Contracts and legal matters can sound intimidating to interior designers, usually because we don't know where to start. So, let's start with the why. Contracts are not only imperative to the security of you and your business, but they are a valuable asset in defining your boundaries and securing better client relationships. A well-written contract and an understanding of how to use it is an empowering tool for interior designers. No one knows that better than Wendy Estela, an attorney specialising in advising on legal matters for interior designers. Wendy offered up her expertise in an "ask me anything session" with our community of interior design entrepreneurs—she might have answered your questions too...
Meet our expert: Wendy Estela
My name is Wendy Estella. I'm an attorney and I have been for 23 years, believe it or not. In the last 5 years, I've focused my attention on working with interior designers. My clients range from designers that are just starting out to celebrity designers—client management issues remain even when you're on the cover of a magazine. My services are a mix of legal negotiations and coaching because often it is not the contract that needs work, it is the approach. People are often surprised at how much free advice I give away. I do so because I believe that if every designer elevates the way they work and the standards they hold for themselves, then the industry as a whole will improve.
What are the basic legal terms and conditions I need to establish with all new clients?
Your initial agreement should be structured as a letter of agreement. In your letter, you want to talk about pricing and scope. These are the only things you need to focus on initially. Your pricing has to be clear, and if a client doesn't understand or agree to your pricing, you should not move forward. You don't want the client looking for a cheap deal. You want the client that wants you. Along with your letter of agreement, I suggest attaching a page of legal terms and conditions at the back where you should highlight your terms for:
Communication process
It is very important to outline how you talk and establish communication boundaries with your clients. For example, I have clients who say texting is only allowed during certain time periods (i.e. don't text on Sunday night!) It is also important to establish boundaries with who your client can contact. Often, clients take it upon themselves to reach out directly to your vendors—you do not want that. That is your relationship, so make sure your contract explicitly states that there is to be no contacting your people.
Revisions and fees
Be clear about how many revisions are included in your package price and how much additional revisions will cost on top of that. Be sure to explain to your clients that your creativity is what they're hiring, not your ability to purchase furniture. You are being hired to create a work of art and you don't tell an artist what to paint. If you do offer purchasing agent services, that's a different contract.
Proprietary information and photography
Proprietary information means confirming that the design is owned by you. Clients are not purchasing your design, you own that. Worst case scenario: you get fired halfway through a project. At least that client can't demand that they get access to the design files because they belong to you. It is important to mention photography too because, as you know, images of all your completed projects are needed for your portfolio. It is important to state upfront that you’ll be taking photos of the completed project for this reason.
Shifting risk
As a designer, you shouldn't be responsible for every contractor working on the project. You're responsible for certain things in your contract but your liability needs to be limited. If for whatever reason the homeowner is not happy with their final product, there should also be a limit on your liability. It is worth noting that if you do commercial work, you need to be very aware of the different protections you should have in place. Because if your contract isn't written correctly, a business can sue you for lost profits which can really add up.
Cash flow
The golden rule of contracts: make sure that in every instance you're ahead with the money. You cannot have a situation where you get to the end of the project and you are trying to get that last 10% from your client. You always have to be ahead. When there's money that could be fought over under the amount of approximately $25 000, it needs to be written into your contract. Because the cost of chasing it in court exceeds what you're going to receive. In attorney jargon: is the juice worth the squeeze?
Transparency
Pricing transparency is a hot topic in the industry right now. A lot of designers choose to disclose their vendor pricing and the markup that they charge or the discount that they provide. Firstly, clients don't like the word markup. Instead use, administrative fees, discounts off retail, or procurement fee—those are much better terms. Secondly, I think that is a mistake. I think that you should simply present an invoice and say this is the price. If a client is asking for your pricing and you're unsure of whether to give it to them, my response is, “Do Crate and Barrel give their pricing? Do they tell you what they pay from their supplier and the percentage markup they charge? No. Nobody does. You are a retailer. This is your price. Treat this as confidential information and make sure your contract reflects that.
Dispute resolution
I’m a big believer that the dispute resolution method should be written into your contract. If a disagreement with a client escalates, you shouldn't take it to court. Opt for arbitration—an alternative dispute resolution mechanism. If you go to court, it’s a public record. You don't want your name and your brand dragged through the mud like that. If you can resolve an issue privately, do so. Your contract should also talk about non-disparagement because, in the age of the internet, one bad review can kill your business. And that works both ways, no bad-mouthing clients either!
Does "decorating" my contracts make me look unprofessional?
Picture this: you’re having a wonderful discussion with your client about beautiful design concepts and then you pull out a monster document, riddled with whereas clauses and probably some Latin terms, and place it on the table with a thud. Way to ruin the mood! Your contract should be an extension of your brand. It should have the exact same look as your proposal or any other documents you issue—the same design, letterhead, font, colours etc.
And you can be creative with it, something as simple as turning it sideways so it reads like a book or putting images throughout—which helps with the visual appeal but also in explaining the process to your client. You can describe each step with text and then illustrate you doing these things with an image—the photos aren't telling the story, but they're supplementing it. The primary purpose of a contract is to protect your legal rights, but it is also there to educate your client. You want your client to read the contract properly before signing, so make it readable. The goal is to make your contract a communication tool.
Can I charge for the time I invest in securing projects pre-contract?
