When you hire an expert, you hire them for their expertise, obviously and because hopefully, they a know a lot more than you do. Imagine a scenario where you have a need, such as a new website or mobile application, and you set a goal to seek out a design and development shop to code your dream to fruition.
You identify a boutique shop that has all the right credentials. It boasts an excellent portfolio, a smiling and attentive sales person, and a promise that your product is going to have the hands on attention your mother would be proud of. With a desire to launch as quickly as possible, you sign on the dotted line and believe your project is being coded on the other side of town.
It isn’t.
You see, your dream company booked your project despite knowing that it lacked the resources in house to complete your work and instead has plans to rely on its “distributed work model” - read, people all over the world - to bring the project to home.
The so called distributed work model, which used to be called subcontracting, isn’t necessarily a bad practice. Yet, room for abuse, fraud and questionable ethics do come in to play, especially when companies sell themselves as larger than they truly are or farm out your project without a client’s knowledge and consent.
In such a circumstance, the client may be kept in the dark for the entirety of the project. However, a worst case scenario can be devastating. Subcontractors may be unvetted, unscrupulous, and difficult to track down in the event your project takes a turn for the worse.
Deadlines may be missed, your brain-child of an idea may be stolen or sub-par in quality, and you may end up looking poorly in the eyes of your boss.
Fortunately, with a bit of diligence you can avoid this scenario from happening to you with a little bit of know-how and preparation.
Right or Wrong?
More prevalent in the design, development, advertising, and marketing industries than one might expect, arguments exist which support and lament the practice of subcontracting work.
At bottom, there is no “right” or “wrong” in a discussion of whether the practice should be permitted. In fact, many will argue subcontracting can reasonably be expected to happen in some form on most projects. Instead, the issue revolves around “informed vs uniformed”, “ethical vs unethical”, and are you “protected vs unprotected” in the event something goes amiss.
The following is not intended to prevent you from entering into relationships where subcontracting may occur, but rather, to provide you with a sufficient framework to make an educated decision whether such a particular shop makes sense for you.
The Pros And Cons Of Permitting Subcontracting
Pro: In Support of Subcontracting
Con: In Opposition To Subcontracting
How to Protect Yourself
Now that you understand the pros and cons, it’s time to make a decision on whether you would like to permit or deny subcontracting. As with much of life, the answer is not so cut and dry. The following sets forth four scenarios which you can utilize to assist in framing relationships. However, it is important to note that some shops may not entertain negotiation.
1. No protection.
Obviously the most risky of all potential scenarios and frequently the result of a lack of understanding of the process or an urgent need to begin the project, no protection can be established one of two ways. First, and most frequent, no protection can be established by omission. Second, a provision can be drafted to specifically set forth the framework. In doing so, the company performing the work is protected from further claims in the event something goes wrong.
2. Notification required.
A provision that sets forth that the company must notify you in the event that they subcontract out any portion of your project will help you keep tabs on the project as work is conducted. Note that such a provision does not prevent them from farming out your work, but instead, merely provides you with notice. This can be accomplished on a general basis (e.g.: “We are subcontracting out your work”) to a company and location level (e.g.: “We are subcontracting your work to Widgets, LLC in England”) to a named individual basis (e.g.: “We are subcontracting your work to Mr. Michael Smith of Widgets, LLC in England).
3. Notification required coupled w/ an advance right to refuse. (recommended)
This provision is designed to allow subcontracting to occur, but gives you the authority to approve or deny any potential distribution of your work. The company you hired may not favor this approach because it has the potential to slow the design and development process and provide insight into who they are working with thus enabling you to contract directly with that entity or individual in the future. But there are ways to avoid such a problem. At bottom, this option provides you with the most control and knowledge over the project but is more time consuming than the other options.
4. No subcontracting permitted.
Such a provision prevents subcontracting under any circumstance whatsoever. Although this may be warranted in certain circumstances (e.g.: Highly sensitive and timely projects), it prevents such a practice without an amendment to the originally executed agreement. Lastly, this highly restrictive provision may result in the elimination of some highly capable companies from consideration.
Where To Protect Yourself
Any reputable shop should have you enter in to some sort of contract or agreement for services. In doing so, you’re not only framing the scope of the engagement, but you’re protecting yourself in the event the relationship sours. There is a reason the legal community espouses that “you don’t execute contracts for good relationships, you execute them to protect you in the event something goes wrong”.
Whether your relationship is governed by a Master Services Agreement, a Statement of Work, or something else, you can easily address the issue by including appropriate language mirroring the intent of one of the aforementioned provisions.
Specifically, and most frequently, the language you should keep an eye out for is contained within an “assignment of work” provision.
Wrapping Up
Although there is no “right” or “wrong” in a discussion of whether the practice should be permitted, it is of the utmost importance that you understand the implications associated with the contracts you enter. Consider the potential repercussions, and don’t hesitate for a moment to have your legal counsel look out for your best interests.
You identify a boutique shop that has all the right credentials. It boasts an excellent portfolio, a smiling and attentive sales person, and a promise that your product is going to have the hands on attention your mother would be proud of. With a desire to launch as quickly as possible, you sign on the dotted line and believe your project is being coded on the other side of town.
It isn’t.
You see, your dream company booked your project despite knowing that it lacked the resources in house to complete your work and instead has plans to rely on its “distributed work model” - read, people all over the world - to bring the project to home.
The so called distributed work model, which used to be called subcontracting, isn’t necessarily a bad practice. Yet, room for abuse, fraud and questionable ethics do come in to play, especially when companies sell themselves as larger than they truly are or farm out your project without a client’s knowledge and consent.
