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Ask a Lawyer // March 2016 // Client Contracts: Dealing with the Dreaded Scope Creep

Written by
Matthew S. Johnston
Published
March 1, 2016
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Ask a Lawyer is a monthly informative column brought to you by AIGA Blue Ridge chapter member, Matthew S. Johnston, Esq. Attorney. Sign-up for our monthly e-newsletter to receive the latest column delivered directly to your inbox.

Have a question or topic that you’d like Matt to tackle in an upcoming Ask a Lawyer? Shoot us an email at info@aigablueridge.org.


A few weeks ago I attended a Client 101 Session hosted by AIGA Blue Ridge for its Essentials program (if you are an AIGA Blue Ridge Member, the chapter leadership does a great job putting together these programs, if you are not a member still come out). The panelists helped me further understand the general business process of a design firm and how they interact with clients. One subject touched upon became the impetus for this month’s column—communications with clients more specifically, the Scope Creep.

 

ScopeCreep copyYou’ve met the scope creep. It always starts with the call or email from a client that asks, “Can you just do this one little thing also?” Then that one tiny request becomes the monster that ate your profit, patience, professionalism, and even you sanity.

All business owners are taught to do our best to accommodate client requests, keep the client happy so that they will pay our bill, become repeat customers, and refer others to us. But scope creep is a big danger for any designer not working on a straight hourly or time & materials contract. Even if that “one little thing” takes you ten minutes, you have opened the door to a bunch of similar requests. One ten minute task becomes ten tasks, becomes 20 tasks, and soon you have lost control of the ability to say no to a client without jeopardizing the account. That risk does not mention the over three hours of work you have done without any expectation of getting paid for the work.

Outside of praying your next client doesn’t become the scope creep, a good client contract can help tame the scope creep.

First, have a clearly defined scope of work for your engagements. You do have a clearly defined scope of work in your contracts, right? The scope of work should include doing work that is reasonably related to the project, for example, including time for market research or inspiration time. Such matters should be built into the scope of work. If you have a “squishy” or ill-defined scope of work, you are on the path to scope creep.

Second, have a contract provision that bills on a time and materials basis for “extra work.” If your client contract has a provision that allows you to bill on a time and materials basis for work outside the scope of work, you have an effective tool for managing scope creep. If you tell a client that that little thing they want will take half an hour or more, and you are going to charge them an hourly rate for that task, you can put the burden back on them to decide if they want the work done. Such a provisions should be written so that you, the designer, has the discretion to say yes or no to the work and the discretion to charge for the work or not.

Third, retain the contractual discretion to decline tasks not covered by or reasonably related to the scope of work. If the contract gives you the designer the ability to say no to extra work lets clients know that they have hired you for a specific job and additional work is not required. You may never invoke this provision, but clients should know that you could and usually that makes for some honesty in the clients.

Fourth, include a steep hourly rate and an hourly minimum for extra work. Most designers have a pretty good idea of their “hourly” rate. That rate may be part of the flat project fee quoted to a client in a given engagement. But for extra work that is scope creep, having an “ad hoc” hourly rate that is 150% of your normal hourly rate is a way to make clients stop and think if they really need the extra work. Further adding to the “stop and think factor” would be a set minimum number of hours for extra work. For example, if your normal hourly rate is $100 per hour, you could charge $150 per hour for extra work. You could then say there is a three hour minimum for work not covered by the Scope of Work. If a client is faced with a $450 charge for a 15 minute out of scope “project” they will certainly think twice before asking. Of course if they do ask, you would make a hefty profit on the scope creep.

Fifth, have a good “No Waiver” provision. A No Waiver provision usually in the contract boilerplate (you know those provisions hardly anyone reads until too late). This provision says that just because you decided not to charge for one little task or didn’t invoke the contract for a beyond the scope item, doesn’t mean you can’t do so in the future.

Of course good customer management can go a long way to preventing scope creep. But having that written contract back up should be a comfort. Nothing prevents you from performing one or two small tasks as good customer service. But when the client starts asking for more than one or two, you should not be afraid to invoke the contract. Without solid contract language that helps you avoid scope creep, you will always be riding that fine line between being a good service provider and being a doormat for those few clients.

In short, you don’t have to be a jerk, but you shouldn’t have to tolerate jerky clients either.


BIO Disclaimer

MATT JOHNSTON IS A SOLO ATTORNEY WITH A FOCUS ON SMALL BUSINESS REPRESENTATION, COPYRIGHT AND TRADEMARK LAW, AND DISPUTE RESOLUTION. MANY OF MATT’S CLIENTS ARE DESIGNERS AND CREATIVE PROFESSIONALS WHOSE CONCERNS OVERLAPPING MATT’S PRACTICE AREAS. MATT CONCENTRATES ON DRAFTING CLEAR CONTRACTS OF ALL TYPES AND HELPING DESIGNERS WITH THE LEGAL SIDE OF THE DESIGN BUSINESS. AS A BENEFIT TO AIGA MEMBERS, MATT OFFERS A 10% DISCOUNT ON ALL CONSULTATION APPOINTMENTS, FLAT FEE PROJECTS, AND HOURLY FEES.
THE CONTENT OF THIS COLUMN IS FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS LEGAL ADVICE APPLICABLE IN ANY SPECIFIC SITUATION. NO ATTORNEY-CLIENT RELATIONSHIP IS CREATED THROUGH THIS COLUMN. IF YOU NEED CONFIDENTIAL LEGAL ADVICE, MATT IS AVAILABLE FOR PRIVATE AND PRIVILEGED CONSULTATIONS. CONTACT MATT IF YOU HAVE SPECIFIC CONCERNS.
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