Every business has overheads and I view this as a business development cost that you just have to absorb. If it's a project you really want and it's a huge opportunity, don't let the money put you off—you’ll make it up along the way. In theory, you could build it into your design fee somewhere down the line by tracking the time you invest in each project and building those hours into your pricing. I have a client who charges for their initial meeting and proposal at an hourly rate before any contract is signed. If somebody really wants to work with you after you clearly state that you charge a consultation fee, that's great.
If I sell a design to a customer, can I still use it in my portfolio?
Question number one is, What does your contract say? If you create something as a graphic designer, you own the copyright as default. But if a client then signs a contract called a Works for Hire, then they are purchasing that copyright. You can still have a license to use it, but that needs to be written into your contract. E.g. I retain a license for marketing purposes and list where you plan to use it. How and when you share these images is more of a business decision, it is best to keep an open conversation with the customer to work out a deal that suits you both. There is always a way to spin it, everyone likes some free publicity after all.
I'm new to interior design, do I need a contract for my first few projects?
If you're new to the interior design industry, do not make the mistake of neglecting to invest in a lawyer, or at least a contract template. Yes, you might be able to make it through without one but it is about setting standards for yourself. From the outset, you need to be training yourself to have structure and it is easy to lose that discipline without the correct documents.
The other piece of advice I have for new interior designers is, whatever you do, do not give away your services for free. A lot of new designers get walked all over because they are not valuing themselves. Think about it this way: how do you treat the most expensive item in your closet versus your cheap, old Amazon leggings? Don't be the Amazon leggings, be the Chanel bag! Have respect for yourself and others will do the same. Do not proceed without a contract even for a family member or friends—it's not an awkward conversation, it is what it is: You're not going to work for free. True friends want to pay you for your services. To get around any confrontation, you can simply make up an excuse. Give them an abbreviated version of your contract and say something along the lines of, "My lawyer makes me follow this set process" or "My accountant makes me do it because we need it for bookkeeping." Do not compromise your standards just because you know these people. Make them sign the paperwork.
What happens when clients don't follow the rules I put in place with my contract?
First things first, your contract has to say very clearly that if you, the designer, feel that the relationship has become toxic or if you feel that the client is being abusive towards you or your staff then you have the right to terminate the agreement at your sole discretion. The contract is there to protect you. If it is written correctly, there can be no backlash. It is always a good idea to go through the contract with your client in person and point this particular clause out. Some clients might ask why you have that provision, to which you can reply with a real-life story of when a client has overstepped your boundaries and why you don’t want it to happen again. Reassure them that you’re not going to use it against them but that it is there to protect you in the unlikely case it is needed. It can be difficult but you’ve got to stand up for yourself and know your worth. Do not put up with bad clients. The abuse is not worth the money.
What are the telltale signs of a toxic client?
If you look back to the first time meeting someone that you now deem a toxic client, you can now clearly see the red flags. Perhaps they were revealing themselves all along but at the time you were too focused on securing the project to notice.The most important thing to ask yourself is, “Do I like this person? To know that, you need to spend a little time with them. Bring your client out for a cup of coffee and go over the contract with them. Find a way to connect with them personally, clients will appreciate getting to know you—after all, your design is in part a reflection of you—and you'll be able to assess your compatibility for working together.
During this meeting, it is important to ask the question, “Have you worked with a designer before?" If you get a client who tells you that they've worked with many designers and only had bad experiences, the likelihood is it is going to be a bad experience for you too. Let your client talk about any previous experiences have had working with designers and watch out for red flags. The number one rule: trust your gut. You're in an industry where you’re constantly dealing with relationships and people and so listening to your instincts is key.
What happens when an amicable resolution isn't working out?
Having your preference for an alternative dispute resolution clearly outlined in your contract will help here. But there are exceptions. Let's say you're struggling to collect payment from a well-known client—imagine the story: [insert client name here] stealing from a small business. Those are the kind of situations that you need to strategically think about with a lawyer in advance. You really don't want to air your dirty laundry on social media, especially as a business person. But unfortunately, clients often do. This is why having a non-disparaging clause in your contract is key. Don't seek revenge on these people. Move on. But also do not entertain toxic people. Get rid of 'em! You'll be far more respected in your industry and with other clients.
How do I avoid conceding in a negotiation just to secure the work?
Before entering into a negotiation, you have to identify what would make it a bad deal for you. If that comes to fruition, that is your walkaway point. If you don't identify this walkaway point, then it is very easy to keep giving and giving and giving. You do not want that situation. You want to be able to say that's a non-starter. So, figure out your top priorities and fix them in your mind, "There's no way I'm accepting this deal if..." And if they insist on that 'if' then you simply say, "As much as I'd love to work with you, I just don't think that we're a fit." That's okay. Don't be afraid to say no. The interior design industry is full of women and gay men—we're people pleasers, we're used to saying yes all the time. But remember, the day before your client signs is the day that you have the most power in your negotiation. The day the client signs, they're now the customer and the customer's always right. So you need to make sure that the contract is signed on terms that you are comfortable with.
The bottom line
A contract is not just about law. It's about how you want to run your business. It's about defining your preferences in commercial considerations, negotiations and relationships and moulding a future-proof reputation in the industry. Contracts are a powerful tool, use them wisely. Got more questions? Book a free consultation with Wendy now or find a growing library of legal advice on her Instagram.
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