Being smart about your agency through the right legal tools with Sharon Toerek

Speaker 1:

It doesn’t matter what kind of an agency you run. Traditional, digital, media buying, web dev, PR, whatever your focus, you still need to run a profitable business. The Build A Better Agency podcast presented by White Label IQ will show you how to make more money and keep more of what you make. Let us help you build an agency that is sustainable, scalable and if you want down the road, sellable. Bringing his 25 plus years of experience as both an agency owner and agency consultant, please welcome your host, Drew McClellan.

Drew McClellan:

Hey everybody, Drew McClellan here from Agency Management Institute. Welcome back to another episode of Build A Better Agency. We are barreling down to episode 300. I’m super excited to hit that milestone. Boy, it just feels like we just started the podcast and when I think about all the amazing people that we’ve talked to and all the content we’ve produced, I’m pretty excited about it. We’re going to have to throw some sort of a party. I have no idea what that’s going to look like for episode 300, but just know it’s coming around the corner. Before we get into today’s episode and what that’s all about, I just want to put three things on your radar screen.

Drew McClellan:

Actually, two things and I’m going to tell you about the guest, and then I’ll tell you about the third thing. The first one is I know you just heard it on the pre-roll about the Facebook group, but I’m telling you the Facebook group for the podcast listeners is really rocking right now. We have enough people in there that people are asking really interesting questions every day. They’re jumping in and helping each other. They’re sharing resources. We of course are jumping into the conversation and weighing in on topics, but it is really a vibrant lively place to be, and I would love for you to join us. All you got to do is go to Facebook and search Build A Better Agency, and you’ll see the group. Here’s the deal.

Drew McClellan:

If you do not answer the questions, it asks you three simple questions. If you don’t answer the questions, I can’t let you in the group. Don’t make me chase you around because sometimes that takes me a week to get to. If you answer the questions, I’ll let you in as quick as I can, but if I have to track you down and send you a message on messenger, it could be weeks before I let you in. Please don’t do that. Just answer the questions and come join the conversation because it’s pretty awesome. The second thing I want to tell you really quickly about is as many of you know, Stephen Westner, agency owner and AMI member and I co-wrote a book called Sell With Authority that came out about a year ago, January of 2020.

Drew McClellan:

We had big, big plans for doing a big book launch and all this other stuff, which of course thanks to COVID didn’t happen, but the other thing that we had planned was we had a date scheduled in the spring to get into a studio to record the audible version of the book. Well, of course, that didn’t happen either. This fall, we finally were able to get into the studio together and record the book and finally, the audible version of Sell With Authority is out. If you’re like me and you really like to listen to books, rather than read books because it allows you to multitask and you can do it while you’re walking the dog or exercising or cleaning the house or whatever it is that you like to do while you listen to books, it is now available.

Drew McClellan:

You can go to Amazon or Audible and find the book. As I said Steven and I recorded it, so you can monkey with our voices. You can make us talk like chipmunks or talk super slow, whatever floats your boat, but anyway, I just wanted to let you know that it’s out there in a new format. Okay, let me tell you a little bit about our guest and the topic, and then I will tell you about the third thing that I want to put on your radar screen. There is not a day that goes by that somebody doesn’t send me an email and ask me, “Hey, do you have a template for master services agreement, or a scope of work document, or a contract with a freelancer?”

Drew McClellan:

My answer to them is always, “No, I don’t have a template for that because that’s not something you should get a template for. You should have it custom built for your agency and/or you need to source it from somebody who’s actually a lawyer, not me. I can’t tell you if it’s a good contract or not. You should not put your business at risk because someone will share with you a copy of a contract.” Anyway, I was talking to Sharon Toerek who as you know is AMI’s go-to attorney. She specializes in working with agencies, super smart, very generous with what she knows, has been on the podcast a few times.

Drew McClellan:

I was sharing with her these conversations, and she then said to me, “Well, you know, there’s variances, there’s degrees of how involved an attorney needs to be in some of these things and in some cases, you can DIY it. In other cases, there’s a do it with you model, or you can go to a resource that you trust and get some templates that you know are baked in goodness, or sometimes you have to actually talk to an attorney.” As we were talking about it, I said, “You know, that’s an interesting topic that we haven’t covered on the podcast, so would you come back on the podcast and talk about how agency owners figure out which of these buckets their need falls into and how do they resolve those issues?”

Drew McClellan:

She of course said yes. That’s what we’re going to talk about today, and here’s the third thing I want to put on your radar screen. When we recorded this, Sharon was in the middle of building out a done with you model, so a resource, a membership-based resource library where you would be able to get documents, attend webinars, and do all kinds of things to make you smarter and protect your agency better that Sharon and her team have put together. When we recorded it, it wasn’t done. She didn’t feel comfortable talking about it because she wasn’t sure that it was going to be done, but now, I’ve come back and I’m recording this introduction after Sharon and I talked.

Drew McClellan:

Now it’s done. If you want to check it out, go to agencylegalprotection.com, and you can see what Sharon has built specifically for agency owners and see if it’s something that would be of interest to you, but it is that done with you model, where you’re going to a place where you know the content is rock solid, it’s been vetted, you know where it came from, you know who created it. I think you might find it pretty interesting. We’ll also put that in the show notes that link. All of that is to say, and I’m sorry that this has been so long, but all of that is to say that this episode is all about being smart about your business, protecting your business with the right legal tools, the right language, the right verbiage on contracts, the right contracts, the right insurance.

Drew McClellan:

That’s what we’re going to dig into today with my friend and my legal counsel and I know for many of you, your trusted legal counsel, Sharon Toerek. I am super sorry that this intro was so long, but it was all important stuff that I wanted you to note, but now I’m done. Let’s get to the conversation with Sharon. Sharon welcome back to the podcast.

Sharon Toerek:

Thanks Drew, so good to be back with you.

