You Can’t Fix a Relationship With a Contract

Postlight has short contracts, and we’ve discussed contracting on our podcast many times. As a result, many people have emailed us, asking if they could see our contract and use it themselves. Enough people have asked, so we’ve decided to go ahead and share it widely, for anyone who finds it useful.

Before co-founding Postlight in 2015, I lived in fear of the law. Not because of my crimes, but because I had mostly worked in and around the media industry, and the number one job of anyone in media is to avoid litigation. You might think it’s “write and publish great articles” or “make compelling podcasts.” But it’s not. You just never hear about it because no one wins awards for not getting sued.

So I was glad that my co-founder, Rich Ziade, was a New York lawyer turned technologist. If someone threatened to sue us, he’d know what to do. Contracts would be his department. He could deal with those thousands of pages of mess. Thus, I was a little underwhelmed when he showed me our standard contract and proudly said, “Here we go.” It was just two pages. I’ve signed longer contracts when adopting a cat.

What about all the indemnity clauses, intellectual property clauses, exit clauses, and so forth? I didn’t know much about the law, but I knew you need clauses. “It’s all covered,” he said. Okay.

So I read the contract. It was…well, it was readable. Not fun and sprightly, still a contract, but clear — and indeed it did cover all of that stuff, albeit briefly. And Rich had run a software business for a decade before we started Postlight. Still, it made me nervous. “What happens,” I asked, “if someone sues us?”

“Anyone can threaten to sue anyone at any time,” Rich explained. “I could threaten to sue the guy at the bodega for making bad coffee. You can’t live your life in fear of lawyers. If someone sends us an angry legal letter, I’ll just call them on the phone and talk about how to resolve it.”

The Three Rules of Contracts

Then Rich said three things that have been lodged in my brain ever since — the Three Rules of Contracts.

1. “The relationship is all that matters.”
2. “A contract is just an instruction manual for what to do when things go wrong with a relationship.”
3. “Our goal is to build the relationship so that the client never feels the need to go back to the contract.”

This might sound obvious, but it’s a subtle reframing that robs the contract of its magical powers and puts the focus back where it should be, on keeping an open line between parties. “The law” is just another gigantic human construct that everyone has agreed makes sense, like democracy, the World Wide Web, or Bitcoin.

Software development is ambiguous work. You agree on one result, but three months in, it’s clear that a different result will be needed. Even with the best, most efficiently run projects, direction can change many times. It might feel like the smartest, most cautious path is to attempt to document everything in a contract and a statement of work, but it’s frankly a fool’s errand. You can’t. Everyone tries, even though it’s pointless and it all changes. We just decided to stop pretending. 

As a result, our statements of work are short too. When we send over our short contract, usually four pages max, we often hear, “Wow, that’s a short contract.” Most vendors love to give you 100 pages. But when the legal team on the client side get involved, they typically go, “Oh, this is great.” They add a few comments and ask for a few small changes around cancellation clauses, or they want to tweak various obligations. Most of the time we go, “Makes sense,” and that’s it. Usually it takes a few emails.

When things go wrong

And all of that works very well. When there’s a dispute, and the client sends an email asking for a call, it typically goes like this:

The client says, “I went back to the contract, and I think we are still owed Feature X.”

And sometimes we say, “Yeah, that’s right, it’s in the Statement of Work, and we will do that for you.” And we do it.

Or sometimes we say: “When we changed the product road map four months ago, we talked about how Feature X isn’t relevant, but Feature Y would be more relevant and lead to a better product. So we built Feature Y instead.” And the client says, “Oh, that’s right. Hmm. Okay.”

Remember rule two: When clients go back to the contract, it’s not time to panic or get defensive. It’s a moment to understand what’s happening with the client. Sometimes they’re a bootstrapped entrepreneur who’s naturally worried that they’re not getting everything they paid for. Sometimes their boss has said, “You go get me all the software in that contract! I don’t care if they shipped Feature Y, make sure they ship Feature X too.” Sometimes people are having a bad day.

Here are the things I’ve said in response to those calls:

“I’d love to work with you to find the best path forward.”

“I can understand why you’re concerned, so let’s take it point by point and find solutions.”

“We fully stand by our work and our obligations. Let’s figure it out.”

Because that’s rule one: The relationship is all that matters. You can’t fix a relationship with a contract. You can’t make a great software product by editing a contract, either. You have to have a relationship that works.

As a result, even though we have dozens of live relationships in the firm — and we keep all of our contracts nicely organized in a knowledge base for instant reference — I almost never look at those contracts, except to refresh my memory. That’s how it’s supposed to go. I probably dig in on one contract a year.

There’s a thing I find myself saying more and more about Postlight: After five years, it’s not an accident. Whatever is good (or bad) about our organization, it’s the result of our actions, often actions that were taken years ago. Our contracts are part of what makes us who we are.

One of the first things we did when starting Postlight was write up a charter. It’s an open document that we review every year as a whole firm. When new employees come on board, it’s shared with them and they’re asked to read it. And the first two statements about client work are:

And that’s why we keep our contracts short and clear — because that’s in the best interest of those relationships. After five years, we feel confident that our approach is solid. Rich’s “little” contract is a big part of our success. We can say with confidence: It’s not an accident.

The contract

And here’s that contract. Read and enjoy. Obviously we are just sharing a document, not offering you legal advice — go ahead and review it with your own lawyer before using it. And as always, we’re glad to hear what you think.

Paul Ford is the CEO and Co-Founder of Postlight. Get in touch at hello@postlight.com, and find him on Twitter @ftrain.