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.

Smart companies are embracing innovative legal solutions

I noticed that what companies were talking about started to change towards the end of 2010. I noticed that companies were talking to me about how they can best manage the inevitable risks their employees pose as more and more employees embrace and use social media services like Twitter. What I found especially interesting was a growing number of companies are acknowledging that simply cutting off access to social services can be detrimental to their businesses overall for a variety of reasons and that moderate access to social services may even be a requirement for their employees to work better and smarter.

Visit of the Chancellor of the University of London, HRH Princess Anne to the School, 8 May 1986

Another trend I noticed and find fascinating is how companies are embracing necessitate fairly innovative solutions for challenges which are starting to emerge as they either adopt social services like Twitter and Facebook in their communications strategies and become more aware of the potential impact their employees may have in their own right. This point may seem like a duplication of my previous one but companies shouldn’t just be concerned about implementing adequate internal policy frameworks like social media policies to govern how employees use social media and are made accountable to their employers for that usage. Companies should also take into account the possible implications employees’ tweets may have with respect to 3rd parties who follow them. Should an employee’s tweets have contractual significance that could bind the company? To what extent should employees clarify their relationship with the company and their ability to represent the company in their LinkedIn profile?

The Wikileaks debate focused a spotlight on radical transparency in the context of organisational and governmental information but what about all those mini-Wikileaks that have arisen and are bound to emerge as time goes on? What impact could an individual armed with sensitive corporate information and a distributed Internet-based publishing network have on the company? “Internet-based publishing network” sounds like a pretty involved and hard to obtain thing but that is pretty much what an average social network on the Web is, especially if it comprises interconnected social networks like Twitter, Facebook and LinkedIn. Individuals’ reach is growing as their networks grow and just as social networks can be a powerful force for positive change, they can also be mis-used to disseminate secrets maliciously.

While there is considerable debate about whether something like Wikileaks should be permitted to exist and whether it provides a valuable service to us all, Wikileaks has shown us that the tools to replicate its work are pretty readily available. This doesn’t necessarily mean that there will be a million more sources of government information being leaked but it does mean that sensitive information could leaks could, and probably have already, occur on smaller scales. This potential could change how companies interact with their customers, how people perceive their brands. The radical transparency Julian Assange works towards could become a new paradigm brands will have to adapt to.

More and more companies are embracing the social Web in their marketing and general communications activities. At the same time the social Web is continuing to grow, evolve and become more complex and this means that the challenges companies are facing are, themselves, becoming more complex. New services are gaining traction. Consider Quora, a social question and answer service which a remarkable number of Web and technology thought leaders are participating in. It is very sticky, contains a growing body of collective knowledge and its not really surprising that it was created by a former Facebook stalwart. Facebook itself is the single biggest only social network on the planet and well on its way to becoming one of the largest communities humanity has ever known. It is also becoming a fundamental part of its users online identity, if not their core online identity. It could become more valuable and useful than national identity. What does that mean for the social Web and the legal solutions necessary to accommodate these developments?

What is clear is that the social Web is a challenging and exciting space, the legalities that accompany its evolution are becoming increasingly complex and the solutions companies will require must be innovative. More of the same from your lawyers has never really been sufficient and it most certainly won’t be this year or the years to come.

Are digital agencies ignoring legalities at their client’s expense?

Digital agencies are expanding and innovating at a rapid pace to take advantage of the increasing demand for their services. This morning’s news about the Brandsh, Cambrient and Stonewall+ merger to create Native is a pretty clear sign of the local digital agency ecosystem’s development and perhaps even its maturation. It also reminds me that, in this push to serve and stimulate local business’ demand for digital services, agencies may be neglecting the unpleasant legalities that impact on their campaigns, possibly at their clients’ expense.

Richard Lovett, Creative Artists Agency

The social Web is an exciting space to work in and it changes pretty quickly. Campaigns designed to take advantage of its dynamics are often innovative and push the envelope both from a marketing and legal perspective. These campaigns often introduce novel legal issues which both underpin the campaigns themselves and must be sufficiently addressed or risk a wasted investment in the campaign’s development, potential litigation for rights infringements and unwanted reputational harm.

So what should digital agencies be doing? My recommendation has always been that digital agencies incorporate a legal component into their campaign conception, planning, development and implementation. Think of it as a matter of prevention very possibly being better than the cure. Introducing a lawyer at an early stage and keeping that lawyer in the loop as the campaign is developed and implemented gives digital agencies the ability to identify and address any legal issues which may interfere with or even scuttle the campaign. Just as the agency’s planning process is designed to lay a good foundation for the campaign’s execution, incorporating legal advice from inception is intended to lay a sound legal foundation for the campaign. It is common sense from a legal perspective and while this approach is not a guarantee that legal challenges won’t arise down the line, it is a way to reduce the likelihood of a sustainable claim arising.

Some agencies are very much aware of the need to cater for legalities and they develop their own frameworks to cater for possible legal issues. Unfortunately this DIY-style process often involves copying terms and conditions from other websites and developing frameworks based on other campaigns. The problem with this is that the “templates” used to develop the agency’s legal framework are often poor copies of other templates or similarly drafted by well-meaning people who lack any meaningful legal training or competence. This is a recipe for disaster.

As self serving as this post sounds, the simple fact is that the legalities that impact on these remarkable campaigns are frequently not settled and require insight into both the law and the digital and social space these campaigns operate in to adequately anticipate and cater for possible challenges. DIY approaches or not taking adequate steps to cater for these legalities at all will only expose clients to a degree of risk they didn’t anticipate and have negative consequences for the clients, their agencies and perceptions of these campaigns generally.

Image credit: Richard Lovett, Creative Artists Agency by Robert Scoble, licensed CC BY 2.0