Drew McClellan:

I think you’re a three-peat now. This is your third time back.

Sharon Toerek:

I think so.

Drew McClellan:

Yeah.

Sharon Toerek:

I think so. I’m honored, I’m honored. Yeah, not everybody wants to see me three times.

Drew McClellan:

I as you know, I’m happy to see you as often as I can. You’ve been such a great asset to AMI agencies for so long that it’s… I always have more stuff to ask you, so I’m glad to have you back. Thank you for making time to do this.

Sharon Toerek:

It’s absolutely my pleasure.

Drew McClellan:

Today, I want to talk a little bit about when I thought about as I was preparing for this, this to me is the show where you and I talk about gradients and variations. There’s this spectrum of agency owners, how they approach legal issues. There’s also legal issues that have their own spectrum. I want to just get into the gradients of all of that, but let’s start with back last summer. For those of you who are listening live, this is airing in the spring of 2021. You were on the show in June of 2020, and you were talking about some research that you had just completed with Susan Bayer from Audience Audit, and it identified three different agency owner personas and how they approached legal decisions or their relationship with the legalities of their business.

Drew McClellan:

Can you just quickly walk us through what those three persona types were?

Sharon Toerek:

Yes, absolutely and it was really dramatically helpful for us at my firm to understand how to help agencies best when it comes to their legal affairs, because it’s one thing to understand the legal topics that every agency should be fluent in. It’s another to understand really how they feel about them, right?

Drew McClellan:

Right.

Sharon Toerek:

And what their risk tolerance is. We ultimately identified as a result of Susan’s wonderful research after talking with 225… I think it was 225 agency owners or leaders about their attitudes related to legal affairs, and they segmented themselves into three basic categories, which we affectionately nicknamed. These nicknames are not official labels. They’re just the way we ended up sorting our respondents. At one end of the spectrum, you’ve got what we’ll call our proactive and protected agency leaders and owners. These are folks who regard the legal affairs as just a regular ongoing part of the necessary operations of the firm. They like to be out in front of them.

Sharon Toerek:

They’re proactive about them, and they typically tend to have a strong legal partner who helps them with them. Most of the time, that partner knows at least a little bit something about the agency world and how it operates. A lot of them know they use their general business council for some of the areas of the agency’s legal needs. Then you have what we’ll call anxious and afraid or exposed and anxious, and this is a segment of agency owners who are actually very sophisticated about the legal issues that the industry throws in their path as they’re running their agencies every day.

Sharon Toerek:

They are though constantly concerned about what’s around the corner, what haven’t they thought about what is new, what is emerging as a potential legal threat that the agency needs to know about, or that the client needs to know about. They are also consumers of a lot of legal services. They tend to be more hybrid though and whether or not they will work directly with an attorney to get the solution, or whether they are engaging in self-help. Our other category is what we affectionately dubbed lawyer avoiders, and these are the agencies that are successful. By the way, size had no determinant on which segment you fell into.

Sharon Toerek:

We had agencies of all sizes in all three segments, but the lawyer avoiders tended to be those folks who engaged in self-help who would be more likely to look for an online resource that they could use to meet a legal need, or who tended to really only involve legal when something became emergent or on fire. It’s fascinating to see that they sorted themselves into those three attitudinal segments because it helps us understand how to help them better when they have a legal issue, or when we’re trying to educate them about the legal issues that might be important for their agency and for their leadership to understand.

Drew McClellan:

Well and I think too it’s important for us as agency owners to recognize where we fall in that spectrum and understand. Because to me when I read the data, it was like I could see where I as an agency owner on the agency side of my world and also as an owner of another business meaning AMI, I could see where I fell into the category, but then I got to decide if that was really where I wanted to fall, right?

Sharon Toerek:

Right.

Drew McClellan:

Was I willing to take the consequence and the risk of any of those categories, or did I want to shift my behavior to consciously choose to be a different kind of consumer of legal help and guidance.

Sharon Toerek:

Right. As a community, I think marketing and digital communications agencies overall tend to be a little bit more comfortable with risk assumption than other types of entrepreneurial companies. I say that because of having worked with hundreds of them, but also because the nature of the service that you provide is very forward-leaning. It’s very future based, and it also has varying degrees of your ability to measure the ROI on it. You’re assuming a lot of risk, and you’re making your clients comfortable with risk assumption because you don’t know how a campaign is necessarily going to measure out for a while.

Sharon Toerek:

It’s a leap of faith for both of you so and as a community in general, I think that agency owners and leaders tend to be a little bit more comfortable assuming risk, but I liked that we were able to dig into the research to find out maybe why that was, or what was guiding their perceptions around when to seek legal partners or assistance and what kind. Do you actually need to work one-on-one with a lawyer? Do you need a vetted resource for our tools for addressing something at the agency? How are you going to handle it?

Drew McClellan:

Yeah. One of the things I love about the way. and it clearly shows how well you know agency owners, one of the ways I love how you approach counseling clients because A, I’ve been on the receiving end of that council, but I’ve also seen you present and talk about it is you always say, “Okay, well someone will ask you a question from an audience, let’s say where you’re speaking like a content marketing world or somewhere,” and you’ll say, “Well, the legal answer is this. I know you’re thinking in your head is this. What you have to decide is where between those two are you comfortable with the risk that is assigned at that spot.”

Drew McClellan:

I think one of the things that makes you a valuable advocate and partner to agencies is that you temper your guidance by knowing your audience and saying, “Okay, technically, legally, you have to do this, but I’ve talked to hundreds of you and I know odds are you’re not going to do that. Let’s talk about how far down the risk category do you want to go and where can we find a compromise that you’re comfortable with.”

