The iron lawyer of Redmadrobot Marina Buturlina told about the situation when the client is ready to order work, but after signing the contract everything is complicated and is constantly postponed. If you want to understand how to proceed in order not to miss anything, but you are not a lawyer, then these tips are for you.
You and Kirill have known each other for a whole year. He even follows you on Instagram and likes photos. “He will not let you down with the contract,” you have agreed that he will pass the payment for your company for the services rendered. So what if there is no contract? Cyril promised.
On the other side is Cyril, who writes you a letter stating that, unfortunately, his management has agreed on a budget that does not contain the name of your company, and you will have to wait with payment. And, by the way, we have not signed a contract, so recall the lawyers. End of communication.
Sound familiar? If not, then you have foreseen everything in advance ( read how, signed the papers ). And if it's relevant, then let's figure it out.
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By the way, many people work remotely, and it seems that this topic is more relevant than ever, since it is difficult to sign papers “live” in the current realities.
A deal with a client rarely begins immediately with the signing of a contract. The story begins long "before" - when we conduct negotiations and correspondence. Legislation and judicial practice keep up with the digitalization of everything and everyone, and this is not the first time that correspondence has been recognized as a legally significant action.
This means that all the terms of the transaction, terms, talks about payment and various "I swear by my mother" mentioned in the e-mail correspondence can long ago be recognized as agreements that have legal force even without signing the papers.
Work without a contract - and you want, and pricks
In any company, as a rule, there are two camps: those who sell and attract money to the company, and those who protect the company from wrong steps. The manager (project manager, sales manager, perhaps even the product owner himself, depends on the structure of the company) and lawyer are prominent representatives of these camps.
Sometimes the manager is faced with a situation when the client wants to start work as soon as possible and seems to be ready to pay without delay, but here's the bad luck - the approval of documents on his side will take a month or even two.
When we work according to the Time & Material formula (this is when you do not determine the total cost of work, but fix the rates of specialists and you are paid for the work based on the number of hours spent during the reporting period), the issue of payment becomes very acute, since the work is divided into monthly orders (or other sprints in duration) and until the client accepts and pays for the work on the current order, it is not profitable for us as executors to proceed to the next one. And every order needs to be coordinated.
A choice arises - to wait for approval and, possibly, miss the client, or start work without a contract. If you choose the second option, if everything goes according to a bad scenario, it will turn out that the work is done, you are ready to hand it over to the client, and he is no longer interested in them or has no opportunity to pay for them. As in the story with Kirill, where "the budget was not agreed."
At this time, the lawyer does not yet know about the situation, he will be connected later, when they will tell with big eyes that the weather is not bad outside, it would be time to take a walk to court.
To prevent this from happening, a manager and a lawyer should follow three simple rules.
Share information and achieve understanding
What the manager knows will not always be announced to the lawyer. It seems like "unnecessary". But we (lawyers) at Redmadrobot always ask to tell us:
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All this can be of great importance for the legal examination of the agreements and the future contract.
In turn, not everyone can understand the legal opinion of a lawyer without special knowledge. Ask your specialists to translate from legal into Russian, this will help both parties in the future.
We always try to communicate with each other in a universal language that is understandable to sales people, analysts, lawyers, and production teams. We also practice drawing among ourselves for clarity. Reflection of a project in the form of a diagram on a regular A4 sometimes removes questions faster than lengthy negotiations.
Therefore, you should not skimp on informing the other side at the start of the project and pronounce the company's position among themselves in understandable categories.
Remember that you are playing for "one team"
Everyone is trying to defend their interests in one way or another. And there are companies where there is transparency in internal processes, any issue can be discussed with the CEO or CFO, and at any time you can arrange a meeting with representatives of the departments that are working on the project.
If the structure of your company is more rigid, and the processes are formalized, then at least try to openly express your position in letters and offer solutions, because for others they do not always lie on the surface.
Engage in negotiations together
A lawyer will be able to suggest how to "decorate" letters to a client from a legal point of view (more on this below). In our opinion, the opinion that lawyers only agree on documents is already quite outdated.
Now, in IT companies, hiring a lawyer at the earliest stage of the negotiation process is a sign of the flexibility and professionalism of the team. Many controversial issues can be removed long before the signing of the documents. Therefore, do not forget to take a seat for your lawyer at the negotiating table.
When we figured out the priorities on our side, we move on to the first exercise.
We figure out which client we are dealing with
Below is a diagram to help you understand what processes within the client's company can be encountered.
The average IT company will most likely face all three types. What should be foreseen for each of them.
Startup
Small startup or single service company. There is a risk that the money may run out at some point. This, of course, is not necessary, but it is worth considering.
Therefore, despite the ease of communication, all agreements must be recorded. At least in the correspondence.
It will not be superfluous to check the counterparty: check in open sources ( nalog.ru , just google ) and special paid services ( spark , glavbukh.ru , etc.) financial condition, tax debts, participation in courts, chain of owners, etc.
Major clients
Kirill from our history is most likely a representative of such a company. His presence seems to help the manager achieve results, but it can weaken his vigilance, they say, everything will be fine, documents - then.
