The following appeared as a position paper on the ASJA website in 2003 and is reprinted here with ASJA's permission--and the warning that it may be out of date (but may alert you to potential problems). See links to current news story at end. This is NOT a clause you want to accept lightly. You may want to run a warranty or indemnity clause in a writer's contract past a lawyer or someone knowledgeable about contracts.
Warranty and indemnity (a/k/a indemnification) clauses can be among the most onerous of contract provisions that writers today may encounter. Exact language may vary, but typically these zingers involve some variation on the theme: "you will indemnify and hold harmless the publisher against any and all claims or actions arising out of a breach or alleged breach of the foregoing warranties..." What do "warranty" and "indemnification" mean and how should you deal with such clauses?
In legalese, when you "warrant" something, you're making a representation that the other party can rely on as being true. Warranty clauses in publishing contracts often start out with fairly reasonable representations: that the work hasn't been previously published and you aren't plagiarizing someone else's writing, for example. No problem there. But keep reading. They often go on to say that you warrant the work "contains no defamatory, libelous, or unlawful matter and Publisher's exploitation of its rights shall not violate or infringe any copyright rights, rights of privacy and/or publicity, or ANY OTHER statutory, common law, or other rights of any party," or words to that effect. Hmmm. Can you really represent that no portion of your article violates ANY provision of law in 50 states or any country on the World Wide Web? Or that your writing or the publisher's use "will not violate or infringe upon" such a wide range of possible 'rights'? Of course not.
Yet that indemnity clause puts serious financial teeth behind just such a warranty -- and the bank account they bite will be your own!! By "indemnifying and holding harmless" your publisher (and also, depending on how broadly written the provision is, the publisher's officers, directors, employees, agents, licensees, and others), you're agreeing to pick up the tab for warranty-related claims. The bottom line, of course, could include not only lawyers (at hundreds of dollars an hour) but also court costs and ultimately damage awards. Worse yet, under many of these clauses, you're agreeing to be liable for such costs on "all claims," a catch-all phrase that includes EVEN COMPLETELY FRIVOLOUS CLAIMS!
A HISTORICAL PERSPECTIVE:
Some say indemnity clauses first appeared in book publishing contracts (where, because of the dollar amounts potentially involved, they may make more financial sense) and were later imported by over-eager counsel into magazine publishing. Recent reports suggest that many mainstream magazines are no longer routinely inserting indemnity clauses in their standard magazine publishing contracts. Whether this reflects these publishers' even-more-onerous predilection for all-rights contracts or a more reasonable assessment of the parties' respective rights and obligations remains to be seen.
YOUR POSITION & POSSIBLE RESPONSES:
Short of actual misconduct on your part (for which of course you SHOULD be held accountable), it's obviously unfair to ask a writer to underwrite defensive litigation -- this is a sad cost of doing business for the publisher.
As you negotiate, remember that (unless you're a John Grisham) the publisher probably doesn't REALLY EXPECT to look to your assets to bankroll defensive litigation. And you can point out that most publishers these days already carry libel and other forms of insurance to cover precisely such business contingencies. If you are presented with a publishing contract that includes a broad indemnity clause, the experience of other ASJA members suggests a variety of possible responses:
1) Suggest that the clause be deleted. That's right -- ask to strike the offending 'graph in its entirety. Point out that many major magazine publishers no longer insist on including such dreadful language. Highlight the respective financial abilities of the parties to defend potential suits. Inquire about whether the publisher already carries libel and other business liability insurance. Ask whether the publisher actually expects it would GET anything if it pursued a writer's assets. Question whether the magazine really wants impartial reporting -- and point out the "chilling effect" these clauses can have on honest (or even mildly negative) reporting where controversial issues are involved.
2) Limit your warranties to a "best of your knowledge" standard. To those onerous representations that no portion of your article violates ANY provision of law -- or that your writing or the publisher's use "will not violate or infringe upon any rights of privacy and/or publicity or any OTHER rights of any party" -- add six magic words as a qualifier: "To the best of Writer's knowledge." ASJAers report that many magazines routinely accept such a change to their boilerplate contract, perhaps because it makes such obvious sense.
