What Do We Do Next? Your Rapid-Response Guide to Your Agency’s Next Client Contract Negotiation
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
5 Legal Mistakes Your Agency is Making in New Business – and How to Fix Them
Your agency invests massive amounts of time, energy and money pursuing its new business goals. And it’s exciting when the efforts turn into a new opportunity, project or long-tem lucrative contract. So let’s not spoil that good energy by missing a legal step or making a legal mistake that will jeopardize the agency’s efforts, create unsustainable risk or cost lost profit, OK? Over the hundreds of agency new business scenarios we’ve helped counsel our clients through, these are the mistakes we see, on repeat, in agency new business. Along with some suggested fixes you can implement before your next big new business opportunity. Mistake #1: Failing to Protect the Agency’s IP in Pitches and Proposals It takes a lot of creativity and ideation to attract new business. If your agency regularly pitches new business or responds to proposal requests from prospects, you are pouring your best creative concepts, strategies, and proprietary knowledge into your attempts to attract prospective clients. Do you want to give all of that away? If you’ve decided that it’s a worthwhile investment in the potential opportunity to do so, I support you – it’s an intentional business strategy. If you haven’t thought hard about it, or it isn’t your intention read on. How to Fix It: Make it your default to implement a mutual Non-Disclosure Agreement (NDA) with the prospect before sharing any creative or strategic materials. A mutual NDA demonstrates that both parties are committed to confidentiality. It also secures your claims to the work and ideas you share with the prospect. Side Note: If you’ve agreed that the prospect will own the ideas or concepts you share in a pitch or proposal, make sure the terms are clear, specific, and any compensation stated. Worried about putting this forward to a potential client? Don’t be. Presented respectfully and in the spirit of mutuality, brands are very accustomed to the requests (in fact, much the time they’re making the request for the NDA first, although their version usually isn’t mutual). If your agency is uncomfortable requiring the mutual NDA, there are two additional measures it can take to “stake its claim” to the IP it shares in a new business conversation: Add an IP ownership ownership clause directly into your proposal or pitch documentation. This clause should that any IP shared with the prospect remains the sole property of your agency unless a formal agreement is signed and the agency is compensated. Use a copyright notice (e.g., © 2025 Your Agency Name) on any deliverables included in your pitch. Remember that copyright protects only physical or electronic assets – it does not cover ideas shared verbally with the prospect. Mistake #2: Accepting Client Contracts Without Proper Legal Review Agencies eager to close deals often sign client-drafted contracts without a full review or negotiation. This can lead to highly unfavorable terms, including relinquishing rights, delayed payments, and excessive liabilities. How to Fix It: Always conduct a thorough legal review of the client’s contract before signing. If possible, have an attorney who understands agency operations assess the terms. Pay special attention to: IP clauses that transfer ownership of deliverables before payment is made. Payment terms that delay billing or tie payment to client “approval” of the invoice. Exclusivity clauses that limit your ability to work with other clients in a vertical or region. Approval processes that are missing, undefined, or put all risk on the agency. Liability clauses that make the agency responsible for client delays, misinformation, or failure to provide assets. Where feasible, seek to lead with your agency’s Master Services Agreement (MSA) in place of the client’s contract. And always have your agency’s own MSA as a benchmark even if you frequently sign the client’s document. A major assumption we see many agencies make is that they have no leverage to negotiate terms with a prospective client. Or that a big brand will never sign an agency-provided contract. It’s not true. You may have less leverage in some situations than in others, but you should always be prepared with an adequate legal review to use the leverage that you do have. Mistake #3: Creating New Legal Documents for Every Client Engagement A major reason many agencies avoid or short-circuit a full legal review of client contracts and related documents is the perceived extra time and investment of legal fees it takes. You’re in a hurry to get the work started and get the retainer flowing. One major reason for this? Many agencies lack a standardized approach to legal documents, treating each client engagement as a one-off transaction. This creates inefficiencies and opens the door to inconsistent language, errors, and legal exposure. It also makes the process more expensive, and slower. How to Fix It: Standardize your legal documentation process. Every agency should maintain a legal document library with vetted, customizable templates, including: A Mutual NDA that can be used across different engagements. A Master Services Agreement (MSA) for long-term, complex, or high-value clients. A Short-form Terms & Conditions document for smaller, one-time projects. Templates for Proposals, SOWs (Statements of Work), Change Orders, and Client Approval Forms. In addition to creating these core documents, assign central ownership of the legal process within your agency. Designate one person or team to manage the use and version control of legal forms. No one should send a contract or sign one without going through the designated point of contact or review process. And, again: if you must use the client’s contract, compare and benchmark it against your agency’s standard legal templates. This helps you identify gaps in liability protection, IP rights, and billing terms before you’re legally bound to them. Mistake #4: Giving Away Too Much IP—Or Giving It Away Too Soon Agencies frequently transfer ownership of creative assets too early in the relationship—sometimes even before payment is made. Worse, many fail to assert rights over unused or rejected ideas, leading to lost opportunities for reuse or repurposing. How to Fix It: Use a clear rule in