Sharon Toerek:

Right. Well, thank you. I mean those are very kind words, I appreciate it. I think I ultimately came to this perspective as a result… you get your own level of entrepreneurial maturity in running your own business. It could be partly that, but ultimately your agency is your agency. The agency is about the decisions about how you want to run it, and the risk you want to assume are your risks to assume and your decisions to make. My role or the role of my firm in the process is advise you of what the law is as best as we can understand it under the fact pattern you’re showing us, give you options, help you understand the risks of each of those options, and then you choose. It’s your choice.

Sharon Toerek:

I mean there are very few situations these days in which I will say to a client I’m literally going to throw myself in front of your car to prevent you from doing that, and these are business decisions and those are not my decisions to make for your business. I may feel strongly about some risks than other risks, and I’m going to tell you that, and then it’s up to you to decide or ask the additional questions that will give you the context to help you make the choice for yourself.

Drew McClellan:

Yeah. I think that my work is very similar to that. I’ll say to if a coaching client, or if we’re in a consulting situation. I’ll say, “Look, here’s what I’ve seen other agencies do, here’s what I know, here’s what I think you should do, but at the end of the day my job is to give you that perspective. Then whatever you choose, as long as it’s not morally or ethically wrong, my job is to support you in the path you choose, even if it’s not the path that I think you should choose.

Sharon Toerek:

Yeah. I mean what gives me the biggest heartburn obvious really is when I know that a client or a prospective client I should say is not willing to know what they don’t know about a situation.

Drew McClellan:

Right.

Sharon Toerek:

That is a circumstance in which we will intervene and say, “We want to make sure you understand the consequences of decision A or decision B, and what that could mean and where we can.” We’ll give a prediction about the likelihood of the outcome.

Drew McClellan:

Sure.

Sharon Toerek:

It’s rarely possible to do it completely accurately, but I think the biggest danger is not knowing what you don’t know and making any decision for your business. It’s just the consequences when it’s financial or legal can be more dramatic when you don’t know what you don’t know.

Drew McClellan:

Absolutely. At the end of the day, I guess what we’re saying is agency owners are grown-ups, and they get to run their business the way they want, but I know for me, I still want them to seek my counsel-

Sharon Toerek:

Right.

Drew McClellan:

… so I can help them at least have everything in front of them, so they can make the best decision possible.

Sharon Toerek:

Right.

Drew McClellan:

Yeah.

Sharon Toerek:

Right. Yeah, and I think you lead in that way, and this is certainly true of you and all the AMI thought leadership that gets put out in your personal thought leadership to use it as a great example. This is why we spend as much time as we do on the education and the learning part of the way we advise our clients, because you can hardly be blamed for not knowing what you don’t know if there’s nowhere to get off like a foundation for learning and understanding and knowing, or you can’t find a resource to help you get there. I mean ultimately our role is to counsel and guide the client and advocate for the client, but before we get to that point, our role is really to educate the client as best we can and inform.

Sharon Toerek:

I see a huge part of my role just as I’ve grown the firm and as we create our additional offerings and products and services as being educational tools as much as they are actual legal instruments that you use in the day-to-day running of your business, because I think that’s our role as a business advisor. Yours happens to be on the business and operations side of the world or the biz dev side of the world. Mine’s on the legal side of the world, but that’s the first and best use of our time in many circumstances.

Drew McClellan:

Yeah, and I think the listeners understand that because honestly, that’s the role they play with their clients too, right? Before you can get a client to do something, you have to help them understand the value of doing it. I think all of us serve at a certain capacity as an educator prior to being a guide or counselor, or whatever word you want to use. First, we have to help them understand it.

Sharon Toerek:

Right, I absolutely agree.

Drew McClellan:

As you know, I strongly believe I also think the other benefit of being that educator is that it attracts prospects to you, that long before they know they need you, they’re learning from you so that when they do need an agency consultant or an attorney or an agency, they’ve already been consuming that stuff and they’re like, “Oh, I already know like and trust these people, so they’re who I’m going to call.”

Sharon Toerek:

Well, for sure. I mean I’m a true believer in the value of being a resource out there for whoever is the best target for consuming your services or your council, whatever it is you have to offer. You have to build that trust by sharing an awful lot of wisdom and points of view about why you think the way you think and what you see by looking at their industry to earn they’re feeling comfortable coming to you for ultimate guidance on their specific issue.

Sharon Toerek:

We found that not only does leading with the education and the content help us there, but if we can find a way to get agency leaders and owners thinking themselves about how to evaluate their legal readiness in this example, that also helps us not only make them in a better position to be able to consume our services, which for our selfish reasons is better for everybody, us included, but also help them make a plan for closing the gap between where they are and where they want to be, because sometimes you can’t close it all immediately. It just depends.

Drew McClellan:

Right.

Sharon Toerek:

We’ve had really great success helping agencies help themselves by doing things like making legal self-audit tools available, just a way of helping you understand what are some of the most frequently encountered issues that your peers see and what have you done about these in your own agency. At a very basic level, we start by making checklists available for agencies to work on independently. We certainly offer a full-blown legal audit, which is a done for you pretty in-depth analysis, like a yearly executive physical I would equate it to and then we’re…

Drew McClellan:

Let’s talk about that a little bit.

Sharon Toerek:

Yeah.

Drew McClellan:

If I need to audit my legal readiness, what am I auditing? How do I even know how to start that?

Sharon Toerek:

Yeah, that’s a great question. I think that I can give you some feedback on a number of the big buckets where agencies need to think about starting, and I’ll do them in the order in which they tend to arise in frequency at our firm. The first is dealing with your agency client issues, and our most frequently provided legal service to agencies is really assistance with client contract, drafting, negotiation, review. When’s the last time as an agency you’ve looked at your master service agreement? Do you have a master service agreement? Does it address the kinds of business situations that you might frequently encounter? Are you using the same version with all of your clients, or are you just slapping something together whenever somebody else has made a new deal?

