Avoiding Legal Headaches When You Change Web Designers

Avoiding Legal Headaches When You Change Web Designers

This article is written by Emily Brackett, CEO of Visible Logic, an award-winning Portland, Maine website development and branding firm, and Adam Nyhan, a software attorney at Portland, Maine law firm Opticliff Law, LLC.

Many businesses hire professional website development firms to build their websites. And as a business owner, at some point you may even need to transition your website from one developer to another. Not necessarily because you have grown unhappy with your first firm — you may simply have negotiated better rates with a second firm, or found one that has particular expertise you need for the second iteration of your site.

Whatever the reason for the transition, it can raise touchy issues: does the client have the right to take all of the first developer’s work over to the second firm or just some? Must the first firm cooperate with the handoff? If the handoff requires the first firm to spend time (which it usually does), should the client compensate the first firm for that work?

We recommend answering these questions pre-emptively — that is, by writing them into the original agreement between the developer and its client — rather than discussing them only when the client moves to a new firm. Talking about these issues at that point can leave the client with the (mistaken) feeling that the developer is trying to charge an improper “termination fee” to discourage it from leaving. In reality, any time a developer is asked to do work outside the scope of the original project, including handoff-related work, it’s fair to request compensation. But the time to have that discussion is in the original contract.

With that background, we offer our recommendations as to how website developers and their clients should handle these questions. Emily speaks to these issues as a website developer, owner of a Portland, Maine branding and website development firm. Adam is a Maine attorney who advises both website development firms and their clients. From those viewpoints, we recommend that the development include these provisions:

First, the client may transition to a new firm at any time, so long as it pays the first firm all of the fees it has earned up to that point. While this may seem obvious — of course a client can choose its developer! — it’s best to say it clearly. You can agree that the client can transition at any time, or at any time with 30 or 60 days’ notice — but whatever it is, write it into the contract. The developer will want to ensure that the client first pay all earned fees as well as any expenses that the developer may have fronted for software licenses or to pay subcontractors.

Second, the first firm may charge a reasonable fee for its assistance in the handoff. The contract does not need to predict exactly what those fees will be. Indeed, the developer probably cannot know at the outset what handoff fees may look like far in the future, because that depends on many decisions the client will make over the course of the project. We favor including a contract section addressing work that is outside the scope of the client’s original vision of the project. There we insert language letting the client know that handoff work could entail fees, or perhaps a fee only if it takes more than two or three hours of complimentary transition work.

Whatever your policy may be as a developer, you’re better off saying it in the contract up front. And if you’re the company hiring a website developer, and the contract says nothing on this point, ask the developer to add a line stating the policy.

Third, The contract should clearly identify three categories of intellectual property (“I.P.”) that will be relevant in the event of a handoff. Category A is the I.P. that the client will own. This typically includes all graphic design elements, all written copy, any object and source code the developer may have written specifically for the client’s project, and the resulting website’s interface and all elements visible to the viewer. All of these are subject to US copyright protection, and unless a written agreement transfers them to the client, by default they remain the property of the website developer. The client should take ownership of them all, regardless of whether it ever plans to transition to another firm. And if it does transition, its ownership of those materials will allow it to hand them all off to the new firm. This is the part of the contract that developers often call a “work for hire,” or more accurately, an “I.P. transfer.”

Category B is the I.P. to which the client will receive a license, while the developer retains ownership. Contracts often call this I.P. “Developer Tools” or “Background Technology,” and it generally includes proprietary in-house tools that firms use for multiple clients (frameworks, scripts and other materials that are usually not visible in the website’s front end but help power the site). The developers cannot give ownership of these tools to their clients; otherwise they would need to reinvent wheels for each new client, driving up the clients’ costs. And there is no reason why a client should need to own them. It suffices for clients to merely have a license to use them while the client is working with the first firm. But this is I.P. that clients cannot take with them to a new firm, so to avoid arguments in the event of a future handoff, it’s important the agreement make clear what this category includes. In short, the contract should clarify what the client can and cannot take with her when she moves to a different firm.

Category C is third-party software and other tools that the developer often uses to create a website. This can include plugins, fonts and licensed photos or video content. The developer’s contract should explain that third-party tools will be used and clarify who will pay for them. And the developer should make clear whether or not the client can continue using those tools after a handoff to a new firm — often a question that the third-party tool’s own terms of use answer. We generally recommend assigning these tools to a particular domain name, which allows them to stay with the domain regardless of which firm is the developer.

Detailed contracts make happy business relationships. With the guidelines above, we think both website developers and their clients can avoid arguments about handoffs and focus on what they both really want to do: build a great website.

Adam Nyhan

Adam Nyhan represents clients in Maine, Silicon Valley and globally in software, privacy, trademark and business law matters. He is also the co-founder of a Software-as-a-Service startup and a former in-house attorney at a software firm in New York City.