Halloween is a time for spooky stories, scary costumes, and sweet treats.
But for agencies, there are some horrors that can haunt them all year round. And Tend.Legal’s Alistair Wells has put together some tales of legal pitfalls, mistakes, and oversights that can turn agency dreams into nightmares.
In this blog post, he will share some of these frights, scares, and legal affairs from the agency crypt. Read on if you dare, but beware: these stories are not for the faint of heart.
The Zombie Shareholder
Three friends once embarked on a journey to start a photographic agency. As directors and equal shareholders, they envisioned a prosperous future. However, after just a year, one of them decided that the agency life was not his calling and left the business.
The remaining two shareholders soldiered on, building the business over the next decade. As they prepared to sell their successful venture, they stumbled upon a horrifying realization: The friend who had left was still a director and an equal shareholder – a ghost from their past who had never transferred his shares.
They reached out to him, requesting him to transfer his shares, only to be met with a demand for one-third of the value of the business.
- This ‘Zombie Shareholder’, who had been absent for ten years, now held their plans hostage. The issue cast a dark shadow over the sale, delaying it for an entire year. Eventually, the two shareholders had to buy back his shares, significantly reducing their profit from the sale and leaving them with a frightful tale of legal oversight and its haunting consequences.
The Data Breach of Despair
In the chilling chronicles of marketing mishaps, there exists a tale known as ‘The Data Breach of Despair’. A marketing agency, armed with their client’s data but devoid of legal advice or a data processing agreement, ventured into the treacherous terrain of a campaign. But they did not realise, their lack of preparation was like walking through a graveyard at midnight.
As they navigated through the brief, they unknowingly caused a data breach. The client’s data, like ghosts in the night, escaped into the digital ether. When the news of the breach hit, it sent shockwaves through the client and their customers.
The client, horrified by the agency’s negligence, sought legal recourse.
- The agency found themselves in a nightmare, facing potential lawsuits and a tarnished reputation. This tale serves as a grim reminder to all agencies about the importance of seeking legal advice and having proper data processing agreements in place. Without these safeguards, they risk awakening ‘The Data Breach of Despair’.
The Creeping Scope of Doom
One digital agency was once hired to create a website for a client. Without a clear brief or scope, the team set off into the unknown. As they progressed, the client, like a phantom in the night, kept adding revisions and add-ons to the project. The journey became longer and more treacherous, going two months over the original completion date.
When the time came to settle accounts, the client refused to pay for the additional work. They argued that these changes were within the original scope and should be included in the initial cost. The agency, trapped in this haunting situation, was forced to accept a much lower fee than it deserved.
- This is a chilling reminder of the importance of agreeing on a clear scope with clients and having a proper change management process in place. Without these safeguards, agencies may find themselves lost in ‘The Creeping Scope of Doom’, where projects extend beyond deadlines, budgets inflate, and profits shrink.
In an attempt to save on legal costs, n ambitious agency decided to stitch together their own client contract. They scavenged pieces from various documents found on the web and “borrowed” from competitors.
The result was a monstrous contract, a patchwork of mismatched clauses and inconsistent drafting. It had parts written for different jurisdictions, ineffective provisions, and contradictions that made it nearly impossible to enforce. The contract, like Frankenstein’s monster, was a terrifying sight to behold.
When disputes arose with a client, the agency found themselves in a horror story. The Frankenstein’s Contract they had created turned against them. The agency was left defenceless in the face of legal challenges due to their ill-conceived creation.
- This story is a warning to all agencies about the perils of not seeking proper legal advice. Crafting contracts is a job for legal professionals, not something to be cobbled together from disparate sources. Otherwise, they risk creating their own ‘Frankenstein’s Contract’, a monster that could turn on them when they least expect it.
The Undead Influencer
A social agency engaged a prominent influencer to promote one of their brand clients. They signed a contract, not realizing it lacked a crucial element – a termination clause in case the influencer did anything that might harm the reputation of the brand.
As fate would have it, the influencer, like an undead creature of the night, made some deeply offensive comments on her blog. The agency watched in horror as their client’s brand was associated with the controversy. They tried to sever ties with the influencer, only to realize that their contract had turned into a chain that bound them to the influencer.
- The agency found themselves in a nightmare, unable to kill the relationship without being left with a considerable expense. The ordeal also caused significant damage to their relationship with the brand and left them with a haunting reminder of the importance of comprehensive contracts.
We hope you enjoyed these spooky stories from the agency crypt. They may seem like fiction, but they are based on real legal pitfalls that can haunt any agency.
All of these situations highlight the importance of seeking proper legal advice and having comprehensive contracts in place. Without these safeguards, agencies may find themselves in a horror story of their own.
Anyone looking for legal work, be sure to check out Tend.Legal, one of Agency Hackers recommended partners, to find out more and see how they can help you.
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