How template legals cost a consultant $30k

A client recently lost a $30,000 deal because her generic contract had vague intellectual property terms that couldn't give her potential client the assurance they needed about IP rights and ownership. 

When you're investing serious money in consulting services, you want clear answers about who owns what at the end of the project. Her template couldn't provide that clarity, and it cost her the deal.

I understand the appeal of templates. When you're transitioning from corporate life to running your own consultancy, legal documents feel like just another item on an endless to-do list. Templates are quick, cheap, and seem like a logical shortcut when you're juggling website design, branding, and actually finding clients.

But here's what this client learned the hard way: legal documents aren't just paperwork - they're the foundation of every business relationship you'll build. When clients can't get clear answers about intellectual property ownership, partnership terms, or project deliverables, they start questioning whether you're the right choice.

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Episode Website:  

https://tmsolicitor.com.au/rise-up-in-business-podcast/tailored-legal-documents-for-consultants

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Transcript

0:21

Hello everyone. Welcome back to another episode of the podcast. I talk a lot in my business on social media and here on the podcast around the importance of properly tailored legal documents for a business about the significance of being properly protected and set up as a business owner for sustainable success. And as a part of that, my position is clearly. It's a hard no from me when it comes to using templates for your legal documents. I've said it so many times. DIY is for Bunnings, not for your legals. Don't get me wrong, I think that templates have their place when we are running a business if we can find a hack or streamlined a way to do something, then I'm all in. templates have no place in my view when it comes to legal documents. In this episode, I'm gonna share with you a real life example of a situation that occurred for a client. She wasn't a client then. She's a client now. Clearly this is all anonymized. but I wanted to share this because I feel like this is something that so many listeners are going to be able to relate to, and those that wonder, oh, what's the worst that can happen, Tracy, if I don't have properly tailored legals for my business, what's a bad thing that can happen? What can go wrong? I'm gonna share with you. An example of precisely what can happen and what can go wrong when you don't have legals tailored for your business. So I'm gonna start by saying the work I do with clients includes an implementation component. So it includes drafting a session to explain. We go through, we spend the time so I can explain why the clauses are there and what they mean. I answer questions. I ask questions so I can go away and tailor. So it's a really collaborative process that I have with my clients to make sure documents are tailored and crafted for each individual business that I work with. So what that means is the business owner walks away fully understanding and appreciating why everything's in there, what they're covered for, what things mean, and they go forth. They roll it out. But implementation is a big part too. So having the documents is one thing. Knowing how to use them is another. So I wanna share with you now the story about how this particular client reached out to me. I act for a lot of business owners who are new business owners going from corporate to consulting. So they've been in corporate for a very long time, and now they're going out on their own. This woman. Was precisely that. She'd been in corporate for a very long time. She was ready to go out on her own, and she did that, and she started pitching for work, and she wasn't getting any work. The reason she wasn't getting any work is because Proposals kept falling over. When clients would come back to ask her questions about her terms, most of these questions were around IP ownership, pre-existing ip, and then who owned the new IP. And this is where the conversations fell over because she wasn't able to articulate it in a comprehensive way to give the client comfort that one, she was across it, or two, what was gonna happen with the IP that was created if they were to work together. She had never had to explore this when she was in her corporate role because they had teams that did that, and she was on the tools, and by all accounts, excellent at what she did. But this is a different process now when you are the business owner and you need to. Secure the work. So put out the proposals, secure the work, get the jobs, win it, and win the job. The last straw on the camel's back, if you like, that caused her to reach out to me was when she lost a job, which was worth $30,000 to her because she wasn't able to engage meaningfully in relation to the use of ip. So she had a generic contract that she got from somewhere and it had really generic IP terms. It didn't deal with ownership of preexisting ip, but she could get around that she said when she was talking to the clients. But it did have generic terms around what happens to ownership of new IP that's created. And because of the unique work that she was doing, she wanted ownership of that. She wanted ownership of that IP because it's something she was going to be creating, and it's something that she feared if she didn't have ownership of her business, would not have longevity because she wouldn't be able to work with other clients because she felt that would be infringing on the IP that she would've created for the previous client. So you can see this is getting murky. You can see this is starting to feel confusing, starting to feel perhaps a little overwhelming, but it's really murky and there's a real lack of clarity here. She lost jobs, but the biggest one being the $30,000 job, and that's when she reached out to me, she was referred to me, and we had a conversation around it and talked around how can we make it really clear what happens to IP such that it serves both parties and your documents should always serve both parties because when done well. Your documents when they're tailored for your business, yes, they'll comply with your obligations and they'll meet consumer law expectations. If there's any particular industry standards, they're covered off as well. All of