Sharon Toerek:

Is there any centralization or thought behind the process of the agency? It’s those agency client relationship issues, and they’re best expressed and what does your contract look like? Do you have a checklist to look at client agreements? Because we all know that a lot of agencies end up signing the client’s version of a master service agreement voluntarily or involuntarily, because that’s just the way it is with some clients. That’s one major bucket that’s a great starting point. I would say the next bucket is talent, and I’m using that term…

Drew McClellan:

Hang on. Before you go to that, so by the time this airs, you will have done a webinar for us on master service agreement. In the show notes, we will include a link to the replay. All of you listening going, “Oh, I don’t know how to answer all those questions that Sharon just said,” just know that Sharon is going to spend an hour with us. Unfortunately, you can’t participate live because by the time this podcast goes live, we will have already done the webinar, but we’ll include the replay in the show notes, so you can go back and listen to an hour of Sharon teaching us about master services agreements.

Sharon Toerek:

Yeah.

Drew McClellan:

All right, sorry.

Sharon Toerek:

I’m looking forward to it. No…

Drew McClellan:

I didn’t mean to interrupt you, but I was like I want to make sure I slide that in.

Sharon Toerek:

Thank you. I’m glad you stopped me because we would have missed giving them the opportunity to get that info.

Drew McClellan:

Yep.

Sharon Toerek:

Another major bucket talent and I use that term really broadly because when you’re thinking of talent, it’s not only the employment related things that a lot of agencies bring that up as something that’s always top of mind for them. It’s when’s the last time you looked at your handbook? When is the last time you looked at your employment agreements to make sure that they’re reflective of your agency and protective of your agency? More to the point, when is the last time you really looked hard at how you’re engaging with your independent contractors, your freelancers? Even prior to the recession that was caused as a result of the pandemic, freelancing and contracting, it’s just a way of life for independent agencies.

Drew McClellan:

For sure.

Sharon Toerek:

It’s just the way you staff up and down when you have a special opportunity. You don’t want to add headcount for. There’s millions of reasons for it. How are you engaging those people? What’s your process? What does your contract look like? Why do you need one? We could do a webinar on that too at some point later, but that’s another area of constant inquiry from agencies. I would regard those two buckets as probably the top two business affairs type things that agencies need to think about.

Drew McClellan:

I, on my end, I hear horror stories every single day from agency owners that either don’t have an MSA, or got screwed by the client’s MSA, or didn’t have a deal, a contract with a freelancer or a contractor, and ended up getting work that wasn’t really original from the freelancer. I mean I just hear horrible, horrible stories from people who are not well-prepared in these particular buckets.

Sharon Toerek:

Right. Yeah. I mean so I’m glad you mentioned that because really part of doing your legal self-audit means really taking a hard look at your insurance situation, and this is probably something that’s not going to be popular for a lot of listeners to hear, but just about all of you are grossly underinsured when it comes to general liability and particularly errors in omissions coverage. Increasingly, many of you are expected to have cyber coverage as well and most of you don’t in my experience. Really, at least understand the goal you need to shoot for, even if you can’t raise your policy limits up immediately which probably costs less than you think it does by the way…

Drew McClellan:

Yeah. Or by the way, some of you don’t even have it to begin with.

Sharon Toerek:

I know.

Drew McClellan:

Right?

Sharon Toerek:

I know. Yeah, the lack of E and O coverage out there is a little frightening. I think agencies can be forgiven for the fact of not having cyber yet, because it’s that’s really a much more recent occurrence that the increase in data privacy regulations has put that burden on agencies, or at least clients would like to put it on you. Audit your insurance as part of this, just to make sure that your coverage matches your revenues. It matches the risk of the size of the projects you tend to take on with clients, et cetera.

Drew McClellan:

Yeah, and for listeners in the US, I can’t help those of you that are outside of the US, but for listeners in the US, if you don’t have an agency-centric insurance partner, send me an email and I will introduce you to a firm that works almost exclusively with ad agencies of all sizes and has been very helpful to many of the AMI agencies. I’m happy to make that introduction if that would be useful to you.

Sharon Toerek:

That’s the benefit of being in a network like AMI is the community that you build that makes everything easier, right?

Drew McClellan:

Right.

Sharon Toerek:

Yeah. I think so after you look at those top of mind business affairs type issues that every agency can relate to because they deal with them on an ongoing basis to taking a turn, we look at intellectual property issues, and some of those are also contract issues by the way, but even putting that to the side, it’s what habits and practices do you have in place at the agency of vetting brands before you pitch them to your clients? If you’re an agency that does a lot of branding, what kind of standards and procedures do you have at the agency to make sure that the interns or the juniors are not lifting imagery, photography, stock fonts, whatever it might be and plugging it into client deliverables without getting proper licensure.

Sharon Toerek:

We’ve had hundreds of cases of dealing with demands from Stockhouses like YETI, Shutter where.

Drew McClellan:

Yeah, I just got an email from an agency owner yesterday saying, “Okay, here’s what they sent me. What am I supposed to do?”

Sharon Toerek:

Yeah.

Drew McClellan:

Yeah, it’s crazy, and I said, “You should call Sharon Toerek,” is what I said.

Sharon Toerek:

Awesome. We’re happy to help and honestly, my free legal tip and this is educational only I’m not giving any of you specific advice. I will say it is my experience that unless the licensing house contacting you is asking for a ton of money, just negotiate the license down as low as you can get it, make sure it’s the right license you’re purchasing and get it behind you, but yeah, we’ve worked on hundreds of these, and we’re always here to help you if you get a demand that is upsetting to you, or your client.

Drew McClellan:

Yeah, so that’s a great point. Somewhere in the audible mouse type that is in podcast, clearly none of this is meant to be legal counsel. This is just Sharon educating on general topics.

Sharon Toerek:

I am just experience sharing based upon-

Drew McClellan:

That’s right, right.

Sharon Toerek:

… our school of hard knocks here, and just giving you ideas about best practices, right? Not legal advice and if you happen to have to be my client, then this isn’t legal advice either, call me one-on-one and then we’ll talk.

