Media lawyer advises freelancers to beware of indemnity clauses
As indemnification clauses continue to appear in freelance contracts, one media lawyer advises freelancers to be careful what they sign. Daniel Burnett, with Vancouver’s Owen Bird Law Corporation, said the potential consequences of indemnifying a publication against expenses that might arise from a defamation lawsuit could be devastating.
“Indemnity for a possible lawsuit that might arise from something a freelancer writes, to a typical freelancer, would be like their life savings, potentially. Because litigation is so expensive,” he said.
Burnett has been practicing media law for close to 30 years and is among the most prominent lawyers in the country in the areas of freedom of expression and media law. He has served as lead counsel on landmark cases in the Supreme Court of Canada. Although he is not involved in either the publisher or freelancer side of negotiating freelance contracts, he has heard about the increasing prevalence of indemnification clauses. He has not seen specifics, but says the trend is concerning.
“If a media publisher got an article written by a freelancer and had the freelancer sign an agreement indemnifying them in the event of any legal action, that would mean indemnifying them for the cost of the action, win or lose,” he said. “A lot of times with libel suits, the fees end up well in to the six figures. And a freelancer, for the sake of one article paying a few hundred bucks, might be potentially risking personal bankruptcy.”
Potential risks of liability
Burnett said that although there are some stories and articles that carry virtually no risk, he would consider most freelance assignments to have some potential risk of liability. A sophisticated freelancer, he said, will usually have some idea which stories pose a risk.
“If you’re writing a story about trends in new types of ethnic restaurants in Vancouver…I have the advantage of knowing the law pretty well, but it wouldn’t cause me any loss of sleep to sign an indemnity because I know there’s no real form of liability that can attach to that,” he said. “If, on the other hand, I was doing a story about potential money laundering at a specific casino and naming individuals, that’s the kind of story that carries a high risk of a libel suit if you get something wrong.”
Burnett said contracts that include clauses requiring freelancers to alert the publisher of possible liability risks don’t concern him.
“Those are based on best efforts,” he said. “The agreement they have with their own insurers require them as a condition of insurance to alert the insurers in the event of potential claims. So in that particular case, if the person’s got a byline and the lawyer for the aggrieved party reaches out to the person because of their byline and raises a complaint then, practically speaking, I see this as fairly reasonable to require the freelancer to alert the publisher.”
But financial indemnities are another matter.
“It strikes me as an awfully huge thing to sign away for, typically, pretty small payoff for a single story,” he said.
Burnett’s general recommendation for any freelance project that involves some potential risk of liability is to ask that an indemnification clause be removed.
“As a general proposition, if I was a freelancer, I would not be prepared to write a $500 story [and indemnify] for potentially six figures,” he said. “If it is a clause that is actually saying I’m financially indemnifying you for any legal action over the story I’m writing, I would want to see that struck out.”
Inquiring about insurance coverage
Burnett also recommends that freelancers inquire about the status of the publisher’s insurance. He said if he were a freelancer he would want a clause included in the contract stating that the freelancer is considered an insured under the publisher’s insurance contract.
“Insurance contracts always cover not only the company but the various employees and people who are, the term in the industry is, ‘additional named insured’ or ‘additional insureds.’ Typically if you’re a newspaper and you’re negotiating your insurance contract you want to ensure that anything that’s published in your paper, online or hard copy, regardless of who wrote it, is covered,” he said.
Asking to be covered under the publication’s insurance, said Burnett, “would not be that big an ask.” A large or medium company, in almost every case, is insured, he said, although usually their insurance doesn’t kick in until a certain level of expense has been reached.
“But even with that, it sort of caps the amount that they’re facing. And why they want to shift even more of that over onto the freelancer… well, I can certainly, economically, see why they’d do it, but whether it makes any sense for any freelancer to sign such a thing is another question,” he said.
Burnett said there is no alternate wording for a clause that financially indemnifies a publication that he would consider acceptable.
“The only major publisher in Canada that I can think of that isn’t insured is the CBC, which is insured by the taxpayer. So if I was a freelancer I would say ‘look I know you’ve got insurance, I know the condition of your insurance is that you alert them to any stories [that carry the risk of potential liability]. I’m happy to agree to make sure that I alert you if something comes to my attention, but no, for my $500 story I’m not going to risk personal bankruptcy by indemnifying you financially for any legal action over the story,'” he said.
“It’s really going to hit the fan”
Burnett does not know of any cases where a freelancer who indemnified a publication has been sued for defamation, but says that might be because these kinds of indemnification clauses are a relatively recent development.
“It’s really going to hit the fan if one of these things actually results in a legal conflict between the freelancer and the publisher, where the publisher’s trying to enforce an indemnity,” he said.
Burnett also said a publisher might be risking its own reputation by not protecting its freelancers in the case of a defamation lawsuit.
“It isn’t just the freelancer who decides what to publish. Ultimately the editor decides what is going to go into print. So it’s a company decision that’s being made. And they want to stand by it and they want to be seen to stand by it,” he said. “That’s sort of a traditional ethos. And so if you got in a situation where they don’t, that would be a bit of a black eye, at least in my mind.”
Generally speaking, said Burnett, it’s important to thoroughly read any contract you sign. Your livelihood, after all, depends on it.
“Don’t treat it like we tend to treat ‘I Agree’ provisions on websites and things like that,”
he said. “Indemnity is something that jumps out as really important from my point of view. But other aspects do, too. Like, for example, what does it say about who owns the intellectual property to the piece?”
Ultimately, said Burnett, make sure to read through your contracts to find out if there’s anything in there that isn’t clear.
“What other obligations are in there?” said Burnett. “It’s just important to understand it and to ask questions if things are confusing.’”
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The Canadian Freelance Guild wants to help freelancers be better informed about indemnity clauses and contract literacy. If you have a contract from a publisher that you’re willing to share, please send it to CFG Organizer Don Genova at organizer@canadianfreelanceguild.ca. Your name and identifying details will be redacted.
If you have questions about one of your contracts, keep in mind that one of the benefits of membership in CFG is advice on contracts and negotiating them. And check out this page on the CFG website for more information.
