Why Simple Freelance Contracts are Better Than NDAs for Building Lasting Client Relationships

Oct 26, 2020 | Customer Relationship, Finance and Legal, Finding Clients | 0 comments

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Do you know what I’m tired of hearing? That signing an NDA is better than signing a simple services contract!

Whether you are just starting out as a freelancer, or you’ve been in business for many years, choosing between signing a contract and appending your signature on a non-disclosure agreement (NDA) can be quite confusing. In any case, whatever decision you make will determine if you will manage to create long-lasting relationships with your clients.

As a freelance designer, signing a contract can help define the objectives of a particular project. However, is this the right way to go? Let’s find out.

Note: a student told me one day that she wanted to start a client relationship with an NDA and no contract. Here is my response…

When considering a contract or NDA, what are the most important factors in creating a winning client relationship?

In 15 years of freelancing, I’ve only signed two NDA’s. Neither of them came from me. They were requested by the client, which I happily signed. I’ve never presented an NDA as a freelancer or business owner to a client.

Conversely, I’ve always started a relationship with a new client with a services contract.

This gives both parties a crystal clear understanding of the deliverables and services to be provided, the timeline in which they will be delivered and the cost and fee structure for the job.

Now, after the initial contract, if there is mutual trust, the next contract might be less formal.

Here’s my reasoning for using contracts and not NDAs.

1. Trust, confidence, and expertise are the three major factors a freelancer must aim to achieve in a new business relationship.

If the client likes and trusts you, feels like you are confident in your skills to do a good job for them, they will hire you. Price is never the number one factor. So, in any client relationship, a healthy, trusting relationship is golden and can mean lots of recurring work. So, building trust should be our number one goal.

You might not know this, but using contracts is a great way of building interpersonal trust and fostering long-term strategic collaboration. After all, a contract contains all the details about the deliverables. This makes it easier for the client to know what to expect, and learn how you will attain the objectives of the project.

However, for a contract to work effectively and deliver its purpose, it must not be too rigid. Setting inflexible terms may only bring problems in the long-term. Essentially, you may end up disagreeing or canceling the contract, long before the expiry date. With this in mind, your contract should allow for adjustments in case something comes up during the course of the project.

2. Contracts foster trust because they are explicit and communicate exactly what is being bought and sold.

When we’re not sure what we’re getting for our money, we get nervous (trust is challenged). Conversely, when we know exactly what they’re paying for, we aren’t nervous (trust is built).

The same applies to the client. When your clients do not receive what they are paying for, they lose trust in your services and in you as an individual.

To expound on this point further, contracts lay bare what the freelance designer is offering and how much the client is paying. In effect, the client will be able to establish the precise time frame the project will take. On the other hand, you will have the peace of mind knowing when to expect your payment.

At the end of it all, everyone will be happy so long as each party keeps its end of the bargain.

3. NDA’s, by nature, insinuate mistrust. i.e. I must protect myself in case the other party is not trustworthy.

They are necessary on rare occasions when there are trade secrets that need to be protected, but are not needed in most situations.

With that said, it doesn’t make sense for a freelancer to present an NDA to a client. In any case, freelancing does not entail any major secrets related to the industry that must be guarded at all costs. Moreover, signing an NDA may just create more friction between you and your clients instead of building a lasting, mutual relationship.

Besides, NDAs in the freelancing world only last for less than a year, meaning that you cannot rely on these agreements to build stronger relationships with your existing clients. After the agreement ends, it might take a long time before the two parties decide to work together again.

4. Contracts have expiration dates (or at least they should have).

Which means they are a natural vehicle for evaluating the relationship and making adjustments (like fee increases, expanding services, etc.).

This is easy and non-threatening

With regular contracts, you have the flexibility to evaluate whether your client relationships are working. If not, you can make the necessary adjustment to make them work.

Maybe you are charging too little for your services and you need more money to cater to miscellaneous expenses or your clients need a discount after adding more work. By working with contracts, you can make these modifications easily without breaking a sweat or compromising the relationships you have built over the years.

5. NDAs are heavy-handed as a result they prevent successful collaborations from developing.

In some cases, the agreement might not have anything to protect in the first place.

In fact, some NDAs do not provide sufficient protection, and considering this, using an NDA might not be the right approach.

It is imperative that you sit back and decide what you really want to achieve before deciding on the mode of agreement that is best suited for both parties. Instead of going through the pain of causing distrust between yourself and your clients, consider developing a one-size-fits-all contract with the option of adding a confidentiality clause.

Let’s face it. Most freelance designers prefer issuing non-disclosure agreements to their clients hoping to protect their unique ideas and designs from their competitors. However, this can only work against the progress you have made to create lasting relationships with your clients.

In any case, NDAs imply a level of mistrust and no client would love working with someone who does not trust them. Considering this, it is advisable that you stick to contracts to enjoy long-lasting and successful relationships with your clients.

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