Four Tips for Surviving Contract Renegotiations
Any freelancer, independent consultant, or business owner who has had to work under contract has at some point had to deal with a client that wants to renegotiate the terms of that contract. If you’re lucky, the client will want more of your time than you originally agreed to provide because they understand that you are an asset. If that renegotiation is due to cost-cutting measures there is little room to negotiate. However, even when your options are limited there are a few actions you can take that will improve your situation and keep you well-positioned for the future.
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“Had Lando Calrissian tried to negotiate with Darth Vader he would have ended up on a floor somewhere choking to death.”
Tip #1 Don’t Let Emotions Cloud Your Judgment
First, the bad news: most contract renegotiations are triggered by a client who wants more work for less money. In my long career working for myself I have been in that position many times and I have learned that the worst thing you can do is panic. Clients who drop a contract on you that’s entirely in their favor do so when they believe you are at your most vulnerable. It is a manipulation tactic to force you into making an emotion-based decision. They want you to panic. Respond that you need a day or two to look it over. Perhaps, explain that your attorney will want to review it. Don’t allow their false impression of urgency force you to sign that contract — at least not right away. Even if you have no other work coming in, you owe it to yourself to take a day or two before signing it (or walking away). Make sure that you have a lawyer review it or at the very least have a couple of friends help you look it over. You want to be clear-headed and calm as you read the contract and/or make a decision.
Tip #2 Ask the Right Questions the Right Way
I had a client e-mail me a new contract mid-cycle that not only would have forced me into a situation where I worked longer hours but also gave them retroactive rights to anything I had created on my own time off the clock for the last two years. I had worked there for a few years already so they were familiar with my habit of taking on only one client at a time so that I could have more free time to work on my own creative projects. When I saw the horrible terms of the contract I immediately saw red and wanted to tell them where to shove the contract. Luckily, I followed my own advice about not letting emotions cloud my judgment and waited until I was less angry before responding. Instead of telling them what I thought of the new contract, I chose to ask questions. I believed that it was possible to guide my client towards rescinding on some of the more unacceptable terms of the contract. I asked them only two questions: 1) what prompted the new contract terms, and 2) if “they” understood that they were asking for the sole rights to all of the work I performed at home, on my own time. By asking these questions-calmly-I forced them to step outside of the situation and put themselves into my shoes.
Tip #3 When in Doubt, Blame the Lawyers
People love scapegoats and lawyers are so easy to hate. Even Shakespeare suggested we kill them all off. In the aforementioned contract discussions I knew that my client would have to risk thinking of themselves as the bad guy/gal and that this had the possibility of backfiring on me. Therefore, I gave them the opportunity to shift the blame by stating that the contract did not seem like something they would ask of me and suggested perhaps the lawyer inserted these stipulations on their own initiative. When presented with that option, they took it. Whether it was the lawyer or my client who initially wanted those terms, I knew that when they had to revisit the contract in plain terms they would realize how unfair it was to ask me to give up rights to projects I conceived and produced on my own time, with my own money. By laying it off on the lawyer they opened up the playing field for a counter-offer.
Tip #4 Know Your Worth
When I say “know your worth” I’m not saying it in a Tony Robinson motivational speaker type of way. I mean, seriously, know your worth.What is the going rate for what you do in your area? What is the average pay for someone with your amount of experience? When someone comes to you with a contract to review, you absolutely must be able to say with confidence and accuracy what you are worth. They must have no doubt that you are worth your asking price. If salaries have fallen in your area, you want to know that, too. You won’t get very far asking for $100 more dollars an hour than other people with your background and experience. However, if they try to offer you less than what others are making for the same job with your background and experience you can raise the issue with actual, verifiable numbers.
My experience has been that cooler heads prevail and contract negotiations are no different. Certainly, there will be times when the situation has either become so acrimonious or the budget too tight to get what you want. Had Lando Calrissian tried to negotiate with Darth Vader he would have ended up on a floor somewhere choking to death. However, in most cases even when it feels like you’re backed against the wall if you give yourself time to breathe and return to the table with an attitude that is open, non-hostile, but firm, it is possible to push back on their demands. Oh and here’s one last tip, and it’s a freebie: always be prepared to walk away.
