What contracts should a growing creative agency have in place?

A creative agency can grow surprisingly quickly without its contracts growing with it.

You might start with a handful of clients, a small team and fairly informal arrangements. A few years later, you have larger clients, employees, regular freelancers, software suppliers and perhaps another founder or investor involved in the business.

But some of the paperwork may still date back to when the agency was much smaller.

You don’t need a legal document for every relationship or eventuality. But there are some contracts I’d expect a growing agency to have properly covered.

Start with your client contracts

Your client contracts are probably the most important place to start.

They’re the documents that determine what you’re agreeing to deliver, what you’ll be paid and what happens if something goes wrong.

For an agency working with clients on an ongoing basis, a common structure is a master services agreement (MSA) supported by individual statements of work (SOWs).

The MSA contains the legal terms governing the overall relationship. Each SOW can then set out the details of a particular project or piece of work, such as the services, deliverables, timetable and fees.

That structure can be particularly useful where you carry out several projects for the same client. You don’t need to renegotiate the full contract every time the scope changes.

Whatever structure you use, your client terms should properly reflect how the agency actually works.

Make sure the scope and payment terms are clear

Some of the most frustrating agency disputes aren’t about complicated points of law. They’re about what the client thought was included in the fee.

Your contract or SOW should clearly describe the work you’re providing, the price and when payment is due.

It should also deal with what happens when the scope changes.

If a client asks for additional rounds of revisions, extra deliverables or work outside the original brief, there should be a clear way of agreeing that additional work and any extra charges.

The contract should also address what happens if invoices aren’t paid or the client delays providing the information, approvals or materials you need to do the work.

Good contracts can’t prevent every disagreement, but they can make it much easier to establish what was actually agreed.

Be clear about intellectual property

Intellectual property is particularly important for creative agencies.

Your client may expect to own the final branding, designs, content or other work you’ve created for them.

But your agency may also use its own templates, processes, software, tools or existing materials when producing that work.

Your contract should distinguish between the rights being provided to the client and anything the agency intends to retain.

You also need to make sure the agency has the rights it is promising to the client.

If a freelancer, photographer, developer or other third party contributes to the project, check the agreement you have with them. Don’t assume that paying somebody to create work automatically gives the agency every intellectual property right it needs.

The contracts on both sides of the relationship need to work together.

Have proper agreements with freelancers and contractors

Freelancers can be an important part of an agency’s ability to scale.

But relying on an email agreeing a day rate can leave important questions unanswered.

A freelancer or contractor agreement should reflect the actual arrangement and deal with issues such as services, fees, confidentiality and intellectual property.

Depending on the role, you may also need to consider access to client information, agency systems and other confidential material.

The agreement should be appropriate for the relationship in practice. Calling somebody a freelancer in a contract doesn’t, by itself, determine their legal status.

This is particularly worth reviewing if you have contractors who have worked with the agency regularly for a long period or who operate in a similar way to members of your employed team.

Get employment contracts right as the team grows

Once you’re employing people, your employment documentation needs to keep pace with the business.

Employees should have appropriate written terms dealing with their role, pay, working arrangements and the other terms required for their employment.

For an agency, there are some additional commercial points worth considering.

Senior employees may have access to client relationships, pricing, pitches, strategy and other sensitive information. Your contracts should therefore deal appropriately with confidentiality and intellectual property.

You may also want to consider whether restrictions after employment are appropriate for particular roles.

Those provisions need to be drafted carefully. The right approach for a senior director with responsibility for major clients may be very different from the right approach for a junior employee.

Don’t overlook supplier and software contracts

Agencies increasingly rely on third-party platforms and software to deliver their services.

That might include project management systems, design tools, hosting providers, artificial intelligence tools, CRM platforms and specialist software used for client work.

Some of those contracts may be accepted online rather than individually negotiated, but they’re still worth understanding where the service is important to the business.

In particular, consider what happens to your data, what rights you have to use the service, how easily the supplier can change its terms or pricing and what happens if the service ends.

If a particular platform is critical to delivering work for a major client, you should understand the risk if access to it disappears.

Use confidentiality agreements when they’re actually needed

Not every conversation requires a non-disclosure agreement (NDA).

Your main contracts should already contain appropriate confidentiality provisions.

There are, however, situations where a standalone NDA can be useful. For example, you might be discussing a collaboration, exploring a potential acquisition or sharing commercially sensitive information before the main contract has been agreed.

The important thing is to use an NDA where there is a genuine confidentiality risk rather than treating it as paperwork that automatically needs signing before every conversation.

And, as with any contract, read what you’re being asked to sign. An agreement labelled as an NDA can sometimes contain obligations that go beyond confidentiality.

If there is more than one shareholder, consider the ownership documents too

Not every important agreement in an agency is with a client, employee or supplier.

If two or more people own the agency, consider whether you have an appropriate shareholders’ agreement in place.

That can cover how important decisions are made, what happens if a shareholder wants to leave, how shares can be transferred and what happens if the agency is eventually sold.

The company’s articles of association also form an important part of the picture and should work alongside the shareholders’ agreement.

This can feel separate from the agency’s day-to-day commercial contracts, but unclear ownership arrangements can become a significant issue when you bring in an investor or start preparing the agency for sale.

Review contracts when the business changes

Contracts shouldn’t be something you put in place once and then forget about.

The agreement that worked when your average project was worth £5,000 might not be appropriate when you’re signing six-figure client contracts.

The same applies when you start using more freelancers, launch a new service, develop your own technology, bring in another shareholder or begin working with larger or international clients.

Those are sensible points at which to review whether your existing contracts still reflect the risks and commercial reality of the business.

You don’t necessarily need to replace everything. Sometimes the documents remain perfectly suitable. The important thing is checking rather than assuming.

What contracts should a growing agency prioritise?

If I were reviewing the legal foundations of a growing creative agency, I’d start with:

1.     Client contracts: clear terms governing your services, fees, responsibilities, intellectual property and risk.

2.     Statements of work: a practical way of documenting the scope, deliverables, timetable and price for individual projects.

3.     Freelancer and contractor agreements: particularly around confidentiality and intellectual property.

4.     Employment contracts: appropriate to the roles people actually perform.

5.     Key supplier and software agreements: especially where the agency depends on the service to deliver client work.

6.     Shareholders’ agreement and articles: if there is more than one owner of the business.

The right contracts won’t be identical for every agency.

What matters is that your paperwork reflects how your agency actually operates today, rather than the business you were running three years ago.

As the agency grows, your contracts should grow with it.

This article is for general information purposes only and is not advice on your specific situation, and does not constitute legal advice.

Frequently asked questions

Does my agency need an MSA and a separate SOW?

Not necessarily, but the structure can work well for agencies with ongoing client relationships. The MSA can contain the legal terms governing the relationship, while individual SOWs deal with the scope, deliverables, timetable and fees for particular projects.

Do I need written contracts with freelancers?

Written agreements are sensible where freelancers are carrying out work for the agency, particularly where intellectual property, confidential information or client work is involved. The agreement should also reflect the actual working relationship.

How often should an agency review its contracts?

There’s no single timetable that works for every agency. A review is particularly worth considering when the business changes significantly, for example when you take on larger clients, introduce new services, expand the team, rely on new technology or start preparing for investment or sale.