Drew McClellan:

Right, right. Okay, so we have MSAs, we have the whole freelancer contractor thing, we have the whole issue around ownership and rights of usage not only of assets that you’re using and purchasing from like a Stockhouse, but also what you’re creating for your clients and how do you protect it for them.

Sharon Toerek:

Right.

Drew McClellan:

Right? That’s the third bucket.

Sharon Toerek:

Right, and I would say the next bucket is the regulatory issues that you deal with by the virtue of the fact that you provide marketing or marketing-related services. What I mean by that are really agency specific things like influencer marketing compliance. If you run influencer campaigns, there are specific rules you need to be aware of. Those need to be baked in your agreements with your clients. They need to be baked into strong agreements with the influencers. Influencer marketing is a huge area. We see a growing need for agencies to really look at their processes and procedures, make sure they’re up to speed. Data privacy compliance huge as well and-

Drew McClellan:

Right.

Sharon Toerek:

… and it’s so challenging because it’s so little understood yet.

Drew McClellan:

People keep adding to it.

Sharon Toerek:

Right. Not only that, but when you combine that with the fact that there’s really been very little enforcement to date yet and really a lack of uncertainty about when and where enforcement might show up, you have to get compliant and put your juxta whether or not you know what’s going to happen. It shows up not only in your own compliance knowledge, but in again your client contracts, who is going to assume that legal responsibility? Your client’s going to want the agency to assume it. You’re going to need to work that out in the agreement, and there’s various ways to do it. Data privacy compliance just…

Drew McClellan:

Do you think a lot of agents or do you observe that a lot of agencies aren’t really being as compliant as they could or should be because of the lack of punitive action so far?

Sharon Toerek:

I think that’s part of it. I think a big part of it and for everybody listening, you’re not going to like this. You maybe won’t like me for saying it, but there are a lot of agencies that do direct response work who’ve been around the block enough times and know enough about the rules to know that they’re dealing with lists that are not…

Drew McClellan:

Clean.

Sharon Toerek:

They’re not clean. They’re not as clean as they need to be, or they’re looking the other way about the origin of those lists, and they’re just assuming that the client is going to be liable if something happens. That’s not necessarily true. I think part of it is just the natural drag that occurs by having to stop and see okay, do we have opt-ins for these people? Do they opt-in properly? Do we have a procedure for responding to a consumer if they reach out to the client and want their information, or they want them to stop con… Have we given our clients any counsel about how to deal with that whatsoever? Some of it is just uncertainty about how enforcement’s going to roll out for sure.

Sharon Toerek:

Some of it is just put the fingers in the ears and hope that the odds are ever in your favor, and sometimes they are. Many times, they’re not. Again, it’s a function of how much risk you are comfortable assuming as an agency, and where you place the risk in your relationship with the client.

Drew McClellan:

Right and again, that gets back to the MSA or other things where you’re assigning responsibility for certain things, so that the client says, “Here’s my list, I want you to do something with it.” Really from an agency perspective, you have no way of vetting where that list came from, or how those names. You really shouldn’t or can’t take responsibility for that list because you didn’t make it.

Sharon Toerek:

A hundred percent, and that’s an example of something you should be thinking about based upon the kind of work you know you’re going to be providing for the client up front when you’re negotiating the contract, or even maybe you have a blanket MSA and it covers like a 3- to 5-year period and then different projects pop up. Maybe you couldn’t have predicted every single issue that could arise. Clean it up in your statement of work because if you’ve got a long-term MSA, then you’re probably in the habit of doing a new SOW every time you do a new project with that client. Clean it up there, clean up your reliability and responsibility for those kinds of things in the SOW.

Drew McClellan:

We need to take a break, but when we come back, what I want to ask you about is what is the value of any of those documents. Don’t answer now, we’re going to hold the audience at suspense, but what is the value of any of those documents if the client doesn’t sign them?

Sharon Toerek:

Mm-hmm (affirmative), okay.

Drew McClellan:

Okay? All right, so we’re going to take a quick break and then we’ll be right back with Sharon. When it comes to conducting a client satisfaction survey, your agency has three choices. The first one is a DADT, a don’t ask don’t tell policy and just roll the dice. Your second option is to do the study in-house, and the third option is to use a third party to conduct your client satisfaction survey. If you decide that you’re ready to invest in protecting your client relationships and improving your win and keep ratios, we believe there are some benefits of using AMI as your third party research partner. Number one, we know emphatically that your clients will tell us things that they just won’t tell you.

Drew McClellan:

The reality is they’re going to speak more freely if they’re not talking to you directly. They don’t want to hurt your feelings, and they don’t want to get into a big conversation about it. A third party is a safe place for them to share their real feedback. The second is that at AMI, we don’t have a bias about any particular client. We don’t know if you like them, don’t like them, if they’re a pain, if they’re your favorite. Because we understand the agency business, but we don’t come into those conversations with any preconceived notions, we can absolutely give you unbiased and unfiltered information based on what your clients tell us. You know what, we know agency clients.

Drew McClellan:

We can hear what they’re saying, and we know which threads to pull on as we’re talking to them to get more information for you and more insight. Your clients will be comfortable talking to us because we speak their language. If you’re interested in having AMI do your customer satisfaction survey, head over to agencymanagementinstitute.com and look under the how we help section of the website to learn more. All right, let’s get back to the show. All right, we are back with Sharon and we are talking about all things legal. I posed the question because here’s what happens. First of all, let’s be honest, a lot of times you don’t have the documents at all. You don’t have an MSA, you don’t do a scope of work.

Drew McClellan:

You basically are still working on spitting a handshake or an email exchange, or you prepare a scope of work, but the client’s in a big hurry to get it going, so you start the work before the client signs the document. Sharon, is that document enforceable at all if the client hasn’t signed it? Is there ever a question that you ask a lawyer that you just get a yes or a no? Does that exist?