3) Limit your obligation to FINAL JUDGMENTS. Emphasize that you don't intend to pick up the cost of defense for every frivolous lawsuit that comes down the pike. One more set of magic words: "provided that such liability is finally established by a court of competent jurisdiction, and that such judgment is sustained after all appeals have been exhausted." Translation: You refuse to bear responsibility for the modern-day business reality of frivolous lawsuits. You'll pick up the tab ONLY if there is a judgment saying you screwed up -- and provided the appeals courts ultimately agree. (Note: If you lose at the trial level, you may need to be prepared to PAY for those appeals. And see footnote below about settlements.)
4) Consider purchasing professional liability insurance. Particularly if you write in highly lawsuit-prone areas (such as true crime) you may want to consider obtaining your OWN insurance. The National Writers Union, for example, offers its members affordable coverage that includes libel, copyright infringement, and a handful of other claims. Sure, it's annoying to have to pay to cover a risk that arguably belongs to the publisher. But if it helps you sleep at night, it's a bargain. PLAN B: Find out if it is possible to "tailgate" on the publisher's liability insurance policy by having you named as an "additional insured."
5) LIMIT your warranties to what you yourself (and not your editor) wrote. Here's language one ASJA member inserted in his book contracts: "The parties agree that the foregoing warranties do not and will not apply to modifications of or additions to the text or illustrations made by the Publisher without the Author's knowledge or over the Author's objection." You might even just put a period after "Publisher."
6) LIMIT your potential liability to the contract price. This same ASJAer adds the following clause: ". . . provided that the Author's liability hereunder is limited to the total sums payable to the Author under the terms of this Agreement" and, in the case of a book, "for the edition or printing of the Work in which the breach is alleged to have occurred." On a $1,000 magazine article, that means your potential liability could be $1,000 -- not the roof over your head. A side note here: if the publisher does agree to such a limitation, make sure subsequent paragraphs don't undo that protection with broader, conflicting language.
CONCLUSION: The proliferation of indemnity clauses, especially in the magazine world, appears to be another case of lawyerly overkill. Don't get caught without a flak jacket. Insist on modifying the contract terms until you feel the risk you're assuming is acceptable.
A FOOTNOTE ABOUT SETTLEMENT: Worried that a publisher might decide to settle in an effort to keep costs down -- and that that might reflect badly on you? Sad fact of life: the publisher will typically be a separate party in any lawsuit, so its decision to settle (or not) will not be yours to make. Often, the publisher's deeper pockets are a more appealing target -- and give the publisher more inclination to settle. But settlement may well be in your best interest as well. The vast majority of cases DO settle before trial, often for purely financial reasons. And most settlement agreements stipulate that even if money is paid, it is "not an admission of any guilt or wrongdoing but solely in an effort to resolve a disputed claim."
Now the bad news: If a publisher settles AND you've signed an indemnity agreement, you may be sent a bill for the settlement amount. Sure, you can try to fight it -- by continuing your part of the lawsuit in hopes of proving at trial or on appeal that you weren't at fault, for example, or by arguing that your agreement with the publisher is unenforceable. But it can be a costly battle.
(Pat McNees was on the contracts committee that went through several drafts, chiefly written originally by Karen Dustman, before arriving at this version. Many thanks to Karen and to Sue Russell. Let me know if I have forgotten others!)
ADDITIONAL MATERIAL ON THE SUBJECT:
• Freelancers, Here's How To Protect Your Business Assets From Liability (Laura Shin, Forbes, 4-29-15) Explains differences between commercial liability, or general liability, insurance; an additional a Business Owner’s Policy, or BOP, which will give you property coverage (if you qualify); an "errors and omissions policy, usually called E&O, which covers any errors, oversights or acts of negligence you make in your line of work. It’s like medical malpractice insurance for the freelance set." And if "your business keeps customers’ personal data or accepts online payments, you may want to purchase cyber liability insurance, which would cover you in the event of a data breach of sensitive client information."
• Indemnity clauses leave freelancers open to lawsuits (Dawn Fallik and Jonathan Peters, Poynter, 5-6-15) "Forbes contributor Dolia Estevez is on her own. Two years ago, Estevez identified a former spokesperson for Mexican president Felipe Calderon as one of the “10 most corrupt Mexicans of 2013” in a story she wrote on the Forbes website. The spokesperson sued Forbes and Estevez under New York law....Even if Estevez wins, the next journalist might not — in part because the next one might not be lucky enough to land a white-shoe legal team, pro bono. And, regardless of its outcome, the case exemplifies a problem in the freelance market: the pervasive use of liability waivers and indemnity clauses....“Other than making sure you get paid, these clauses are the biggest danger for freelancers, the biggest thing they should worry about,” said Randy Dotinga, president of the American Society of Journalists and Authors....Whenever [Barry Yeoman] gets a new contract, he asks for the liability and indemnity clauses to read: 'The Writer guarantees that the Article will not contain material that is consciously libelous or defamatory. In return, the Publisher agrees to provide and pay for counsel to defend the Writer in any litigation arising as a result of the Article.' " Publishers will often amend these clauses but writers rarely ask them to. Ask!
