Episode 244

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Most agency owners would put attorneys in the cost column. Until they get into legal trouble. Then, they quickly realize how much they could have ultimately saved if they’d been a little more proactive and worked with an attorney before they got into hot water. But with the right attorney who specializes in agencies and understands our world, you can navigate common legal obstacles while saving hundreds of thousands of dollars.

My guest is AMI’s go to attorney, Sharon Toerek. Sharon’s depth of expertise in our world makes her an invaluable resource for agencies who have any sort of legal issue that they’re either trying to proactively resolve or when they’re in a jam.

She speaks our language and has spent the last fifteen years carving out her niche. In this episode of Build a Better Agency, Sharon Toerek joins us again to share her expertise and walk us through the new research project that she and her law firm put together, looking at common legal snags that get agencies into trouble.

A big thank you to our podcast’s presenting sponsor, White Label IQ. They’re an amazing resource for agencies who want to outsource their design, dev or PPC work at wholesale prices. Check out their special offer (10 free hours!) for podcast listeners here.

Agency attorney

What You Will Learn in This Episode:

  • The most prevalent legal issues that agency owners are currently facing
  • How to approach client contract negotiations from a legal perspective
  • How to overcome the legal challenges of working with freelancers
  • How to protect your agency from copyright and trademark issues
  • How to move out of the anxious and afraid category by finding an agency attorney you trust
  • Why putting foundational processes in place can make a substantial difference in the way you handle legal issues in your agency
  • How the pandemic will change language in contracts
  • The most worrisome part of Sharon’s research findings

The Golden Nuggets:

“Understanding exactly what agency owners worry about is the best way for us to build content that serves them, create service lines they truly need, and to help them close gaps before they’re even noticeable.” @SharonToerek Click To Tweet “If you spend time where your clients spend time, you start to see patterns in the things that they talk about. Then you can connect the services you provide to the patterns in their businesses.” @SharonToerek Click To Tweet “If agency owners want to move out of the anxious and afraid category, it is easy to do once you form a relationship with an attorney that you trust.” @SharonToerek Click To Tweet “What we’ve always known from working with our agency client base is that the little hinges move such huge doors. There is a lot to gain from putting base processes in place to deal with legal issues in your agency.” @SharonToerek Click To Tweet “It is a lot easier to be confident if you have leverage. The contract is a tool that enables you to have that kind of leverage.” @SharonToerek Click To Tweet

Ways to contact 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 McLellan.

Drew McLellan:

Hey everybody, Drew McLellan here from Agency Management Institute. Welcome to another episode of Build a Better Agency. Super grateful that you are here with us. I know the world out there is a little crazy, and so hopefully we can offer you some respite and some things to think about outside of the chaos that everybody is sort of managing right now.

Couple things I want to put on your radar screen before I tell you about our guest and we dig into the conversation. The first one is probably a lot of you are already aware of this, but just in case you haven’t heard, we did have to move the Build a Better Agency summit. It was supposed to be in mid May, and as you might imagine with everything that’s happening in the US, that’s not possible right now. So we’ve moved it to November 11th and 12th with the AMI family day on the 10th of November. It’s going to be a great time to be in Chicago. It’ll be all decked out for the holidays. We are still at the Westin, which is right on Mag Mile, so lots of great holiday shopping opportunities for you if you want to stick around for a day or come in a little early.

So I think it’s going to be great. I know it was not our original plan, but now what it will be is not only is it going to be an opportunity to learn, and connect, and network, but it is also going to be a huge party. A party of celebration that we survived the virus and all of the things that it did to our agency and our clients, and that we are coming together to plan for an amazing 2021 and to be grateful for the fact that we survived all of this, that we get to actually come together as a group and be in the same room with each other. So it’s going to be a celebration and a party, and I sure hope you can join us.

I know this may not be the time for you to buy a ticket, but for some of you if it is a good time, obviously tickets are on sale and you can go to agencymanagementinstitute.com and right in the upper nav you’ll see BABA. Click on that and you’ll learn more about who’s speaking, and who’s sponsoring and all the great things, and you can also register for yourself and maybe some folks at your team. We have about 100 tickets left. So if now is not the time, don’t panic, we probably will still have room for you in a few months, but if you do have the funds available right now and you want to grab your seat, we would love for you to do that, okay?

Couple other quick things. Reminder that we have a Facebook group for podcast listeners. So all you have to do is go to Facebook, search Build a Better Agency Summit in the groups category and you will be taken to the group. We ask three simple questions. One of them is, are you an agency owner or leader? And you put in the URL of your agency. The second one is, what do you want to talk about, what do you want to learn about inside the group? And the third one is, will you be nice to everybody? If you don’t answer the three questions I cannot let you in. So please, be sure you answer the questions. You don’t have to write a paragraph, a single sentence for each question is plenty, but I would love to have you join us. I’m happy to answer your questions there and expound on any of the podcast interviews that you hear or my solocast, so don’t be shy. Head over to Facebook and come join us. We’ve just started it, so there’s not a lot of people in there yet. So you have plenty of access right now, and I hope that you will help us create a community in there that helps and supports each other, so head over there.

