For account directors in advertising and consulting agencies, that matters because you often sit between the client, delivery team, finance function and legal advisers, which means you need to spot risky terms early and know when to push back or escalate.
Scope of work
A clear scope of work is one of the strongest protections an agency can have. It defines what the agency is being asked to do, what the client is paying for, and where the line sits between agreed work and additional requests. In practice, this is where many profitable projects start to drift, as extra amends, new channels, expanded deliverables or additional approvals quietly build into unpaid work.
A strong scope should set out:
- Deliverables, formats and channels.
- Timings, dependencies and approval stages.
- The number of revisions or feedback rounds included.
- Assumptions, exclusions and anything outside scope.
- A clear process for change requests, revised fees or timetable extensions.
For account directors, this is not simply contract language. It is one of the most effective tools for protecting margin, managing workload and keeping client expectations realistic.
Payment terms
Payment terms deserve close attention because agencies often begin work, commit internal resource and incur supplier costs before cash has been received. If the contract is too loose here, the agency can end up carrying the cost of the engagement while waiting for the client to pay.
The contract should spell out:
- When invoices are raised, whether on signature, upfront, by milestone or monthly in advance.
- The agreed payment period, such as 14 or 30 days.
- Whether late payment interest, recovery costs or a right to suspend work applies.
- Which third-party costs are recharged separately.
- Whether final files, access or usage rights can be withheld until fees are paid.
Seen properly, this is not just a finance issue. It is a commercial control that affects cash flow, delivery confidence and the quality of the client relationship.
Intellectual property rights
Intellectual property should never be left vague in agency work. Whether the agency is producing strategy, creative concepts, presentations, copy, frameworks or process materials, the contract should make clear what the client is buying and what the agency retains.
A practical structure is usually:
- Final deliverables transfer to the client only after full payment.
- The agency retains ownership of its pre-existing tools, templates, know-how and methodologies.
- The agency may retain the right to refer to non-confidential work in credentials or case studies, subject to any agreed restrictions.
That distinction helps protect the value of the agency's underlying methods while still giving the client ownership of what they have commissioned.
Termination clauses
Termination wording should explain how the relationship can end and what happens financially and operationally once it does. This becomes especially important on retainers, phased projects and engagements where the agency has committed staff time or entered into third-party arrangements on the client's behalf.
A well-drafted clause should cover:
- Termination for convenience on notice.
- Immediate termination for material breach, insolvency or repeated non-payment.
- Payment for work completed up to the termination date.
- Recovery of committed costs, cancellation fees and non-cancellable third-party charges.
- Handover arrangements and the return or deletion of confidential information.
As a practical benchmark, 30 days' notice is often reasonable for shorter projects or lower-value engagements. For longer-running retainers or more integrated client relationships, 60 to 90 days is often more realistic because it gives the agency time to reallocate resource, manage supplier commitments and exit in an orderly way. Standard UK agency-related rules use notice periods that step up from one month in year one to three months from year three onward, which can be a useful reference point when judging what feels commercially fair in an ongoing relationship.
Liability and indemnity
Liability and indemnity clauses are often where a commercially attractive piece of business can become disproportionately risky. Account directors do not need to draft these clauses themselves, but they do need enough confidence to recognise when the client is asking the agency to accept broad, open-ended or uninsured exposure. ACCA's guidance notes that caps are commonly used, may apply in aggregate or per claim, and should be proportionate to the nature of the appointment and the potential loss.
As a starting point, indemnity equal to at least the total project value can be a reasonable position for both parties. In some situations, 1.5 to 2.5 times the total project value may give the client additional comfort while still protecting the agency from liabilities that are unrealistic or unaffordable. The key is to frame those figures as practical negotiating benchmarks rather than universal rules, because the right level depends on the nature of the work, the client, and the likely exposure.
It is also sensible to include a maximum limit per claim so that one issue does not consume the entire indemnity cap. A practical benchmark is often around 25% to 35% of the total indemnity amount, but the drafting should make clear whether the cap applies per claim or in aggregate and how the calculation works. ACCA specifically recommends avoiding formulas that look arbitrary and making the basis of calculation transparent.
The total indemnity cap and any per-claim cap should never exceed the agency's professional indemnity insurance limits. For marketing, advertising and communications businesses, cover is typically written up to the limit shown in the schedule and may operate on either an each-and-every-claim or aggregate basis, so the contract should be checked carefully against the agency's actual insurance structure before anything is agreed.
Time limits matter too. The agency should not remain liable forever for work that the client may later alter, repurpose or use in a different context. Twelve months after a campaign goes live is often a reasonable starting point, while 24 months or longer may be more appropriate for longer-running campaigns or more complex advisory work. The important point is that the indemnity period should align with the agency's insurance wording and with the practical timeframe in which issues are likely to emerge.
The contract should also contain sensible carve-outs so the agency is not indemnifying the client for matters it does not control. These usually include claims arising from:
- Outstanding unpaid fees.
- Client-supplied materials.
- Third-party suppliers or contractors appointed by the client.
- Unapproved combinations of the agency's work with other products, data or services.
- Work carried out on the client's instructions after the agency advised against it.
- Use of the services outside the agreed scope, territory or intended purpose.
These exclusions matter because insurers may not respond to claims that fall outside the insured business activities, territorial limits, retroactive dates or other policy conditions, and policies may also exclude some categories of risk altogether.
Insurance requirements
Insurance requirements should never be treated as a formality at the end of the contract. If the client specifies minimum levels of cover or particular policy types, the account director should check that the agency actually has them before signature rather than assuming they are already in place. Professional indemnity cover for this sector operates within the policy wording, the business description, the territorial scope and the limit shown in the schedule, so contractual promises should always be matched back to the policy.
At a minimum, the agency should confirm:
- That it holds the required professional indemnity insurance and the minimum limit requested by the client.
- Whether other cover is required, such as public liability, employers' liability, cyber or media liability.
- Whether the territorial scope and jurisdiction in the contract match the policy.
- Whether freelancers, subcontractors, overseas work and specialist services are covered.
- Whether defence costs sit within or outside the stated limit of indemnity.
This is one of the most important checkpoints in the whole contract process. If the agency agrees to liabilities or insurance minimums it does not actually carry, the commercial team may win the work while exposing the business to a level of risk it never intended to take on.
Confidentiality
Confidentiality provisions are especially important in agency work because teams often have access to campaign plans, launch timing, pricing, financial information, customer data and other commercially sensitive material. A good clause should define what counts as confidential information, how it can be used, who may access it internally, and what happens to it at the end of the engagement.
For account directors, confidentiality is not just a legal point. It is a core part of trust, reputation and risk management, particularly where sensitive commercial or strategic information moves across multiple internal teams and external suppliers.
Closing thoughts
Strong contract negotiation is not about being difficult. It is about making sure the agency can deliver the work profitably, sustainably and within a level of risk it can actually manage. When scope is clear, payment terms are workable, liability is proportionate and insurance has been checked properly, the contract becomes a commercial foundation for a healthy client relationship rather than a source of avoidable problems.
A good contract isn't a defensive document - it's the commercial foundation of a healthy client relationship.
This guide is general information for account directors, not legal advice. Always check specific terms and insurance wording with your agency's legal advisers and insurers before signing.