Episode 286

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Every week I get an email or three from an agency owner asking me if I have a contract template or some other legal document that they can just copy and use. My response is always the same. For a few hundred or thousand dollars – do not put your entire agency at risk. It’s dangerous and short-sighted for an agency to use someone else’s agreement as a template. They need to be built for your agency, your clients and your particulars. But when is a DIY approach acceptable? What, exactly, is a “done with you” model? And how can you determine when an actual attorney is necessary? Understanding the when, what and how of various legal tools available is vital to protecting your agency. The good news is that you can spend a little now to avoid paying a lot down the road.

As AMI’s go-to attorney, Sharon Toerek* specializes in working with agencies just like yours and mine. She understands the constraints and challenges of running a small to mid-sized agency and helps clients dodge legal bullets every day.

In this episode of Build a Better Agency, Sharon and I talk at length about ways agencies need to best prepare their agencies legally. We discuss a wide range of topics, including the need for a legal readiness audit, agency insurance, IP rights, regulatory issues, influencer marketing, freelance contracts, data privacy compliance, the legality of unsigned agreements, if DIY legal agreements are safe, how exactly the “Done with you” model works, and when you need to get an attorney involved.

*Please note, Sharon is here as an educator speaking to her experience and nothing she shares should be interpreted as legal advice.

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.

Legal tools

What You Will Learn in This Episode:

  • The three different agency owner personas and how they approach legal decisions
  • What legal tools are available to you and why they matter.
  • How to audit your legal readiness as an agency
  • The need to review agency insurance
  • A look at IP rights and usage
  • Regulatory issues and data privacy compliance that need to be considered
  • Is there any value to agreements not signed by the clients
  • When DIY legal agreements are acceptable
  • How a “Done with you” model works
  • How to know when you need to get an attorney involved
“The biggest danger is in not knowing what you don’t know in making any decision for your business.” @SharonToerek Click To Tweet “Influencer marketing is a huge area where we see agencies needing to make sure they’re up to speed.” @SharonToerek Click To Tweet “Many agencies are grossly underinsured.” @SharonToerek Click To Tweet “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.” @SharonToerek Click To Tweet “You can take a ton of friction out of this as an agency by committing some resources upfront to getting your legal tools established.” @SharonToerek Click To Tweet “If you spend the $10 once, you don’t have a $100 problem down the road.” @SharonToerek Click To Tweet

Ways to contact Sharon Toerek:

Additional Resources:

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 encou