A contact in this company may suddenly change to a new one. Instead of Kirill, there will be Oksana, who is not aware of your previous agreements. Its KPI will be formed from other contractors, you may not be there. Here, again, you need to save all correspondence, so that when communicating with a new manager you do not "roll back" in negotiations, but continue from the stage where you left off.
Government customer
Anyone who has ever played a tender under 223-FZ or 44-FZ knows how inflexible this procedure is. This is the most risky option for starting work without a contract, because your client concludes contracts only for the budget allocated by the state.
And if you started work (because you asked me to start sooo much), and you haven't allocated the budget, then there won't be a tender and no one will sign a contract. The risk of not getting paid for work performed without a contract is great.
It is also worth considering the fact that the provisions of the Civil Code on the so-called "retro-clause", which we will talk about a little later ( letter of the Ministry of Finance dated 01.07.2019 No. 24- 03-07 / 48249, clause 2 of article 425 of the Civil Code of the Russian Federation).
Therefore, the circle of evidence that you started work before the conclusion of the contract is narrowing before our eyes.
We write letters
The management gave the go-ahead to start work without a contract, but the lawyer for some reason cheerfully discusses something with his colleagues, and the manager looks after himself a new coffee machine.
Why is everyone so calm? Because the guys agreed to write competent letters to clients.
Let's go through the checklist of what needs to be checked and done:
- choose the right addressee,
- describe the essential terms of the future contract,
- indicate favorable conditions for you,
- attach the necessary documents,
- sign an NDA,
- competently "hand over" the work.
And now a little more detail.
Choosing an authorized person
The recipient of the letter who says "ok" must have the authority to make such decisions.
Who we put as the addressee depends on the structure of the customer's company: project manager, product owner, practice leader, sometimes even a financial or general director . We always conduct analytics in relation to the client and have an idea in advance who should write on what issues.
We clearly prescribe the conditions of work and / or services that we start
It's time to call a lawyer for help and indicate the following conditions in a letter (like an agreement).
Template in Google Docs
When the time comes to sign the contract, it is necessary to reflect the "retro-clause" clause.
From legal to Russian - this is when the terms of the contract will be extended "back", that is, will be valid until it is concluded.
For example, the contract will be dated June 1, 2020, and you started work on the project on April 1, 2020. By specifying in the contract that “the provisions of the contract apply to the relationship of the parties that arose on April 1, 2020”, you register that the contract is valid from April 1, 2020, when the work actually began, and accordingly, they must be paid.
We designate favorable conditions
Do not hesitate to describe specifically the terms of a future deal that are favorable for yourself, email will endure everything. If you suddenly have to go to court, then such correspondence will have legal force. But remember: to make it easier to substantiate your agreements later, first of all indicate the essential conditions (subject, terms, price) in the letters.
Do not ignore the conditions that are painfully familiar to representatives of the IT sphere:
- the warranty period for individual features, software modifications, ready-made software (so that it starts exactly from the actual date of delivery of the work, without waiting for the signing of the contract);
- a description of the gradation of bugs and the timing of their fix (if you have a ready-made SLA, it's time to send it to the client);
- the procedure for deploying software at the customer's facilities, etc.
If you agree to work in short sprints and close jobs on a monthly basis, such conditions become essential.
And be sure to wait for a clear answer from the other side so that agreement with the listed conditions is clearly expressed. “Begin, we’ll agree on everything with the management for now” - will not work. No, no, we'll wait.
We attach the necessary documents
If you have templates of documents suitable for these works, it will not be superfluous to fill them in and send them to the client.
This will show that you have a clear understanding of what the workflow will look like. In addition, this will significantly reduce the further approval of documents for signing on the client's side.
We sign NDA
This document becomes important at the earliest stage of negotiations with the customer. A nondisclosure agreement (or non-disclosure agreement, NDA) may be entered into by the parties in relation to future projects.
It is desirable to sign it immediately, you can provide for the exchange of signed scans in the text of the NDA itself, this will simplify the client's life and yourself.
In it you can define:
- what information is considered confidential,
- how to exchange such information,
- what responsibility the offending party will bear.
It happens that even before the start of the project, we need to exchange information with the client in order to conduct analytics or draw up a commercial proposal. Such information is more likely to be confidential.
We competently hand over the completed work
When the time comes to hand over the completed work, for example, in a month, we act according to the same principle as when writing a letter about the start of work.
Hi, Kirill!
We completed the work for May 2020 in full, we attach information about the hours spent.
Do you confirm these work results?
If everything is ok, we expect from you payment in the amount of 560,000 rubles, incl. VAT 20%, until June 5, 2020.
Excel file with detailed rates and hours will not be superfluous.
Outcome
So, we have learned to understand customers and write letters to them in situations when the contract is not yet on the horizon. We also realized how important it is not to be afraid to indicate your conditions and collect the necessary documents.
On behalf of all lawyers, I would like to say that you should not miss the opportunity to involve us even before the signing of the contract, namely in the negotiation process itself. This will help minimize risks even before starting work and save time and money. Thanks to all!
Marina Buturlina , Senior Associate at Redmadrobot, shared her experience.