LEGAL EASE: It seems like every contract has an indemnity" provision attached to it...what does that mean? (Legal Ease, Film Independent, outlining the parts for which you should fight to narrow your reps and warranties, thereby giving the indemnity provision less bite)
Writers and Editors (Pat McNees's blog)
August 13, 2012
August 15, 2014 2:13 PM EDTThank you. I can currently find very little work anymore that doesn't come with these dangerous clauses. The publisher's attorneys advise against any change the author suggests unless the writer gets another attorney involved.
November 2, 2014 8:58 AM ESTThank you, Pat.
Instead of "provided that such liability is finally established by a court of competent jurisdiction, and that such judgment is sustained after all appeals have been exhausted", "provided that such liability is finally sustained" is all that is needed.
March 18, 2015 12:07 PM EDTThanks, Pat. I too am seeing more and more of this language in contracts, written in increasingly broader terms. Your post is the clearest and most useful resource I've found for dealing with this issue. Much appreciated.
March 20, 2015 12:47 AM EDTPat, it might be interesting to explore the ramifications of indemnification on the individual's insurance.I would image that an insurance policy would not pay claims in situations where you've signed away in advance to cover third-party (a publisher's) expenses.
Thanks for your thoughtful writing on this topic. It is a big help in these murky and shark-infested waters.
December 18, 2015 1:44 PM ESTSee also this post in the Authors Guild's Fair Contract Initiative: Stop Forcing Authors to Take Unlimited Financial Risks (AG, 12-18-15)
One comment there seconds what Michael Altus recommends, as a limiting phrase.
June 18, 2016 12:14 PM EDTIn The Business of Editing: Noncompetition Agreements (An American Editor, 1-29-14), Rich Adin complains of packagers asking for one-sided, onerous noncompetition clauses. After explaining all the reasons for not signing a contract containing such a clause, he ends, "The point is that you need to read noncompetition agreements very carefully. You need to be sure that its scope is very narrow and that all of the entities you are not to approach are identified. Even more importantly, you need to negotiate compensation for the rights you are giving up. Finally, I would think about whether signing the agreement would change your status from freelancer to employee in the eyes of the IRS. Because I am averse to signing such agreements, I make it clear that I plan to send the agreement to the IRS for review. So far, that has been enough to have the agreement disappear without my signature."
July 28, 2016 5:16 PM EDTKatie writes:
"I recently got accepted as an independent contractor on a selective freelance site. I just received their contract, and it includes everything you warn against. My question is whether you believe the information in this article would still apply? Technically, the website connects other businesses with freelancers, so the setup is different than a book or magazine publisher. Any advice on how to handle the situation? Or should I proceed with what you've laid out above, regardless of the different situation?
Thank you so much for this information! My spidey senses perked up as I read through the contract, and this (as well as another article I found on this site) helped a lot."
Pat responds: I am no lawyer, but if anything people are offering even more draconian clauses now, and based on the logic of the thing, I would strike out any clauses that put you at financial risk. It's not worth signing a bad clause just to get the gig, in my view.
August 12, 2016 10:35 AM EDTSee Legal Liability and the Copyeditor (Adrienne Montgomerie, Copyediting, 8-8-16). Good succinct statement about why a copyeditor should strike an indemnity clause from a contract with her client: "The copyeditor does not have the authority to enforce changes to address plagiarism or using content without permission (two related but not identical issues). Neither does the copyeditor have the last look at material before it is published." "Proofreaders can’t be assigned the responsibility because they are not asked to look at content at that level." There is also a LEGAL LIMITS OF LIABILITY reason: "In some jurisdictions (and the jurisdictions vary wildly), there is also a legal principle along the lines that the powerless little guy can’t be assigned responsibility in an agreement. That means both that the court won’t agree that the copyeditor accepted legal liability if that person was reliant on Big Corp for a living (you might think of it as being dismissed because it was agreed to under duress), nor will they easily agree that the least able to pay in a settlement is the one responsible for damages."