fees and expenses)[3] as a result of the work the Contractor has done under this Contract.
(Without the explanatory footnotes, of course.)
The non-solicitation clause also sticks out to me because it seems a bit odd. I’ve never come across something like this in an agreement with a freelancer and I think I would be suspicious if someone tried to include this in an agreement. Are they going to try to poach my people as soon as the contract ends? I think it’s better to just leave it out - I can’t imagine many corporate attorneys would look for this specific clause, let alone insist it’s included. I don't work in Silicon Valley though so it might be different there.
Finally, this one is nit-picky, but it looks like you have a duplicate “is” in the second sentence of the agreement. (It’s captured in the screenshot on your site, too.)
[1] That means I've never given an agreement back to a contractor without redlining it – we just can’t help ourselves!
[2] Indemnification typically occurs after the matter is settled. That means if the Contractor gets sued for the work done the Contractor would foot all the legal bills and once the proceedings are complete the Client would cut a check to the Contractor for the costs incurred. Most freelancers don’t have the deep pockets their clients do so that could put them in a precarious financial position. Adding the duty to defend here means the Client would have to actively fund the Contractor’s defense of the claim, not just reimburse it. In some states this is assumed to be part of the indemnification but in others it must be specifically included in the agreement.
[3] Likewise, in some states attorneys’ fees are not considered part of the indemnification unless expressly stated and whether or not litigation expenses such as e-discovery or an expert witness are covered is still debated so it's best practice to clearly include them.
Nonsolicits are a common term in consulting MSAs --- though usually it's the client demanding them and not the consultant offering them unbidden.
3 out of every 5 clients of ours takes our unilateral indemnity clause (our legal was optimistic!) and simply reverses it so it works for the client and against us. I'm pretty close to offering mutual indemnification simply to avoid round trips. Anyways my point is that, as the representative of corporate attorneys on this thread, I blame you.
Looks more like a standard contracting contract. I don't see why the "stop work" thing is required. I also don't know why a contractor would give up no-competing-clients; in fact, we'd be a hard "no" on that even if the client proposed it to us. I think clients will generally push back on an unlimited right to subcontract, too.
Just to be clear: not a lawyer! Just a consultant who deals with a lot of contracts in his job.
The Stopping Work section wasn't meant to give contractors the right to stop. If the client materially breaches the contract by not paying, they can get out of their own obligations. I added Stopping Work mostly because it comes up a lot, so it's nice to have terms in the contract, rather than background law, to point to. But also so I'd have a place for the deadline-postponement and fees-keep-adding-up terms. Those don't go without saying.
I hear you on Conflicts. There's no escape valve in the section for contractors who do often work for competing interests. I might look into adding a mechanism there, so the contractor can write in the names of competing clients for preclearance, that gets signed as part of the contract.
Your toint on subcontracting is well taken, but note that Personnel allows statements of work to override the contractor's ability to use employees and contractors at will. When folks use the form as individual contractors, or when clients use it to hire specific people at firms or studios, the SOW can specify a named individual, and prohibit subcontracting.
Why is the conflict section in there at all, though? To the extent it's there now, it's conceding something clients hope to get through redlines; game-theoretically, it's pure negative for the contractor.
It's obviously for the client's benefit. But additional turns of the agreement aren't good for anyone. Clients typically have the leverage to get this. I've included a fairly contractor-leaning formulation, which requires the client to act.
Unlike employees, clients generally want their contractors to have experience working with competitors.
They also don’t want the contractor to disclose anything about their business or the project to anyone else, which is why they’ll never expect you to provide a competing clients list. If they ever start to inquire, that line of questioning is trivially shut down by pointing this out. You take confidentiality seriously, and that applies to them as well.
That aside, it’s a ridiculous proposition. They are hiring you as an expert in this domain because of your experience. If you’d signed such an agreement with the first company to suggest that, you would not be able to offer your services to the client.
You're absolutely right to connect terms about work for competing clients with terms about confidentiality. You're also right that the value of many independent consultants---including attorneys---derives directly from diverse experience within a competitive field.
However, the desire for experience with competitors doesn't exclude valid concerns about ongoing, concurrent relationships serving competitor-clients. To borrow from legal ethics, it's one problem to have information from one client that could be useful to another, and a distinguishable but related problem to face a conflict of interest, with both sides expecting undivided loyalty. Terms about work for competitors assume, practically, that confidentiality obligations will break down when the contractor works for both sides concurrently. We can't build Chinese Walls in our minds, or in small firms of a handful of people.
Back to the terms, note that "Early Termination" gives each side the power to terminate early, with a given number of day's notice, for no reason at all. The main effect of "Conflicts" is to require the contractor to notify the client of potentially concurrent work for a competitor. If the client has concerns, they can terminate immediately, instead of with n days' notice. It's fundamentally about ensuring the client the information they need to make use of their termination right.
Not that it applies to you, but the right to subcontract in the UK is one of the primary checks for wether a contract is considered disgused employment.
The checks are Substitution, Direction and Control, and strong clauses in these will protect both the client and the contractor from a nasty tax bill.
The issue comes up under several kinds of state and federal law. All of the inquiries are pretty fuzzy. None of them turn on what contracts say, but rather the facts of the working situation.
Most US lawyers advise reciting independent-contractor status, anyway. Some forms include obligations to comply with tax laws in accordance with that characterization. Some go even further, and have contractor indemnify client for wage, benefit, and other reclassification-related claims by putative subs.
Where reclassification is particularly risky, lawyers will often include recitals that go to the relevant factors, like independence, self-direction, use of own equipment, and so on. Intuition says that language may be stronger when they it speaks in terms of the specific work to be done, rather than generic features of a generic independent-contractor agreement.
> The Client agrees to indemnify, save, hold harmless and defend[2] the Contractor from any and all damages, liabilities, costs, losses or expenses arising out of any claim, demand, or action by a third party (including reasonable attorneys’ fees and expenses)[3] as a result of the work the Contractor has done under this Contract.
(Without the explanatory footnotes, of course.)
The non-solicitation clause also sticks out to me because it seems a bit odd. I’ve never come across something like this in an agreement with a freelancer and I think I would be suspicious if someone tried to include this in an agreement. Are they going to try to poach my people as soon as the contract ends? I think it’s better to just leave it out - I can’t imagine many corporate attorneys would look for this specific clause, let alone insist it’s included. I don't work in Silicon Valley though so it might be different there.
Finally, this one is nit-picky, but it looks like you have a duplicate “is” in the second sentence of the agreement. (It’s captured in the screenshot on your site, too.)
[1] That means I've never given an agreement back to a contractor without redlining it – we just can’t help ourselves!
[2] Indemnification typically occurs after the matter is settled. That means if the Contractor gets sued for the work done the Contractor would foot all the legal bills and once the proceedings are complete the Client would cut a check to the Contractor for the costs incurred. Most freelancers don’t have the deep pockets their clients do so that could put them in a precarious financial position. Adding the duty to defend here means the Client would have to actively fund the Contractor’s defense of the claim, not just reimburse it. In some states this is assumed to be part of the indemnification but in others it must be specifically included in the agreement.
[3] Likewise, in some states attorneys’ fees are not considered part of the indemnification unless expressly stated and whether or not litigation expenses such as e-discovery or an expert witness are covered is still debated so it's best practice to clearly include them.