Freelance Contractors Or Employees? Does It Matter?

The Industrial Brand team circa 2009—no contractors included.

I recently spoke with a client who expressed his frustration with design firms who include associates on websites or in proposal responses without clearly expressing that they are external contractors and not employees. Does it really matter? Is it a personal choice or a question of professional ethics?

In a recession with more creative professionals than ever freelancing, banding together as a “virtual agency” is an appealing idea indeed—and a format that many have used in their favour to win work. Most claim advantages like scalability, flexibility, and low overheads to convince budget-sensitive clients to hire them. It works well for some who can project manage outside vendors well and ensure they deliver on their promises. It fails miserably for others and leaves their clients gun-shy and wondering where their team went.

But is it kosher to call yourself a “firm”, an “agency”, or the ever popular “group”, and include a list of professionals with fancy titles like Art Director, Copywriter, Media Buyer, or Interactive Designer, if you are actually a company of one and all those are actually contractors? I’m gonna say no. Not really.

I heard a story recently about a local architecture design firm that was in a bit of hot water with their professional association for this very issue as well as using projects in their portfolio without fully disclosing those who collaborated with them. As many of my friends who run little design companies that compete for work by presenting themselves as bigger than they really are, it got me thinking.

Before writing this personal opinion piece, I asked a number of industry colleagues their thoughts on this and even tossed it out into the Twittersphere for a gut check, and the majority of opinions supported being fully transparent to potential clients, anything else being misleading.

Everyone agreed that any bait and switch was wrong and should be avoided at all costs, but some argued that clients shouldn’t care how we structure our companies as long as the work gets delivered. Others said that any client worth having will do their due diligence and ask the right questions or even visit a firm’s office to validate any claims.

But thinking back to the many proposals we’ve sent out, I recall very few clients—even large corporations—that were careful to ensure that those listed in our proposal response were actually a formal part of our company structure and would in fact be working on their projects. It seems they assume that if you like John Smith as your Creative Director on your proposal and website, they assume he works with/for you.

An industry friend challenged me, saying that my clients might be “stuck into some pretty 20th century thinking about how things are done” and claiming that the “virtual agency” is the new paradigm, often giving clients access to the best talent for the best prices. I agree that the work world is much more nimble and loosely defined than in the past, but I’m concerned that the theoretical benefits of this structure—when managed well—isn’t a justification for exaggerating your size or capabilities to win work—regardless of how often it’s done.

We all reap what we sow, make our own beds, and any other cliché phrase you can think of, but I’d argue that clients eventually see through this kind of shenanigans. That said, there is the valid argument that once you’re in, it’s your account to lose. If your experience and portfolio were good enough to win the account, and your external team is meeting needs, budgets and timelines, and your clients are happy, then you’re golden, right? I don’t think so, no.

Regardless of old or new school thinking, clarity and transparency is becoming increasingly more important than ever when selling to a corporate client who feels the need to partner with a solid team. If you win work while being very clear that you are essentially a marketing & strategy specialist with the experience and networks to get the job done, cool. But if not, a day may come when your trusting client will begin wondering if your “firm” or “agency” is nothing more than a hybrid broker/project manager, and erode the long-term relationship.

I know that many of our larger clients have hesitated and even balked after finding out that we brought in an external consultant or web developer to assist. I’ve had to calm down clients who were nervous after realizing we didn’t do all our coding in-house—which is a very common scenario and one we never hide.

I don’t think this is about geographic proximity either. Although I argue that there is a real advantage to a unified team structure, collaborating and working under creative leadership using a proven design process, it’s true that many firms are built around the “virtual studio” concept and successfully work together—some with entire continents separating them. But the ones who do this best are very honest about the fact, and often even brag about their particular approach to teamwork as a way of differentiation.

The truth is, we’ve often included industry specialists as “Associates” or “Collaborators” in proposals to win work, but we also clearly explain in their bio info that they are a respected vendor partner we’ve had success with in the past and the role they’d play in the project. Even so, we still get occasional clients raise their eyebrows and challenge us to explain why we don’t provide this service internally and what we’d do should this contractor suddenly become unavailable.

We never list outside contractors on our website as members of our team as that would seem like outright lying. In fact, I’m quite sure we’ve lost work because of the perception of our size, just like I’m sure many of our competitors have won work for the exact opposite reasons.

In my view, the reality is that clients—larger ones especially—seek right-sized teams they can trust. More often than not that means a team with a stable, hierarchical infrastructure that is understood and well-suited to their needs. I contend that it is unfair—probably even unethical—to mislead potential clients by pretending your company is larger than it is by including a laundry list of industry colleagues as though they hold full-time positions within your studio.

Do you have any opinions on this topic or related stories you’d like to share? Please leave a comment below.