The Problem With LOAs

Few interior designers spend time truly putting their Letter of Agreements to work for them. In too many cases with my interior design coaching clients, I have seen them use a generic contract, perhaps one found in a textbook or on the ASID website.

For the record, I can’t imagine a worse LOA than the one prepared by ASID, and I don’t have to have read it to make that claim. With all due respect, can you imagine a more bureaucratic and lawyer-heavy approach to taking the big risk of offering you protection? When they provide you with a contract, I can assure you their primary concern is not whether you get sued, but whether they get sued!

The fact is, your LOA has little to do with the law or protection. Why? Because you’re almost never going to end up in court. Let’s face it, if a big, wealthy client sues you, you’re going to negotiate your way to a settlement because you can’t afford the two years and tens of thousands of dollars you’d have to spend to defend yourself.

From my experience, your LOA should carry the following weights: 

  • 40% Business Strategy. Design firms operate differently in terms of how they make money. For example, one may bill mostly for time, or perhaps give away their time in return for merchandise sales. But at what markups? Does the contract mention “markups?” (It better not use that dreaded word!) How and when do you get paid? Retainers? Deposits? All of these are reflections of business strategies that are made long before ink is ever put to paper on an LOA.
  • 40% Marketing Strategy. Perhaps the most important use of a LOA is to create a PowerPoint presentation with the highlights and put your clients through that synchronized presentation before the project starts. I call it an “NCO,” or New Client Orientation. This is your one chance to make sure a client knows exactly how a project will flow, how and when payments will be due, and where along the way problems are likely to occur. Think how nice it would be when a client turns frosty late in the project to be  able to say; “Remember when we sat down at the start of this project…and I told you this might happen?”
  • 20% Legal Document. Sure, there are a few things you need to cover such as the fact you’re not responsible for certain delays or errors by others such as sub-contractors. Make these clear and simple and avoid page after page of legal terminology. There’s nothing more absurd than a designer snagging a contract to use that they themselves don’t really understand!
I have many different LOAs in my archives, submitted to me by members of The Edge, but I rarely share them. Why? Because of just what I’ve written above. Determine your business strategy first, then your marketing strategy, and the LOA will virtually write itself.

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