All right, let me tell you a little bit about our guest. So Sharon Toerek is an attorney who specializes in working with agencies of all kinds. She’s been doing this for I think 15 years or so, so quite a while. I will tell you that Sharon is no stranger. If you are a part of AMI you have probably heard Sharon speak before, she’s been on the podcast. Many of you are her clients, and I am one of her clients. Now, I’ll tell you that she has literally saved me, literally, hundreds of thousands of dollars in the last six months. Two different incidents that came up where she was able to help me.

So, in one, somebody else in the agency consulting space was about to launch an arm of their business called The Agency Institute, and I happened to catch wind of it and I reached out to Sharon, and she helped me craft a note to that person asking them to not do that because we own the federal trademark for Agency Management Institute and obviously that would be confusing to folks. This person was very gracious and very quickly agreed that they would find a different name for a new avenue, a new event that they were putting together, and so it all worked out great. But if I hadn’t had her, and more importantly, if she hadn’t helped me get the federal trademark many years ago, that could’ve played out very differently and we could’ve ended up in court and all kinds of yucky stuff.

Then the second way she came to the rescue and was my hero was with moving the summit. So as you might imagine, hotels are hurting right now and they don’t want to let people out of their contracts, or at the very least they want you to pay the cancellation penalty or the penalty to move your event, and that would’ve been a six figure expense on my part, which as you might imagine would’ve really devastated my business and my family. Sharon came to the rescue, and again, helped with the negotiation with the hotel and it all worked out great and they ended up being very accommodating once we all sat at the table. I made it clear that I was going to rely on Sharon’s expertise to help me get out of having to pay a ridiculous amount of money when all I wanted to do was move the event, and obviously it wasn’t because I just wanted to move it but it was because I had to move it.

So, Sharon is a good friend of mine. She’s obviously my own attorney, but what she is most of all, she’s an advocate for agencies. She has a passion for agency and agency owners. What I love about her is she doesn’t talk like a lawyer. She doesn’t prescribe like a lawyer, she’ll say, “Well, legally here’s what you should do. Now, I know what you want to do is over here on the other end of the spectrum, so let’s talk about where in the middle it makes sense for you to land and what risk you’re willing to take.” So she is very pragmatic with her advice and her counsel to agencies, and many, many agencies rely on her on a regular basis.

So, Sharon recently, and Sharon and her law firm, recently launched a research project, and what I asked her to do today is to share with us what she learned from that research project. So let’s not dilly or dally, let’s get right to it and welcome Sharon to the show. All right, Sharon, welcome back to the podcast. So glad to have you back.

Sharon Toerek:

It’s so good to be back with you. Thanks for having me.

Drew McLellan:

Of course. Hey, so what I want to talk about today a little bit is the research that you did. So you partnered with Audience Audit. So, as many of our listeners know, with our good friend Susan Baier, who is my partner, my research partner in the Agency Edge Series. So you partnered with Susan to do some research. What prompted that plan?

Sharon Toerek:

You know, I have to give the credit to Susan. Susan and I actually were introduced through you, Drew, as you know. We started talking about six months ago and she said, “You know, you ought to really talk to agency owners about the issues that they’re really facing and their businesses from a legal perspective, and the best way for you to do that is to go to market with a survey.” She said, “And we can work on it … we can design it together and it can give you all sorts of insights.” And her suggestion happened to come at a time when we were already starting to think about product development and ways in which we could help our community in other aspects of their business, and so the timing was just perfect between her suggestion and what we were thinking of doing in terms of reaching out to the agency owner community. So, that’s how it all kind of got started.

Drew McLellan:

Well, and I think it also dovetails nicely. I know you prescribed to the sales methodology that I am always touting and that Stephen Woessner and I wrote a book about, in terms of really having a subject matter expertise and selling from that subject matter expertise. Yours is around being an attorney that specializes in working with agencies and other creative service firms. So it makes sense that you would look at this research as not only insight for you, but I’m guessing it’s now also giving you a ton of little chunks of content that you can share out with your audience to make them smarter and better at what they do.