Sharon Toerek:

No. Typically, I have to say it depends, but that’s not what I’m going to do.

Drew McClellan:

Okay.

Sharon Toerek:

I’m going to say no, however.

Drew McClellan:

There’s always a however, right? Okay, however.

Sharon Toerek:

No, what I can tell you though is that when a dispute arises that has to be adjudicated, decided upon and a fact finder like a court or a mediator or an arbitrator doesn’t have a contract to use to determine what the parties intended at the beginning, what they’re going to do next is look to the course of conduct between the parties. What they’d like to see next is something in writing. Are there any writings that occurred between the parties around the time you made your agreement or got started that express intent? If there aren’t, then it’s down to he said, he said, she said, she said about what happened and when. That’s not where you want to be.

Sharon Toerek:

I mean particularly because it’s highly likely you’re going to be waiting for your money in a circumstance like that, either because you got to hold your client accountable for not paying you, or they say you screwed up and so they’re not paying you. Either way, you don’t have any money from that client and you’re left having to try to enforce a right you say you have without a contract that helps support you. It’s particularly I will tell you that you’re pretty much out of luck on IP provisions in many situations if you don’t have those reflected in writing in the agreement. There are other things that the courts will be more likely to look at courts of conduct, like money owed or liability for complying with something legal, that kind of thing.

Drew McClellan:

Me sending a purchase authorization, or a scope of work to a client and them not signing it, I’m better off that at least I can document that I sent them this piece of paper through email or through the mail at some point in time, than if I didn’t have it at all?

Sharon Toerek:

Right. Well and if that’s going to be you think a practice of yours on a recurring basis, or at least it’s going to happen every now and again, put together what I call a short form set of legal terms and conditions, a page or two, add it to your estimate, your proposal and put language in there that says that unless the clients advise you in writing to the contrary, you starting work is evidence that they agree to the terms. Is that completely enforceable? No. Is it more enforceable than not putting that language in there? Yes. At least you have something to point to that says, “Well, we put the terms in writing. We asked them to tell us if the terms were unacceptable. They let us start work.

Sharon Toerek:

Maybe they’ve even paid us once or twice, so this is our contract.” That’s one stop gap you can… I always advise agencies to have two forms of contract. One, your master services agreement. Those are for those longer, bigger dollar deals, multiple year deals. Then a short form set of legal terms for those smaller projects, those lower dollar, lower budget situations where you can add the language to some other document you’re going to use like an estimate, a proposal.

Drew McClellan:

Right, right.

Sharon Toerek:

Yeah.

Drew McClellan:

Okay. Earlier before we took the break, you were talking about there are times when agencies can punt on their own. There are times when agencies can seek out a trusted, vetted resource and then there are times when you really have to talk to your attorney one-on-one and get specific advice. Help us understand that spectrum.

Sharon Toerek:

Yeah. I’m going to be really plain about the fact that I’m not in love with the do-it-yourself legal mills of the world, but I also understand the reason why they have generated a lot of revenue and are increasing in popularity because they do fill an access to justice need for lots of small business owners.

Drew McClellan:

You’re talking about those sites where I can just go and pay a hundred bucks, and I can fill in a bunch of blanks and all of a sudden, I have-

Sharon Toerek:

Yeah, the ones that…

Drew McClellan:

… a will?

Sharon Toerek:

The ones that rhyme like with regal room, those kinds of sites.

Drew McClellan:

Right, right, right. Am I understanding it that you can’t say it, but I could say rocket lawyer and you could just nod. Is that what you’re saying?

Sharon Toerek:

I mean yeah, and they fulfill a need and they are a good match in certain situations. If you are a small business owner of any stripe, whether it’s an agency or some other firm, and you need to get your entity chartered, you need an operating agreement for a one owner LLC, you need a simple rental agreement… I mean maybe you need a simple rental agreement. Those types of very businessy transactions that have nothing to do with the fact that you run a marketing services agency.

Drew McClellan:

I’ve used it before when I’ve lent money into my agency. I used it to create a loan document because it was a loan to myself, just through the entity, right?

Sharon Toerek:

Yeah.

Drew McClellan:

Yeah.

Sharon Toerek:

Yeah. I mean I think that if you are scrupulous about making sure that they’re filled out correctly, the problem I have with services like that is there really is nobody to ask or guide, and that’s their business model. They’re not there to do that for you. That’s my only caveat and why I don’t love them because there isn’t really anybody to ask and…

Drew McClellan:

Help you from doing it wrong.

Sharon Toerek:

Right and to be fair, if you’re going to contact your business attorney to look over a document you drafted yourself, that’s not a place we ever want to be in as a law firm because we didn’t have control of drafting in the first place, and it’s ultimately not really less expensive for you. Those are situations where the self-help might be workable from a more general retailer type legal forms provider. Your mileage may vary, proceed at your own risk. I would say there are also a category of needs that an agency would have legally that recur on a continuous basis, where having a vetted set of resources created by somebody who is fluent in your industry and understands the nature of the kinds of work that you do and the business transactions you engage in is also a helpful resource.

Sharon Toerek:

It’s taken me a long time of working with agencies and working in a specific vertical in general to get to the point where I felt comfortable saying that as a firm, we’re going down that path of creating a more productized access to the kind of legal help that an agency would need on a day-to-day basis with our subscription offering that we’re going to be starting up soon, but then there are those circumstances where you know what, you need customized. You need to either speak to a lawyer who understands all the specific facts of a situation you’re dealing with, or your documents need custom review or custom creation.

Sharon Toerek:

That’s really where you need to work with an advisor who understands and can truly tailor advice based not only on your needs, but on what they understand the realities to be in your industry. I see it as a spectrum as well.

