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Four legal falsehoods of freelancing

After more than 20 years of practicing business law in Philadelphia, working mostly with entrepreneurs, John Gerber became a freelancer himself. He joined the self-employed workforce to help businesses grow from a legal and operational standpoint as an independent consultant. Since then, he has helped more than 100 companies launch. Now, he’s created an opportunity […]

After more than 20 years of practicing business law in Philadelphia, working mostly with entrepreneurs, John Gerber became a freelancer himself.
He joined the self-employed workforce to help businesses grow from a legal and operational standpoint as an independent consultant. Since then, he has helped more than 100 companies launch.
Now, he’s created an opportunity to spread the wealth. He recently formed Upstart Legal, an online legal repository for the freelance community. On the site, paid users can download modular, semi-customizable documents on the cheap. These “tools for entrepreneurs,” as Gerber calls them, help protect freelancers from potential legal liabilities.
On the site, there’s documents there for developing a service agreement with a client, the proper paperwork needed to hire sub-contracts and more. For an all-inclusive fee of $395, users get all the documentation they need to create their business, from forming a Limited Liability Corporation to tax registration. All that’s left is paying the State its due.
Well, it’s not always that easy. Let’s please not forget Technically Philly’s 15 steps to open a business in Philadelphia. Still, properly setting up your business with the right legal framework is easy and cost effective, Gerber says. “Because the key protections of a legal entity and good contract forms can be purchased at a relatively low cost, from a cost/benefit standpoint,” protecting your freelance work is a no-brainer, Gerber says.
After the jump, Gerber shares four often misconstrued truths of the legalities of freelancing.

I’m just freelancing. I don’t have any legal concerns to worry about.
The legal reality is that any time a freelancer accepts an assignment to perform work, he or she assumes legal liability for the work even if there isn’t a written agreement in place. There are three main parts to this: project performance, third-party claims, and confidentiality. First, a client has a reasonable expectation that the freelancer will complete the project on time, to specification and to an acceptable level of quality and functionality. Second, a client expects the freelancer’s work won’t expose him or her to legal liability for violation of third-party rights, such as copyright, trademark or trade secrets. Finally, the client will expect the freelancer to keep the client’s proprietary information confidential.
For freelancers, creating contracts that set clear expectations of deliverables and liabilities can help limit legal exposure.
If I work with friends, we don’t need a contract.
Anyone—friends included—who helps with a project adds to the freelancer’s legal responsibility and potential liability. Uncertainty with regard to the nature of the relationship with a friend can lead to unclear responsibilities. Is the friend a subcontractor hired to do a piece of the work for a fee or a “partner” with a claim to a stake in the profits or freelancer’s business? Is the friend violating the freelancer’s contract with regards to liability, deliverables, or confidentiality, as mentioned above? The answers could lead to complications, a lost client or the end of a friendship. Since the freelancer contracted with the client for the project, any losses or liability the client incurs are going to be the freelancer’s problem.
Potential clients can’t legally use ideas I might pitch to them.
If a freelancer pitches an idea or includes concepts in his or her proposal to a new client, the freelancer probably, but doesn’t always, have legal recourse if the client uses it. It’s always better to have a clear statement of ownership and confidentiality of ideas before they are shared to deter misappropriation and build an enforcement case if needed.
Protecting myself is complicated and expensive.
Getting the legal documents you need to organize and operate your business can be simple and easy if you know what’s important. Lawyers, online companies, and simply trying to figure things out yourself offer a range of support at different price points. Regardless, all freelancers should have an incorporated entity, a client contract, a subcontractor agreement and a non-disclosure agreement.
Every Wednesday, Shop Talk shows you what goes into a tech product, organization or business in the Philadelphia region. See others here.

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