Sharon Toerek:

It absolutely is, and I have to say that this is part of a journey that I’ve been on as the owner of a law firm who wants to create new and different ways to help my client community, which is I’m lucky to say in a vertical that is fun to serve and has a lot of interesting legal issues to deal with. As a result of influencers like you and like Stephen Woessner, and teeing up this whole idea of having a content based strategy with a home base, if you will, sort of a cornerstone that you call it and cobblestones. Understanding what agency owners really think about, worry about, what they lose sleep from, where they need help from a legal perspective is the best way for us to develop our content to serve them, is the best way for us to figure out what sorts of services they’re more likely to need. It puts us in a better position to be counselors to them, so that we can help them close gaps before the gaps are noticeable in their businesses.

The rewards just go on and on, and we’re lucky to be able to do it a little bit more easily than maybe some of our peers because we do serve a narrower community in a more deep fashion rather than taking a broad approach to the kind of clients we work with.

Drew McLellan:

Yeah, without a doubt, I think the more narrow your scope, the easier it is to create content that’s really meaty, and relevant, and unique enough that people go, “Oh, I’ve never read that before, or I’ve not thought about it that way before.” It’s easier to do that when you have a narrow audience, which you do, absolutely.

Sharon Toerek:

Yeah, it is, and it’s also more enjoyable. You’re more inspired because you’re spending more time in the space first of all. Second of all, you’re talking to more people in that community and you start to see patterns.

Drew McLellan:

Right.

Sharon Toerek:

You start to see a number of them. For the purpose of the agency owners that might be listening to this, if you spend time where your clients are spending time, and you have a lot of clients in one group, whether it’s an industry or a community, you start to see patterns in the things that they talk about, and that makes your work more enjoyable too because you can connect the services you provide to the patterns you’re seeing in their businesses. So that makes the content flow a lot more easily as well.

Drew McLellan:

Absolutely. So, you guys went out into the field, you did the research, and I know one of the things that came out of the research were some of the top or most prevalent legal questions or worries that independent agencies were wrestling with. What are some of those?

Sharon Toerek:

Yeah. We talked to 224 agency leaders, most of them are owners of their agencies, and most of them own agencies that average between 10 and 25 employees, full-time employees. There were some larger than that, there were some smaller than that. Not many smaller, there were a number of larger ones, but top three legal issues that they have on a recurring basis and that they are always concerned about, client contract, negotiation, whether it’s developing the right master service agreement that they go to market with, whether it is negotiating off the client’s agreement. Working with freelancers was probably tied one and two versus master service agreement in terms of their priority level, how do they put together the right agreements to make sure that they’re safe and they’re protected in terms of working with freelance and get talent. Then third was copyright and trademark issues, making sure they understand how to help a client protect a trademark before a campaign, a branding campaign gets launched. Making sure that they understand how to properly use copy, images, graphics, making sure they own what they need to own before they go to market with a campaign. Those are the top three.

Then one we’re seeing increased concern about is of course privacy regulations, and that wasn’t a surprise to me because I know from talking with agency owners just anecdotally over the last 18 months that they’re getting more and more concerned about it. So, those are really the top most frequently mentioned issues. I was pleased to find out that that’s sort of equated with the experience we were already having at the firm. So it’s nice to get some scientific validation of something that you’re already feeling in your gut.

Drew McLellan:

Right. One of the ones I’m surprised, and I’m sure it showed up further down on the list, but I’m kind of surprised it wasn’t one of the top three given what’s going on in the marketplace right now is dealing with influencers, because I know that that’s a hot mess for a lot of agencies.

Sharon Toerek:

I know. I know, I was surprised too, Drew. I really thought that that would emerge up higher. My theory about that is that it’s a question of not knowing what you don’t know.

Drew McLellan:

Right. You haven’t been burned yet.

Sharon Toerek:

Yeah. It’s emerging. I did notice the audience audit team sort of segmented, and I think this was Susan’s captioning because she’s so great at this, segmented the respondents into basically three categories. The proactive and protected, the exposed and anxious, and then my personal favorite, the lawyer avoiders, lawyer avoiders.

Drew McLellan:

Yeah.

Sharon Toerek:

Amongst the exposed and anxious, influencer marketing did rate a little bit higher.

Drew McLellan:

Sure.

Sharon Toerek:

So it shows to me that they are a little bit more in tune with the fact that they need to know some stuff about what they don’t know. I think the lawyer avoiders just either it’s not on their radar or something they need to worry about, or they don’t work in that space as much as some of the other agency peers who answered the survey.

Drew McLellan:

Well, and the other thing, as I was listening to you list the top three, the good news of all of those is that the master service agreement is a once you have a good one, and by the way, that does not mean downloading one off the internet, once your attorney helps you craft one that is right for your agency, then yes, you have to modify it now and then, but it’s sort of a one and done big task. The whole idea of the trademarks and all of that, again, once you’ve gone through that process once or twice, then you sort of know what to expect and it’s not particularly onerous or scary.

