From Forbes, Art Neill discusses an indemnification clause in a writer’s freelance agreement but the advice is valuable for all independent contractor agreements. Indemnification clauses are common in independent contractor agreements and can, among other things, demonstrate that the independent contractor has a financial risk in a relationship which may be important in some independent contractor tests. Art explains indemnification and provides excellent advice. Art writes:
What does “indemnity” and “indemnification” actually mean?
“Indemnity” refers to a duty to make good any loss, damage, or liability incurred by another. “Indemnification” refers to the actual act of compensating for such loss or damage. When you see either of those words in a contract, they likely refer to the idea that liability is being shifted from one party to the other. In other words, indemnification allocates the responsibility of making right a wrong.
In freelance contribution agreements, this duty or responsibility will often fall on you, the creator, if someone sues the publication for some reason related to the article. This is usually the case because publishing agreements sent to you by the publisher will be written to reduce the publisher’s liability as much as possible. The bottom line is that under an indemnification provision, you might be financially responsible for a lawsuit brought due to the work. You could be required to pay attorneys’ fees, damages, and other expenses, depending on what is exactly written in your contract under this clause.
There are a variety of reasons that someone might sue over your writing, related to copyright law or even defamation. For example, your publisher might be sued by someone claiming you plagiarized their work in the writing that the publisher distributed. The indemnification clause in your contract would control how much you have to pay to help the publisher defend itself. Even if there is no merit to the lawsuit, you could still end up paying out of pocket for attorneys’ fees, settlement costs, and other expenses. How much you would be responsible for all depends on how the indemnity or indemnification clause is worded. It can be expensive, even for unsound lawsuits, so you should pay extra attention to the language and review it with an attorney to ensure that you understand your responsibilities.
Remember: you can limit the scope of indemnity or indemnification clauses
When negotiating with a publisher, here are some tactics to consider (with the help of an attorney) to limit your responsibility under an indemnity or indemnification clause (note that some tactics are more effective than others):
- Delete the indemnification clause from the contract. This seems like a simple and easy solution; however, if a claim were to go to court, a judge can still imply indemnification in a writer’s contract, which means you are still on the hook. There is no guarantee you won’t be held liable in court, so this may not be the best course of action.
- Adjust and negotiate the indemnification language with the publisher to better suit your needs. By doing so in a careful and deliberate way, you can avoid getting stuck with a massive legal bill in the event that any legal dispute arises regarding your content. For example, you can include a provision that says that in the event the publisher is sued by a third party, the contributor (you) will pay for the litigation, but only after liability is established and all appeals have been exhausted (i.e. someone serious sues and wins in court). Such language would prevent you from having to indemnify the publisher for every single claim involving your content (including potentially frivolous ones) and encourages the publisher not to settle so quickly.
- Get the publisher to cover your liability. This could be accomplished by adding a provision where you guarantee your work does not knowingly contain anything illegal (which someone would sue over) and in return, the publisher will cover the costs for you to defend yourself if anyone does sue.
- Void your obligation to indemnify if the publisher is at fault. Inserting language into a contract that makes it clear you will only make you obligated to indemnify the publisher if the publisher hasn’t committed any grossly negligent acts or omissions or willfully failed to comply with the contract in bad faith.
- Negotiate for an indemnification cap. This will limit how much you would have to pay for a defense. One option is to see if the publisher would be willing to limit your liability for paying damages to, say, the amount or fee you were actually paid for the article.
These are just a few examples of the tactics that writers can try; we strongly recommend talking to a qualified attorney if you have specific questions or you want to learn more about negotiating the fine points of an indemnification clause in your contract.
Read the full story at What Exactly Is Indemnification, And How Does It Affect A Freelance Contributor?