Key Legal Considerations for Agencies Wake Forest Business School Charlotte Campus June 12, 2013

* The Big Issues When Negotiating an Agency of Record Agreement or Other Type of Services Contract * Indemnity * Extended Payment Terms * Ownership of IP * Termination * Warranty * Exclusivity T HE L AW O FFICE OF L AURENCE B ECKLER, P LLC 2

* Expertise and Creative Skill * Differing Priorities of Agency and Client * Shared Interest in Avoidance of Settling a Dispute Through the Courts T HE L AW O FFICE OF L AURENCE B ECKLER, P LLC 3

* If you are the Indemnifying Party: Limit the amount of indemnities. (Carve out patents as an unreasonable assumption of risk); Impose an express obligation to mitigate loss. (If an agency develops an app for a client, carve out an exception for any technology modified, altered or enhanced by the client); Agree to indemnify to the dollar limits of insurance contract or to revenue received by Agency; Specifically exclude claims of patent infringement, whether real or threatened, and Limit the time during which claims can be brought under the indemnity clause. (Within 3 years from the completion of services or deliverable should suffice.) * If you are the Indemnified Party: Avoid drafting the clause too broadly; and Include indemnity for breach of contract and negligence. 4 T HE L AW O FFICE OF L AURENCE B ECKLER, P LLC

* What can an Agency do or say? Offer discount schedule for payment within 30 days Price work product to cover carrying charge * Insert a sequential liability clause for the purchase of media “For all media purchased by Agency on Client's behalf, Client agrees that Agency will held solely liable for payments only to the extent proceeds have cleared from Client to Agency for advertising disseminated in accordance with this Agreement." 5 T HE L AW O FFICE OF L AURENCE B ECKLER, P LLC

* Creative Content Carve out content not selected by Client for use in campaign * Technology Pre-Existing Tools License the Pre-Existing Tools to Client 6 T HE L AW O FFICE OF L AURENCE B ECKLER, P LLC

* Convenience Lock Up an Initial Term Extend Notice Period – Blame staffing and resources * For Cause Insert Opportunity to Cure Defect in Performance or Deliverable * Effect of Termination Compensation During Termination Notice Period Third Party Contracts Transfer of property Acceleration of Outstanding Invoices Cancel media buys, short rate adjustments and Sequential Liability 7 T HE L AW O FFICE OF L AURENCE B ECKLER, P LLC

* Basic Warranties Organization and Standing Authority Third Party Claims Assignments & Encumbrances Obligations to Third Parties No Claims or Suits Defamation and Rights of Publicity Union Fees Expertise and Resources Performance Standards Legal Compliance Open Source * Special Warranties Software development Website Development and maintenance * Disclaimer of Warranties 8 T HE L AW O FFICE OF L AURENCE B ECKLER, P LLC

* During Assignment 1. Exclusivity must be limited. 2. Specifying products, services or categories, to define "exclusivity" requires case-by-case negotiations. 3. A good confidentiality clause can offer as much protection to a client as a comprehensive exclusivity provision. * Post Assignment 1. Effect on the Employee and Agency 2. Is exclusivity being compensated 3. Argument against post assignment exclusivity include existence of confidentiality agreement 4. Require compensation 9 T HE L AW O FFICE OF L AURENCE B ECKLER, P LLC

* Jurisdiction - Federal and State Courts * Venue - County or Federal District for Agency's primary place of business. * Applicable Law * Integration Clause * Public Announcements 10 T HE L AW O FFICE OF L AURENCE B ECKLER, P LLC

* Independent Contractor vs. Employee Reduced withholding taxes and unemployment taxes; Reduced Social Security and Medicare taxes; Reduced benefits; and Limited engagement. * Concerns Regarding Independent Contractors Airtight warranty and indemnity that work does not infringe rights of third party; Management and supervision; and Communication expenses. * Penalties for Misclassification If an Agency determines that a worker is an independent contractor absent a reasonable basis for making such a determination, the Agency may be held liable for employment taxes for that worker should the tax authorities conclude that the worker is, in fact, an employee. The Law Office of Laurence Beckler, Pllc 11

* Image courtesy inc.com 12 T HE L AW O FFICE OF L AURENCE B ECKLER, P LLC

13 The Law Office of Laurence Beckler, PLLC 575 Madison Avenue, Suite #1006 New York, NY Telephone (917) Facsimile (212)