As a freelancer, you enjoy some of the gig economy’s most enticing benefits. You may get to choose your own projects, set flexible hours, and determine your own path to success. It’s as simple as delivering excellent work on deadline, and making the clients happy, right?
For most freelancers the road is paved with creative inspiration and remote freedom, but for some unsuspecting solopreneurs, there‘s legal trouble lurking. It‘s not uncommon for clients and even third parties to sue freelancers over their work.
A small business insurance policy will provide protection from these types of legal hassles, but it’s still stressful and often can be avoided altogether.
1. Violating Platform Terms of Service
Lots of independent contractors and solopreneurs find and deliver work through freelancing platforms that help match them with clients. Typically, these freelancing sites spend money to promote themselves and to provide tools for collaboration and productivity. The sites act as middlemen take a cut from each project or order their efforts resulted in.
Here‘s the kicker:
The terms of service for most of these freelancing gig sites rarely allow their clients and talent to connect outside of the platform.
If you get caught violating these terms, you may be lucky enough to get a warning. Even being barred from the platform would be lucky compared to the more serious alternative punishment.
In the worst cases, the platform could sue the offending freelancer for breaching the terms of service and trying to profit from that breach.
How to avoid getting sued for violating the terms of service:
To avoid this kind of legal issue in your freelance career, it’s best to familiarize yourself with the platform’s terms of service and resist the temptation to violate them, even when prompted by a client.
Freelance platforms are a great way to get started, and the fees they charge help them provide that service for other freelancers who want to work independently. If you want to keep the entirety of your fees, do the work to create your own website, network among other independent freelance professionals, and cut out the middleman’s terms of service from the start.
2. Clients Wanting Refunds
Sadly, some clients don’t pay their invoices. Whether they weren't happy with the final product, got charged more than they thought, or just aren’t good clients to work with, refusal to pay can cause serious conflict.
Sometimes they may have even paid a deposit or advance and demand you return it.
For example, one freelancer software developer had delivered 50 percent of a project and as agreed in the original contract, invoiced the client at that time. The client hesitated but then sent that partial payment, which the programmer used to pay bills. After that, the client appeared increasingly unhappy as the project progressed. The client’s attitude concerned the freelance developer, so he offered to let the client off the hook for the rest of the project.
At first, the client agreed to this solution. Then, without further communication, he sent a court summons for a claim to recoup all previous payments, including the non-refundable $500 deposit.
How to avoid refund demands for freelance work:
This is hard to completely rule out; some clients are never happy. So, if this happens to you, make sure you have saved all communications and deliveries between you and the client. Email any communications and avoid phone conversations that could turn into a he-said-she-said debate.
Also, spend a few dollars on a legal professional who can make sure you‘ve got an iron clad contract that documents expected payments for deposits, advances, and timelines for each stage of completion. You might also consider adding an escape clause to your contract so it‘s very clear what path is to be taken if either party wants out of the contract.
3. Defamation Lawsuits
Sometimes the work you do for a client ends up offending a third party, or the customer of your client. You might assume the client would be the target of any kind of defamation suit in that case, but it‘s not always that cut and dry.
Freelancers are sometimes named in defamation suits along with their clients. In other cases, clients have even referred legal action to the freelancer as a way to avoid trouble for themselves.
For example, a freelancer wrote a review of popular sweeteners. The purpose of the piece was to provide information that would attract visitors to a website. The writer honestly preferred certain sweeteners over others, and he made that clear in his review.
The manufacturer of a brand the writer did not prefer threatened legal action for defamation.
Avoiding defamation suits as a freelancer:
While you‘ve got your legal aficionado working up your contract, they might want to include an indemnity clause in the mix. Getting a good small business insurance policy to cover you is a must-have, but contract fine print can often be enough to deter legal action from the get go.
4. Getting Sued Over Security Breaches
Hackers pose one of the biggest threats to all kinds of businesses, including freelancing businesses. Even companies with large security budgets have suffered breaches, and it’s a particularly growing threat for smaller companies with fewer dollars in the budget for cyber security measures.
Despite the best efforts of trained and experienced professionals, cyber criminals still manage to find flaws in code they can exploit. You’d be surprised at the number of well-known business names who have faced a serious breach. If you’re a WordPress developer, for example, a hacker might exploit a flaw in the base code, but the client might try to hold you responsible.
Measures to avoid this:
No matter how careful you are about coding your project, you can’t control every aspect of how it’s used after delivery. You need a contract with an indemnity clause that puts the security burden back on the client. Some freelancers may want to consider cyber insurance for their business too.
5. Lawsuits Over Errors
Nobody‘s perfect, and even the most consummate professional freelancer might make an error from time to time. Whether it‘s accidentally introducing a bug into software or inadvertently entering misinformation into a spreadsheet, the repercussions of that mistake can leave the offender open to legal trouble down the road. Even when proper care is taken to avoid mistakes, it‘s inevitable at some point.
Creating a liability cushion when mistakes are made
Again with the contract legalese—an indemnity clause may help; however, it’s also prudent to have a contract clause that specifies you took reasonable care to avoid any mistakes in the first place. Building trust and working with diligent clients will help mitigate this risk too. The best clients will due their own due diligence and always have their own systems for testing software, checking for bad data, vetting sources, and so on.
6. Intellectual Property Lawsuits
Sometimes freelancers are accused of violating someone else’s copyright or other property rights. For example, a writer may accidentally use too much text from another source without getting permission or giving credit, or use an image that didn’t belong to them in a graphic.
A more subtle way this plays out is in software applications. A software developer might borrow code they developed themselves when under contract with another client who claims ownership. If copyright belongs to the client upon delivery, that’s a problem.
Avoiding IP lawsuits:
Freelancers need to take care when they use all or part of previously published media, or any other intellectual property another party might claim as their own. Always use a duplicate content checker when creating original content writing, and follow creative commons best practices for attribution.
Even freelancers who take great care to prevent lawsuit can end up getting sued. Life is unpredictable like that, which is why most professionals carry small business insurance to reduce the likelihood that a rogue legal problem or accident will ruin them financially.
Even if you consider your project as part-time or temporary income, you probably can’t afford to hire lawyers, or worse, pay a legal judgment. Take the precautions to help reduce the risk in your freelance business, but make sure you have small business insurance coverage to back you up too.