New business feels like a game of “hurry up and wait” for agencies.

Until you’ve landed the client or the account—when it’s all hurry, no wait. 

Your team is excited to start work, and your accountant is eager to see revenue. All as soon as possible.

What nobody wants? A drawn-out contract negotiation that slows down progress. 

So, in the spirit of closing agreements promptly, without sacrificing your agency’s leverage in the process, here are some suggested “rapid responses” to a few of the common deal points most agencies encounter frequently in new business.

The Challenge: Payment Terms That Aren’t Reasonable for Your Agency

Agencies are generally protective of their payment terms in client contracts. The challenge usually arises when you are onboarding a new client whose payment policies don’t align with the agency’s needs. One part of the problem is lengthy pay terms. The other, less-noticed part of the problem is contingencies that can draw a payment term out even longer than it looks on its face—terms like invoice approval rights, charge dispute provisions, or unreasonable pass-through cost reimbursement rules.

Your Agency’s Rapid Response: 

Long payment terms are a business problem, not necessarily a legal issue. Know your agency’s benchmarks and its capacity to financially tolerate payment terms that don’t accommodate your overhead cycles and profitability targets.

Beyond that, consider some of the following responses:

• Ensure that the payment term clock begins to run on the date of invoicing. Not on the date of “approval” of the invoice. 
• Require that any objections or errors in agency billing be raised promptly by the client, or waived if not prompt.
• Bill in advance for all third-party expenses, such as media or production. If you bill in arrears for agency services, consider “split billing” for expenses vs. agency services—one invoice for expenses, one for services, on different remittance schedules.

The Challenge: Standard “Work for Hire” IP Language and Restricted Portfolio Rights

Most client-provided services contracts will address IP rights in agency work with a broad brush—the agency creates, the client owns.

Many brands now also default to prohibiting the agency from displaying samples of the work it creates for them.  Sometimes the restriction covers even mentioning the brand as a client.  Imagine the impact this has on your ability to attract new clients in the future.

These IP defaults and work display restrictions have real-world consequences for your agency’s revenues and future business development efforts.

And there may be some work that the agency doesn’t intend to transfer to the client (like your proprietary knowledge, software, methodologies, etc.), or cannot transfer to the client (like third-party licensed assets or anything generated by AI).

Your Agency’s Rapid Response:

Address this deal point with these recommended responses:

• Include terms that the rights to work your agency agrees the client will own do not transfer until the agency is paid in full.
• Carve out rights transfers in any work that is proprietary to the agency (this gets licensed, not transferred), or work that is third-party created (like stock assets).
• Reserve a license for the agency to display portions of the work that are not confidential for its promotional and marketing purposes—including the right to share the client’s brand name. If you’re unable to secure this term, negotiate instead for a “disclose/display with permission” term to share this information in your agency’s marketing. This is a midpoint on the issue that at least keeps the door open to the possibilities for promotional use cases later.

The Challenge: Exclusivity Demands by The Brand

One outcome of agency specialization and niching is that clients have increased their expectations about restricting your agency’s ability to serve other similar businesses or product categories. Brands want to guard against their agencies working for perceived competitors. But your agency needs flexibility to pursue these other opportunities, or an economic incentive to agree to exclusivity.

Your Agency’s Rapid Response:

If you’ve made the decision that your agency will accept some exclusivity requests in order to serve the client, consider these response options:

• Request, and expect, minimum spend requirements and/or premium pricing from the client. Choose your language as carefully as you like; however, the agency deserves a premium for foregoing other business opportunities to serve the client.
• Suggest limitation of the exclusion to a narrowly defined list of competitors.
• Suggest limitation of the exclusion to as short a list as possible of product or service categories.
• Request that the exclusivity end as soon as the agency’s services to the client do, not for any “tail” period after they conclude. 

The Challenge: AI Compliance and Responsibility Expectations

Increasingly, agency-client agreements are addressing the responsibility of agencies when using AI. This is particularly true in the case of the agency using GAI to create deliverables, but is also an increasingly recurrent challenge when it comes to data privacy compliance and confidentiality. 

This is a balancing act during your contract negotiations. AI’s presence in the work stream is dynamic, and the law around the legal issues it can create is still unsettled in many areas. Meanwhile, the agency wants to display proactivity in AI adoption, and the client has risk management concerns and likely has more conservative organization policies around AI use.

Your Agency’s Rapid Response:

The client will expect your agency to share some of the risk when using AI to create and deliver work. Your role in the negotiation process is to balance the risk as fairly as possible, given the legal unknowns.

Here are the starting points for responding:

• Require the client to acknowledge the agency’s use of AI in writing. Include the acknowledgment in the contract.
• Include approval and legal review of all deliverables by the client as a defined client responsibility.
• Require the client to disclose its AI use policies to the agency before work is performed.
• Expect the agency to have to assume some part of the responsibility if any of the work it creates (using generative AI, especially) infringes someone’s intellectual property or data privacy rights. Balance this as best you can with the client’s assumption of responsibilities.

While there are many more legal issues that can pop up for debate when getting a client’s agreement across the finish line, in our experience negotiating hundreds of agency-client contracts, these are the ones that arise most frequently. Having a “quick-react” strategy to them can help your agency move past them and toward revenue sooner.