The owner of a dev agency asked for help navigating a client situation—who owns what the agency creates?

Agency deliverables are typically “work for hire.” That means that as soon as the client pays (in full), the client becomes the sole owner of the work. I require this from my freelancers, as it means I don’t have to worry about ownership disputes later.

For design work, clients typically own the final product—but not necessarily the intermediary pieces, including the editable files. It’s all negotiable—it depends on what you and your clients negotiate during the scoping process. If things deteriorate later, you may be glad to send everything to a client you don’t like, just to get rid of them!

For development work, I believe agency clients shouldn’t pay a licensing fee to their agency for custom software that’s been developed. But you may need to include a licensing clause (from agency to client, or from client to agency) to protect yourself in other ways.

Licensing: Don’t charge ongoing fees, but protect your ability to re-use code

To protect their ability to re-use code for other clients, software-oriented agencies will often have a “perpetual, paid-up license” clause. You’ll want to ask your lawyer for specific language, but here’s a sample.

The idea is that the client can use the software forever, but they can’t stop the agency that created it from re-using it (including re-selling it to others). Of course, that agency won’t have permission to re-sell confidential client data that covered under the NDA.

You can also structure that in reverse—the client owns it, but the agency can do whatever they want with it via the same “perpetual paid-up” license..

The exception to this? If you develop a SaaS or other software product. In that case, an ongoing license fee would definitely apply—because they’ve primarily purchased an off-the-shelf “product,” not a custom-development service.

Design: Decide beforehand what to do about editable files

For design work, typical practice is that clients own the final design work—including vector and raster files—but not the editable files. This can lead to arguments and disagreements later, when clients request the editable files.

Most often, clients want editable files when they’re unhappy with the agency, and the client wants to take the work elsewhere. That is, the request usually comes at a tense time, where the agency has learned the client is leaving.

My view? Give them the files. If a client is done with you, let them leave. Odds are you didn’t enjoy working with the client—wouldn’t you want to create a situation where you never have to talk with them again?

When you hand over editable files, I recommend asking clients to sign a release—saying that they’re responsible for protecting the files, including backups, because you’re no longer maintaining a copy. To help on this, consider asking the client to provide a hard drive for backups.

Should you charge for the work it takes to bundle up the files? Ideally yes, but clients are often reluctant to pay. As an agency PM, I once told an exiting client they needed to pay us $250 to create and share an archive of their website. They refused to pay.

We finally just gave them the files, to be rid of them. That was ultimately the best solution (although I should have gotten a “don’t ask us for these again” release, too).

Licensing & ownership at your agency

How do you handle work-ownership at your agency? What big questions have come up about who owns what? What did you do? Now’s a good time to double-check your client agreement with a contract specialist who knows agencies.