Usually, freelancers don’t think much about legal issues. If anything, we think of things like lawsuits as problems that companies and people in traditional work settings face.
Considering freelancing appears detached from the established systems, it’s easy to feel like you’re safe and can’t possibly get into legal trouble. There’s truth to that, as you can see below:
- You’re probably working remotely
- You answer to yourself
- You’re not chained by corporate rules
While the independence that comes with freelancing affords you some protection, you’re not entirely secure. Your freelance business may seem personal and foolproof, but it’s not.
Basically, as a freelancer, you can still get sued. The question is:
How do you protect yourself from getting sued as a freelancer?
Here’s how:
- Be Careful With Contracts
When it comes to freelancing, contracts are like gold bars. A contract means a paycheck. You exert so much effort in pursuing clients and at the end of it all is a document that seals the deal.
That document is a source of joy, but it can also bring you a lot of pain. Contracts are binding, and if for some reason you breach them, your client has legal grounds to sue you.
To protect your interests, you want to carefully analyze your contracts, watching out for clauses that could be damaging. You don’t want to sign anything that exposes you to trouble
- Minimize Marketplace Use
The minute you decide to go into freelancing, you quickly realize that getting a foothold isn’t as easy as it’s made out to be by online gurus. Your freelance business may stall multiple times before it finally kicks off.
You may find yourself resorting to marketplaces that connect freelancers and clients. Many freelancers do this initially until they are able to get a footing.
The issue with these marketplaces is that they profit from playing as intermediaries and hate being cut out of the deal. Their terms of service forbid members from interacting outside their platforms, and they have no problem suing freelancers who directly interact with clients on the platform.
If you’re going to use freelance marketplaces, stay compliant with their ToS, and you’ll avoid legal trouble.
- Get Insured
You can’t always avoid trouble. It may find you even when you’re trying to play safe. There’s a reason why businesses have liability insurance in place, and that’s to protect them in case of legal disputes.
If you consider your freelance work your business, get yourself some sort of coverage. There are various forms of self-employed insurance policies you could go for.
Here are liability insurance options to consider:
Professional Liability Insurance
You may face claims that your services had errors and didn’t meet your client’s requirements, resulting in loss of business or damages. If you have professional liability cover, it takes care of such issues.
Claims covered under professional liability insurance include:
- Misrepresentation
- Alleged negligence
- Missed deadlines
- Underdelivered services
General Liability Insurance
This type of liability insurance covers injuries, property damage, and reputational harm.
As a freelancer, reputational harm is the most likely issue you may face. Your freelance business may provide services that may get you sued for things like slander or copyright infringement.
Just because you were hired to do a job doesn’t mean you can’t get hit by a defamation suit. This is where your general liability policy comes to the rescue.
- Create a Business Entity
Most freelancers run their businesses as sole proprietorships, likely because there’s no urgency in creating a legally recognized business entity.
The problem with taking things casually is that you and your business are considered one, which is highly damaging in case of a lawsuit. Your personal assets may suffer.
But when you incorporate your business, it becomes a recognized company separate from you. That means if you get sued, your business becomes liable, and its assets can be used to cover claims but not your personal assets.
Final Thoughts
Being a freelancer doesn’t make you immune to the issues facing the people in the traditional workforce. It’s best to remain prepared, especially if you’re taking freelancing as a serious career path.
Remember, all it may take is one honest mistake or miscommunication to land you into an expensive legal dispute.