Refresh my memory, what was the third one? Oh, freelancers. Again, once you have a great contract and you sort of know what the boundaries should be. So the good news for agencies I would hope in that is I’m sure, I suppose a lot of people think of, not you in particular, but people in your profession, sort of like a doctor, like I’d really rather not see or talk to them all that often because it’s going to hurt, it’s going to pinch. But as I said in my intro, you have literally in the last three months saved me hundreds of thousands of dollars because you were there to help me with some legal issues. So I guess I fall into the protected and confident category because-

Sharon Toerek:

Yeah.

Drew McLellan:

… I have a good attorney, which happens to be you, that I count on and who set me up to be successful. So I guess the good news about the worries are if people, if agency owners want to move out of the anxious and afraid category, or whatever you call them, it’s not that hard to do, right? It’s easy to move into the protected once you make the move and create a relationship with an attorney that you trust.

Sharon Toerek:

Yeah. Thank you for that, first of all, but I think what is most validating for me as a result of having gone to market with this research is that what we’ve always known in working with our agency client base is that the little hinges move such huge doors in terms of having a base layer of process and procedure in your agency when it comes to your legal issues. I’ve been teaching this for a long time to agencies, I do a fair amount of speaking, a fair amount of electronic training, and what I always say to these audiences is that having this foundational set of tools and processes in place now, it may feel like going to the dentist, but if it does, it really should only feel like a checkup initially. Putting this stuff in place now is going to save you so much time, and more to the point, so much investment in legal fees in the future that it’s definitely worth slowing down and taking the time to implement these processes.

What I was most validated about is the fact that the survey bore this out. The survey results bore out, in my mind, that this is the biggest opportunity area, you could call it a gap if you want to, but opportunity area for agencies is to just think about putting these processes and tools in place now so that they’re quicker and more nimble to deal with these common recurring evergreen situations later. The contracts are a typical example. Even if you’re going to, like I always say, sign the client’s version of a contract, the fact that you have your own version of one, it makes you smarter about negotiating, it makes the process faster, and it helps you understand whether there’s some danger level in the client’s documents that you need to know about. Yeah, one of the things that we wanted as a result of the outcome of the survey to be was to understand how to help agency owners better. So we’re taking these results and we’re going to translate them into an even better set of access points to the legal stuff that you need to set your processes up for success.

Drew McLellan:

It’s interesting, we’re recording this in the height of the COVID-19 crisis here in the US, and for much of the world right now, we’re all sort of getting through it together. Asia is a little ahead of us, but everybody else is sort of slogging through it right now. So, I’ve been spending, shoot, 12, 15 hours a day on the phone with agency owners helping them sort of navigate this. One of the points of difference that I’m noticing is the agencies that have great client contracts and the agencies that don’t have great client contracts.

As clients are trying to ratchet back or pause work, and agencies aren’t in a position and certainly don’t have the heart to say, “No, you have to honor the contract for the next 12 months.” But even the 60 day out or the 30 day out, or making the agency hold for work that has been done to date versus the agencies that either had no contract or just had a project authorization that had no legal language in it, and those agencies, the ones who were underprepared, not that anyone was prepared for a pandemic, but underprepared in terms of their contractual language, they’re taking it in the shorts right now because they have no basis to negotiate with their clients to be treated fairly.

Sharon Toerek:

Right.

Drew McLellan:

And because they don’t have a document to start with, and again, they’re all trying to be good people, they’re trying to be understanding, they understand their clients are in a jam, but they don’t even have a place to start a negotiation so that they also are being taken care of fairly and that they find middle ground that is reasonable for both of them.

Sharon Toerek:

Yeah. I mean, you like to create some leverage points to be magnanimous if that’s what you’re going to choose to do in an environment like this, which is the right thing to do.

Drew McLellan:

Of course.

Sharon Toerek:

I mean, I am definitely of the school of thought that generosity and grace and under the current environment, as we’re talking today, is not only the right thing to do, but it’s necessary in the business world right now, because what are we going to do? All clobber each other over the heads with our baseball bats. But having said that, having a contract in place that gives you more options and leverage is going to put you more in the driver’s seat about how to negotiate the workarounds, right? So it’s just another unexpected reason why spending time and resources to put this foundation in place of legal preparedness in all corners of your agency is so important.

Drew McLellan:

Yeah, yeah. What’s happening is when they don’t have, as you say, sort of the levers to pull, they end up going all the way to the extreme of giving it all away.

Sharon Toerek:

Yeah.

Drew McLellan:

As opposed to looking generous and like a great partner by softening some of the language in the contract so that it looks like they are making concessions, because they are, but they don’t have to give away the farm.

Sharon Toerek:

Yeah. Yeah, and I think that that’s a question of confidence of the agency owner. Boy, it’s a lot easier to be co