Drew McClellan:

Really, what you’re saying is in that case, what you want to do is you want to know the source, and you want to know that you can trust that source to provide you with good DIY, but maybe with a little support through some things that you can get through yourself.

Sharon Toerek:

Right, one and yes, exactly. I came to this point by understanding that if I was faced with an agency owner who was either going to do nothing, but who might take advantage of a resource that they could engage in self-help with that was created with their industry and business in mind, but that’s the way we could help a lot more agencies than the ones who can afford one-on-one legal services. That was the driving force behind us deciding to go down this path was we want to help more agencies. We want to not only provide you with a basic set of tools, but also the learnings that you need to expose your team members to, to understand the legal issues that they face as a result of being agency professionals.

Sharon Toerek:

We’re wrapping around it, and this is the context that you don’t necessarily get if you’re going to one of the more retail oriented products because again, that’s not why they’re there. They’re not set up to do that as the education the training and the industry-specific learning base that we’re going to wrap around it, so that they work together. Then when you add in a little bit of one-to-many support, a human-based support, it gives you a system that is going to help you meet your needs on a day-to-day basis without always having to feel like you’ve got to engage one-on-one with a lawyer.

Drew McClellan:

When do I know I need to actually let either of those solutions are not good options and I really do need to talk to an attorney?

Sharon Toerek:

Well, I’d say if you are facing a decision related to a business transaction with a client that involves big dollars for you, it is a large deal you’re entering into compared to the typical deal value that you engage in as an agency. That’s when you want to deal in one-on-one versus perhaps template-based help. If you are navigating into an area of legal concern that is high-risk or new to the agency, then maybe your first stop is really one-on-one help. Once you’ve got some experience under your belt, you can engage in some self-help after that.

Drew McClellan:

Isn’t a lot of this if I had gone to the effort to put together the right MSA or the right documents on the front end, then odds are I don’t have to do a lot of this, right?

Sharon Toerek:

Yeah. I mean the truth is… yeah, thank you for pointing it out. Honestly, you can take a ton of friction out of this for yourself as an agency by committing some resources up front to getting your legal processes, your legal tools established as an agency, and then centralizing the process of who creates these things, who reviews these things, who makes these decisions in your agency. A lot of the time, the issues that we see or the reason why something’s a fire drill, or the reason why agencies spend more money or time than they have to is they could have had a solution in place that with a few minor tweaks would have helped them meet their needs…

Drew McClellan:

Avoid whatever trouble they’re in, right?

Sharon Toerek:

Exactly.

Drew McClellan:

Yeah.

Sharon Toerek:

We avoid trouble, get the deal done faster, whatever the case may be and because that process or system isn’t in place, everything’s a new day, everything’s a new deal, everything’s a new problem, everything’s a new issue. I’ve even done presentations about… and I think Drew, I’ve even done one or two of these for your community, the top 10 ways to save money on legal fees as an agency. It sounds exactly like the top 10 ways to spend money on legal fees as an agency, and that’s intentional the reason is if you do this once, you don’t need to do it every single time.

Drew McClellan:

Right, right. Yeah. If you spend the $10 once, you don’t have a hundred dollar problem down the road.

Sharon Toerek:

Right.

Drew McClellan:

Yeah.

Sharon Toerek:

Yeah, and I firmly believe that it is really a core value of the way that we deliver service to agencies. We would rather have you spent a few thousand bucks getting things set up properly. We’d rather have you spend money getting a one-time audit done and create a plan for how you’re going to get your systems and processes up to date than to feel insecure, or you’re worried about the next legal fee bill every time something arises.

Drew McClellan:

Yeah. Let’s wrap this all up with this idea of an audit. Is an audit something I as an agency owner can do myself? Do I have to hire someone to help me do that? What’s the process of doing a proper legal audit, so I can figure out if I really do need to invest some more money and time in services, or if I’m in good shape?

Sharon Toerek:

Right. Well, I’d say the starting point is get the legal audit checklist that’s free at our site and at our legal toolkit site, and we’ll drop the information in the show notes about that. That’s a place where you can expose yourself to the things, the issues that you may not have considered you need to be ready for as an agency. At the other end of the spectrum, it is a full done for you basically legal analysis of the things you already have in place, the things you’re already using that’s really for an agency that’s already probably spent some time thinking about what its issues are, but it’s been a long time since they’ve looked at their tools, or they don’t have a complete set of tools, and they really just need it done for them.

Sharon Toerek:

That is a full-blown audit that we offer through the firm. The middle point is something we’re creating for agencies which is a done with you legal audit strategy session, where we will send you some information in advance, a questionnaire for you to look in the corners and in the dusty shelves of your agency. See what you have, what you don’t have, set a time to talk with us about it and together, we’ll talk for about an hour and make the plan for what you need and how to tackle it. Lots of different levels, but it all starts with I think having a fundamental understanding of what do I not know about what I need to know. Again, it’s back to I don’t know what I need to know. What do I need to know? At least that’s a good starting point.

Drew McClellan:

Here’s what I heard you say and first of all before I preface that, for all of you that are listening, if you have not bumped into a legal issue in your agency yet, honestly it’s not if, it’s a when, that as your agency gets bigger, as your clients get bigger, you’re going to be confronted with an NDA from a client or a contract from a client or something. That if you don’t have your ducks in a row, I cannot tell you how many phone calls and emails and texts with a lot of emojis I get from agency owners because their back is against a legal wall because they weren’t as prepared as they wanted to be. Sharon to help us get more prepared, here’s what I heard you say. Number one, you have a self-serve audit checklist that we’re going to include a link to in the show notes.

Sharon Toerek:

Right.

Drew McClellan:

You have a done with you model where people can engage with you for about an hour, but there’s some pre-work that they would have to do to send to you to make that hour as effective as possible, and you would help them at least construct a plan of what they need to do next and how they might get that done, or they can hire a you or a firm like you, preferably a firm that really understands agencies and is not a generalist to do crawl through your underwear drawer audit, figure it all out, and then advise you on what we the firm are going to do for you, right? I know you don’t really crawl through people’s underwear.

