“Pusillanimous”, was the only word on the flipchart during John Leonida’s workshop at The Superyacht Design Forum 2018. Leonida, a partner at Clyde & Co, advised the gathered design community on the importance of contracts and contractual management. Pusillanimous, Leonida explained, means showing a lack of courage or determination and was referenced to highlight how designers often behave in relation to the contractual and financial elements of the design process.
Leonida outlined that the most fruitful professional relationships are based on trust between the client and the designer. However, all too often, designers are willing to place their trust in the client without any supporting documentation that guarantees that their trust has not been misplaced. He implored the design fraternity in attendance to stop doing work for free and, at the very least, to employ the use of a modified standard contract for any work they do on behalf of a client. In this way the responsibilities of both parties are codified.
“Don’t just put the copy right symbol on your drawings and certainly don’t leave any hard copies of designs with clients, present them with the drawings and then take them away,” said Leonida. “I worked with a particularly well-known designer who had done such a design, left it with the client and then never heard from that individual again. Later they saw photographs of a superyacht under construction that looked remarkably like the proposal they had presented to the owner. The client had given the design to another designer who, quite brazenly, copied what the initial designer had done and added his flourishes.”
Without a contract for the designs in place, or adequate proof of intellectual property theft, the designer in the scenario outlined above could do very little. Leonida, having acted on behalf of superyacht owners for a number of years, discussed scenarios where his team had “crushed a designer mercilessly” because the designers had not contractually protected themselves. “We flooded the designer with letters of unnerving complexity, detail and size that it literally scared them. Were we right? Hell no. Were we powerful? Yes.”
However, this is not always the case. Leonida spoke of the “rock and roll star designers” who cruise through the contractual mire without any great difficulty, regardless of the fact that their contracts resemble little more than a letter and would certainly be of no benefit to them or the owner if litigation became a genuine possibility in the latter stages of manufacturing a project.
“An audit of your contractual life has to happen, otherwise you will find yourself in a situation where – and I get a couple of these a year – a designer calls me screaming bloody murder because they have had their design stolen or because they haven’t been paid,” continued Leonida. “My response is always to ask where their paper work is and, more often than not, they tell me that they ‘have a few emails’ and that is the sum total of their agreement.”
Some of the design community in attendance queried their ability to enforce contracts on a potential client when so many other designers will offer their initial services free of charge or without a contract, creating a race to the bottom within the design community. Additionally, they queried their ability to enforce contractual requirements for fear of furnishing themselves with “difficult to work with” reputations.
“I have no sympathy with that position,” responded Leonida. “If you are going to sign a contract worth €2-3 million, you make damn sure that you have the wherewithal to defend that contract. Contract management is an important element of any contractual relationship. If you do make changes, have change orders, if the owner doesn’t pay on time, make sure you have the paper trail that shows them that you are not waiving the fact that they haven’t paid you. Make sure they know you have provided them with a license to use your design and that that same license is revocable if they don’t pay. The power that you have to say “you no longer have a license to use this design” can bring a build to a grinding halt and the various stakeholders will sit up and take notice.”
On designers gaining negative reputations Leonida responded: “You become difficult to work with, but you become respected. If you become a professional in the way that you run your business, you will be professional in the way that you deliver your goods and people will respect that.”
By Rory Jackson
This article was originally published by Superyacht News on 10th July 2018.