In such a circumstance, the client may be kept in the dark for the entirety of the project. However, a worst case scenario can be devastating. Subcontractors may be unvetted, unscrupulous, and difficult to track down in the event your project takes a turn for the worse.
Deadlines may be missed, your brain-child of an idea may be stolen or sub-par in quality, and you may end up looking poorly in the eyes of your boss.
Fortunately, with a bit of diligence you can avoid this scenario from happening to you with a little bit of know-how and preparation.
Right or Wrong?
More prevalent in the design, development, advertising, and marketing industries than one might expect, arguments exist which support and lament the practice of subcontracting work.
At bottom, there is no “right” or “wrong” in a discussion of whether the practice should be permitted. In fact, many will argue subcontracting can reasonably be expected to happen in some form on most projects. Instead, the issue revolves around “informed vs uniformed”, “ethical vs unethical”, and are you “protected vs unprotected” in the event something goes amiss.
The following is not intended to prevent you from entering into relationships where subcontracting may occur, but rather, to provide you with a sufficient framework to make an educated decision whether such a particular shop makes sense for you.
The Pros And Cons Of Permitting Subcontracting
Pro: In Support of Subcontracting
- Many boutique firms experience difficulty maintaining full time staff with diverse skill sets to meet the demand of clients whose project span the spectrum. By maintaining relationships with subcontractors, they are able to integrate fresh ideas and technologies that otherwise would not be available on a full time basis.
- As the quality of the final product and subsequent reputation ultimately rests with the contracting entity, the subcontracting company has to have properly aligned interests to manage the project to success. Accordingly, clients should be able to rest assured that final product will be delivered as promised, and all problems will be rectified if they arise.
- In the event that the scope of a project changes, subcontracting may provide the ability for a company to rapidly scale the size and scope of the project to meet the increased demand.
Con: In Opposition To Subcontracting
- Subcontracting can complicate the process of ensuring that your intellectual property rights are maintained and protected. Specifically, due diligence which will highlight items of concern between the company you hire and their and their subcontractors may be problematic, and as such, you may be setting yourself up for problems down the road. Portfolio attribution, product promotion, and most importantly, ownership of the source final product, source files, and intellectual property are just the tip of the iceberg.
- The further down the creative chain the project is from your lead contact, the greater the likelihood that your vision will be diluted. In a worst case scenario of subcontracting gone amiss, instead of hiring a contractor you’ve hired an unnecessary project manager at superfluous cost.
- Oftentimes the act of subcontracting occurs after work is booked. At best, the subcontractor is on retainer, but oftentimes new contractors are identified at the last minute without proper vetting. This scramble will inevitably locate individuals available to work on the project, and those individuals may not be up to par. As such, your project may falter.
- Without notice to the client, the practice is arguably unethical at best and fraudulent at worst.
How to Protect Yourself
Now that you understand the pros and cons, it’s time to make a decision on whether you would like to permit or deny subcontracting. As with much of life, the answer is not so cut and dry. The following sets forth four scenarios which you can utilize to assist in framing relationships. However, it is important to note that some shops may not entertain negotiation.
1. No protection.
Obviously the most risky of all potential scenarios and frequently the result of a lack of understanding of the process or an urgent need to begin the project, no protection can be established one of two ways. First, and most frequent, no protection can be established by omission. Second, a provision can be drafted to specifically set forth the framework. In doing so, the company performing the work is protected from further claims in the event something goes wrong.
2. Notification required.
A provision that sets forth that the company must notify you in the event that they subcontract out any portion of your project will help you keep tabs on the project as work is conducted. Note that such a provision does not prevent them from farming out your work, but instead, merely provides you with notice. This can be accomplished on a general basis (e.g.: “We are subcontracting out your work”) to a company and location level (e.g.: “We are subcontracting your work to Widgets, LLC in England”) to a named individual basis (e.g.: “We are subcontracting your work to Mr. Michael Smith of Widgets, LLC in England).
3. Notification required coupled w/ an advance right to refuse. (recommended)
This provision is designed to allow subcontracting to occur, but gives you the authority to approve or deny any potential distribution of your work. The company you hired may not favor this approach because it has the potential to slow the design and development process and provide insight into who they are working with thus enabling you to contract directly with that entity or individual in the future. But there are ways to avoid such a problem. At bottom, this option provides you with the most control and knowledge over the project but is more time consuming than the other options.
4. No subcontracting permitted.
Such a provision prevents subcontracting under any circumstance whatsoever. Although this may be warranted in certain circumstances (e.g.: Highly sensitive and timely projects), it prevents such a practice without an amendment to the originally executed agreement. Lastly, this highly restrictive provision may result in the elimination of some highly capable companies from consideration.
Where To Protect Yourself
Any reputable shop should have you enter in to some sort of contract or agreement for services. In doing so, you’re not only framing the scope of the engagement, but you’re protecting yourself in the event the relationship sours. There is a reason the legal community espouses that “you don’t execute contracts for good relationships, you execute them to protect you in the event something goes wrong”.
Whether your relationship is governed by a Master Services Agreement, a Statement of Work, or something else, you can easily address the issue by including appropriate language mirroring the intent of one of the aforementioned provisions.
Specifically, and most frequently, the language you should keep an eye out for is contained within an “assignment of work” provision.
Wrapping Up
Although there is no “right” or “wrong” in a discussion of whether the practice should be permitted, it is of the utmost importance that you understand the implications associated with the contracts you enter. Consider the potential repercussions, and don’t hesitate for a moment to have your legal counsel look out for your best interests.
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