Posts Tagged ‘indemnity clauses’

Contracts: Negotiating an indemnity clause

Monday, January 5th, 2009

While the Copyeditor’s Desk was down for a few days, a contract from our best client came in. They wanted us to sign a master contract that would govern our relationship in 2009.

At first glance, the contract looked OK. But as I was reading over the three pages of boilerplate, what should I come across but an indemnity clause. These little zingers are common in publishing: it’s a device to transfer the cost of any and all legal action or arbitration from the publishing company to the writer (or, in our case, the editors)—the very parties in the relationship who are least able to bear such expenses.

Usually you’ll see the word “indemnify” in the language. It’s a red flag: any time that word shows up, you should stop right there. This passage, however, was more subtle:

15. ATTORNEY’S FEES: Should Contractor not abide by the terms and conditions set forth in this Agreement and it becomes necessary for the Company to engage the services of an attorney or mediator to resolve any such dispute, Contractor agrees to pay all Company costs associated with this action, including, but not limited to, attorney, mediator, and process server fees. All legal action will be initiated in a Maricopa County, Arizona court.

This is exactly what “indemnify” means: to pay the costs for someone else.

We do not sign contracts like this. It’s far better to forego the work than to end up being rendered penniless by lawyers’ and court fees, regardless of whether you’re at fault. You understand, the language above says that even if a court finds in your favor, you still will have to pay the client’s legal fees, just because they decided to take some action against you.

Many magazine contracts now contain similar clauses. Do not ever sign such a thing!

When I was writing on a freelance basis for magazines and newspapers, I would take a black marker and ink these clauses out. This, however, is risky, because to make it legal, both parties have to initial the change. If your editor refuses to do so or has no authority to alter the contract, the fact that you unilaterally crossed out a paragraph may not change things.

Better to discuss the issue with the client. Often they will delete the offending clause—most of the time, they don’t expect writers to know what an indemnity clause is or to understand its implications. When you let them know you’re wise to that game, they’ll back down. If they refuse to do so, you’re better off not to do business with them. This kind of arrangement is unfair to you and puts you at enormous financial risk.

Some things are worse than not getting an assignment, and this is one of them.

I did let the client know the indemnity clause was unacceptable, and I politely explained why. Before long, I’m pleased to report, along came an answer to the effect that it was a piece of boilerplate they’d swiped off the Web. We should cross out and initial the offending paragraph and they would agree to the deletion.

That’s a relief! We didn’t want to lose the client. But on the other hand…clients are a dime a dozen; life savings are not.