that, yes, but also we want those documents to be giving comfort and peace of mind to your clients so that they know what's happening when they're going to work with you. What they're getting, what they're not getting, what they're paying for, what the processes are, but who owns the ip. And sometimes, as is the case with this client, that IP issue is really, really important. So what served this particular client Was to include terms around her IP provisions that made it really clear. Both parties own their preexisting IP and in the context of new ip, which parts she would own, which part the client would own. And we were able to particularize that because of the nature of services that she provides. But when you can't, we can still deal with who owns the new IP that's going to be created. And if the other party needs the ability to use it, we can include license terms for that ip, so there's no infringement. If one party owns it, the other party's using it. We can put parameters around the usage. the. Consultant might retain ownership of the new ip, for example, but the client has a license, an unlimited, non-exclusive, but open-ended license to use the IP for the purpose that it was intended. And if the client then decides they wish to use it for purposes, outside of that, they need to come back and have the conversation so they can agree on terms for that to happen. There's lots of different ways we can dive in and deal with ip, but it's really important to make sure that whatever your IP provisions are, whatever any of your provisions are, but we're talking IP here, whatever your IP provisions are in your terms, that they're serving both parties, because in this particular case, the generic agreement that this client was using was causing her to lose jobs because clients lacked confidence. There was a lack of clarity and she was not able to engage meaningfully. To address concerns and to reach a resolution. So the conversations fell over there consistently. So we worked together to develop her consulting agreement for her clients and it was beautifully streamlined into a process that worked for her. And it was issued in conjunction with tailored proposals to her clients. And it was really detailed in relation to ip. And by the time we finished doing that, she was not only telling me how confident she was now in the ip, but it had been an education process for her because I was able to explain to her so much around the law, how it works, what it means if this is not included, what that means. What I've seen in the past where pain points come up and people get into tricky situations because that's the other thing, of course, isn't it? When you're working with a client and you've issued your agreement. You then want to be able to act consistent with it, such that you're not only meeting client expectations, but you're exceeding them so that you are able to grow your business on word of mouth, referrals, repeat work, positive testimonials, things like that. So the document, the contract, the T's and C's serves so many purposes and reaching a point in the project where a client becomes disgruntled because of a misaligned expectation around what's happening with ip. It does not serve the business because no happy client. No exceeding of expectations, no word of mouth. The ripple effect can be significant. So taking the time to get the terms right so that you are really clear on what they mean. You are really clear on how to use them and roll them out. You're really clear on delivery and so that you can answer clients' questions if they come up. Priceless. It can be a game changer. So that's a real life example of a client that came to me with a pain point of losing work because she didn't have properly tailored legals. So she. grabbed something that was generic. Cost cutting, saving money, triaging. I'm at the beginning of my business. I'm not quite sure where to invest. I need a website. I need a brand. I'll put legals down the bottom. I get it. I totally get it. And I have all the respect for triaging. We do what we need to do. All I'm saying here is perhaps we might want to revisit the priority list when we're starting out and that triage list. And rather than having the legals at the bottom because you think that they don't matter. Perhaps think about putting them closer to the top because in actual fact, they do matter and they can cost you money If you don't have them, so I hope you have found this episode helpful. I'm gonna dive in and answer two questions like I'm doing with all episodes this season. those questions are if things go wrong and a client's not paid, what do I do? The shortest answer to that is you go back to your documents and have a look what they say. So your agreement, your contract, your T's and C's. What does it say about payment? What does it say about when you can issue invoices? What can you do now that you haven't been paid? Can you charge interest? Can you cease work? The answer's always in the documents. Therefore, again, touching on the theme of this topic, the importance of having documents that are tailored for your business and that you are comfortable with and that you understand how they work is so incredibly valuable that it can avoid non-payment issues altogether in the first place. The second question is. Do all businesses need website terms and conditions? And to that, I say go back to some previous episodes where I've talked about website, T's and C's, or jump over to the resources page on my website where we've actually got a whole section on website legals. So website, T's and C's and privacy policies. But the short answer is if you are doing something on your website, if you are collecting personal data, if you are selling something, if you are sharing information about your services, if you have a freebie download. Then yes, you need website terms and conditions. They do so many things. They need to be tailored for what you're doing on the website. Again, like all documents, your business legals need to be tailored for what is happening in your business, and no two businesses are the same. So that's the short answer to that one. Thank you so much for joining me. If this episode has resonated with you, please feel free to share it with business friends because it's these types of messages that I feel can share real value and context for business owners so that they know exactly what it is they need to be doing in their business to go forward and achieve long-term sustainable success. I catch you next time.