Sharon Toerek:

We’ll go in the file cabinets. We’re not going anywhere near your underwear drawer.

Drew McClellan:

Fair enough.

Sharon Toerek:

Just to be clear.

Drew McClellan:

Okay.

Sharon Toerek:

Yeah, perfectly said.

Drew McClellan:

Okay.

Sharon Toerek:

That’s exactly it. Those are three great access points, so that at whatever level you’re ready to consume learning what you need to know to get more ready, or to get the reassurance that, “Hey, you’re in pretty good shape.”

Drew McClellan:

You are ready, right?

Sharon Toerek:

Yeah, absolutely.

Drew McClellan:

Yeah. I’m curious here’s my final question. When an agency engages you to do an audit, how often do they have all the T’s crossed and the I’s dotted?

Sharon Toerek:

They never have them all crossed and dotted, but I mean we’ve found situations where what most likely is to occur is that the things that they’ve already got in place are in pretty good shape, don’t need much modifying, but there’s another set of tools that they haven’t thought about that they could add to the mix to make themselves more secure, more proactive and faster to the draw when they need these things. That’s a more likely scenario than everything’s perfect and you don’t need anything, but I mean we’re about making the recommendations, finding the holes if there are any and recommending to you how we would go about closing the gap.

Sharon Toerek:

Then you can decide, it’s like doing a discovery engagement as an agency, where you would work with the client, assess the problem, assess the gap between where they are and where they want to be as a business, give them your recommendations about what to pursue to get there, and then they decide, right? They either executed with you, or they execute it with some someone else and are done…

Drew McClellan:

Or they execute part of it this year and next year, they do more.

Sharon Toerek:

Exactly.

Drew McClellan:

Sure, yeah.

Sharon Toerek:

Yeah. Our done for you process is pretty much like agency discovery, paid agency discovery.

Drew McClellan:

Yeah, makes sense. This has been great. I knew that you would get us thinking about all of these things that we need to be thinking about. You and I were saying before we hit the record button that legal stuff is never as sexy at conferences or people are not like biz dev, or all this stuff that agency owners really want to dig their teeth into, but holy buckets, if you want to protect your agency and you want to make sure you’re making the kind of money you should, that you’re not taken advantage of in contracts, and that you’re getting to keep the money that you make, there are very few people who should be more important to you than your firm’s attorney, right?

Sharon Toerek:

Yeah. Well, I just like agencies to not lose the spoils of all the great work they do for their clients, and I’m so passionate, I’m such a fan girl of the agency world. I mean I’m just in awe of the creativity I get to be around. I think what agencies do matters to the economy. I think what agencies do matters to our culture and lots of different ways. I’m lucky to get to be around it, and I don’t want you leaving risk or money on the table unintentionally. Really, that’s my goal is to close that gap between intent and actualization. We just happen to use the law as a way to help you with that.

Drew McClellan:

Yeah, awesome. If folks want to get in touch with you want, I know you put out a lot of great content if they want to subscribe to that, what’s the best way for them to find you?

Sharon Toerek:

Yeah, we would love you take a listen at our podcast which is the Innovative Agency. Find it wherever you find podcasts. Connect with me on LinkedIn it’s Sharon Toerek, T-O-E-R-E-K and at the firm, it’s legalandcreative.com, and feel free to email me directly if you’ve got a question as a result of something you’ve heard here. It’s [email protected].

Drew McClellan:

Awesome. As always, thank you so much. You’re such a great resource, and I know that I lean on you heavily to make sure that my agencies are safe and protected, and I am grateful for all the things that you do for agency folks, so thank you.

Sharon Toerek:

Well, I’m so grateful for you in the AMI community and honestly, I can always tell when someone comes to me as a result of having connected via the AMI community, you can just always tell what an impact it’s had on them and their business. Thank you always for giving me the opportunity to share some information and for all you do for agencies, really appreciate you.

Drew McClellan:

My pleasure and thanks for being here. All right guys, this was again you know my goal with these podcasts is I don’t want you just passively listening. I want you to go, “Oh, I wish I was not on the treadmill because I got to write that down, or I got to get off the sixth hole and go write that down or leave myself a text.” This is an actionable podcast episode. This is if you do nothing else, I want you to go to the link in the show notes, download Sharon’s audit tool and at least self-audit, so you know where your agency is at, where you’re exposed to risk, where you’ve got it buttoned up, and then decide are you okay with that.

Drew McClellan:

If you’re okay with that, then great, but if you’re not okay with that, then there are other opportunities and other resources for you, whether it’s a DIY model like Sharon was talking about. They’re going to have a done with you model or done for you. There are ways for you to get those things taken care of, but if nothing else, I want you to know where you’re at and be comfortable with where you’re at. Please go download that audit tool and at the very least, if that’s all you take away from this episode, then I feel like our time here has been well spent. Please go do that. Before I let you go, a couple things. Number one, you know I’m going to be back next week. I’m going to have another great guest, so don’t miss it.

Drew McClellan:

I am always grateful that you carve out the time to hang out with me and my guests for an hour every week. Thank you so much. I know how busy you are and that you make time for this is very meaningful to me, so thank you. Number two, I want to thank our friends at White Label IQ, our presenting sponsor. If you want to know more about them and their white label services, as you know, they white label dev design and PPC for many agencies, head over to whitelabeliq.com/AMI and check them out and the special deal they have there for you. In the meantime, I’m around, you can find me at [email protected], and I’ll see you next week. Thanks for listening.

Drew McClellan:

Thanks for spending some time with us. Visit our website to learn about our workshops, owner peer groups, and download our salary and benefit survey. Be sure you also sign up for our free podcast giveaways at agencymanagementinstitute.com/podcastgiveaway.