Six legal issues for digital and creative businesses

While all businesses encounter legal issues at one time or another, anyone running a web development company, a software business, a branding and design agency, or PR and marketing firm will testify that the digital and creative sector faces its own set of challenges that increase legal risk.

Having your creative ideas ripped off, dealing with late payers, or being made the scapegoat when things go wrong will all be scenarios familiar to digital and creative business owners.

Here are six common digital legal issues for digital and creative businesses and how to address them.

Protecting your intellectual property: As a creative business, your livelihood is built on your ability to come up with great ideas. I’m sure many of you, particularly those working in marketing and public relations, will have stories where you’ve pitched for a new contract, only to see the prospective client implement all of your ideas at a later date under their own steam. Just like technological innovations, the fruits of your creative thinking and innovation are your intellectual property and need to be protected. By seeking expert legal advice you’ll be able to minimise the risk of others copying your ideas.

Commercial property: Many digital and creative businesses are young businesses – both in terms of how long they have been established, and in the relative ages of those running them. Hence, many are run by first-time entrepreneurs who may have little experience when it comes to such matters as negotiating the lease of a property. With a high potential for growth in digital and creative businesses, it’s important to ensure both the property and the conditions of the lease don’t inhibit your potential. Always seek expert legal advice when it comes to negotiating a lease.

Company structure: When you provide professional services, there’s often a dilemma over how to structure your business. Should you remain as a partnership or sole trader, or should you incorporate to become a limited company or LLP? There are pros and cons to each option, but a lot depends on the size and nature of the business and whether your current structure is tax efficient for your needs. Getting the right structure in place is essential to protect you legally and financially. Again, consult your professional advisers before rushing into a decision about business structure.

Payment terms: It can be hugely frustrating that customers often see digital and creative services as discretionary, rather than an essential service. Having won that battle you then face another – getting paid on time. The relative infancy of some digital and creative disciplines, and a resulting lack of understanding from those who ultimately sanction payment, often your client’s accounts department, can lead to a significant slip in payment punctuality. Furthermore, you’re operating in an industry based on relationships, often with those who don’t directly pull the purse strings. The trust is hard-won and you don’t have the luxury of being a faceless supplier, such as an energy firm or phone company, who can cut off the service if the bill isn’t paid. How can you protect against this? Do you ask for some fees to be paid up front? When should an aged debt escalate into a formal dispute? It’s essential you have the right legal protections in place.

Data protection: As a digital and creative business, you’ll not only be handling a lot of client data, you’re also likely to be advising your clients on such matters too. Be it hosting your client’s data ‘in the cloud’, sending marketing literature to a database of businesses, or storing data gathered through social networks, businesses need to comply with a raft of data protection rules. These laws are currently undergoing EU reform to tighten them up for the digital age, so it’s even more important to ensure you’re fully compliant and have the right systems, procedures and protections in place.

Legal protection and professional indemnity insurance: In business, things can and do go wrong. As a professional services business offering your clients consultancy and advice, there’s always a chance you’ll encounter a claim for professional negligence. Having the ability to mount a robust legal defence is essential, as is ensuring you have adequate professional indemnity insurance to cover you should the worst happen.

As always, prevention is better than cure when it comes to solving legal problems. By taking a proactive approach to reducing risk you’ll be in a much stronger position to grow your business and be successful.

For more information on this, or any other legal matter affecting digital and creative businesses, contact Harrison Drury 01772 258321.