Digital agencies that skimp on legal are negligently exposing themselves and their clients to substantial claims

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I’ve noticed an alarming trend with many digital agencies and the account managers responsible for advising their clients on their digital marketing initiatives: they view legal frameworks as something akin to the undercoat on a wall. It seems to be a good idea although it’s better to keep it thin, hidden away and forgotten about.

One of the concerns seems to be that legal content distracts from the fun and social elements of the campaign and too much emphasis on it would only upset the fans. It’s a grudge purchase and because no-one is really going to cause any real trouble the smart ORM people can’t manage, legal terms are added because, well, that’s just how it’s done. At least, this seems to be the thought process that too many marketers put into legal frameworks for their campaigns.

Nothing kills the mood of a social campaign quite like a lawyer insisting on a dizzying array of legal terms and conditions to address an unclear set of risks and using language no-one except the lawyer seems to understand, let alone appreciate the significance of. We lawyers have not been very good at conveying the importance of what we do, particularly where there are few practical examples of their value. We are in a risk management business and a lot of the work lawyers do is in anticipation of likely risks and aimed at reducing both the likelihood of those risks occurring and, if they do, the resulting fall-out.

By the time a transaction becomes the subject matter of a dispute (usually when “lawyers’ letters” are called for) or disputes go to court, lawyers are generally in damage control mode. Something has gone wrong and either there weren’t adequate protections in place to anticipate or even resolve the dispute before it went pear-shaped or there just wasn’t anything in place and the client took a leap off a cliff expecting to be caught by fluffy clouds and adoring customers, not hitting the rocks below.

Unfortunately the risks to these agencies and their clients can be very real.

What could go wrong?

You’re working for a digital agency and you’re asked to set up a Facebook Page to support a client’s campaign. You recommend “house rules” for the Facebook page and, in doing so, you implicitly advise your client (yes, this is basically what you are doing) to use the house rules on the basis that they will afford the client adequate protection from likely legal risks. In other words, when you (whether you be an account manager, copywriter or someone else) prepare those house rules and give them to your client to use on their Facebook Page, you’re telling them that these legal terms and conditions are intended to protect the client. Unless they have their own lawyers to check those house rules, they are likely to rely on your advice, assuming you’ve had those house rules checked out and approved by a competent lawyer.

If those house rules then turn out to be inadequate and the client finds itself faced with a claim of some sort that could have been avoided with adequate terms and conditions, then you really should have some sort of liability cover in place because you may need to rely on it to protect your business from a negligence claim. Well, that’s assuming your agency’s liability cover protects it from negligence claims based on bad legal advice. If the agency has professional indemnity insurance cover, it may be limited to negligence in the context of the agency’s business, namely digital marketing and communications, strategy, community management and so on. Liability for legal professional negligence is a somewhat different set of risks and the liability cover you thought was in place may not be available.

What happens next is a complex, costly and drawn out series of legal battles largely because you assumed that house rules are largely a formality and need not go much beyond a set of rules asking fans not to be rude, to play nicely together and respect the client’s brand. Odds are, those house rules didn’t cover copyright concerns, properly contextualise product or services-related information on the Page, privacy and how fans’ personal information is used (Facebook requires brands to have their own privacy policies to govern collection and processing of fans’ personal information) and a number of other considerations. This means the house rules lacked a real framework governing to what extent fans can rely on information you present them with through the campaign, whether they can use content on the site and to what extent, how you can use their personal information … you get the picture. Maybe everything will turn out just fine, perhaps not. Can you afford to take the risk?

Why are terms and conditions so important?

Terms and conditions are contracts between customers and providers. They are premised on the legal requirement that a contract can only really be binding on parties who have reached agreement that they be bound by the contract and on the contract’s terms. This is somewhat of a generalisation because the law has evolved to created exceptions on the periphery of this ideal scenario but the concept of a “meeting of the minds” is central to our contractual law.

That said, this doesn’t explain the reason why terms and conditions are contracts. The reason they are contracts is that the one party seeks to impose obligations on the other party and can only do so where the other party agrees to assume those obligations. In this case, the client wishes to establish a framework for fans to participate in, say, the Facebook Page and that framework comprises certain rights and obligations. In order for fans to be brought into a contract with the client, terms and conditions describing the parameters of this contract with a fair degree of detail are necessary. Without them, you have a lot of vagueness and uncertainty as to who can do what and with what. That is a recipe for a dispute due to mis-managed expectations, among other things.

A legal doctrine called the doctrine of “quasi-mutual assent” is what allows website and similar terms and conditions to bind parties to contracts even though they haven’t necessarily engaged in a more conventional and interactive contract negotiation process (that is, where one party is faced with standard terms and conditions and told to accept them or not take advantage of the related service).

Even with this doctrine, the terms and conditions must be detailed enough to establish an adequate framework governing the foreseeable aspects of a fan’s interaction with the Facebook Page, micro-site or some other aspect of the campaign. If the terms and conditions are vague or don’t cover important issues which they should cover, our courts have ruled that not dealing with important provisions can be pretty much the same as saying they don’t apply or should not be considered. If you, as the agency representative, have been instructed to ensure that fans are aware that, for example, product prices published on Facebook are not necessarily current purposes, are subject to verification and may be changed without notice and you don’t actually provide for this in the “house rules”, you may find that fans may be entitled to rely on and even insist on those published prices. That means you failed to comply with your client’s instructions and exposed the client to the loss being required to honour those prices resulted in. This is a relatively benign example but the potential prejudice could be more severe.

Add to this the possibility of class action lawsuits by angry consumers who feel they have been misled by inaccurate information in a marketing campaign which is not properly contextualised by adequate terms and conditions (let alone the reputational harm when the client is portrayed as a liar due to the inaccurate information), you may appreciate just how valuable these terms and conditions can be.

Here is a suggestion

Resist the temptation to cobble together house rules or other terms and conditions based on what you may have seen elsewhere online or may feel are adequate given the nature of the campaign and chat to your agency’s lawyer about the possible risks (likely risks, even if you are open to some degree of risk) and work with your lawyer to create a legal framework that adequately caters for those risks and remains consistent with your campaign’s look and feel. It is achievable and could help avoid a very messy and costly dispute.