[Note: This article is being published on my blog because after Ms. Berlinski interviewed me and submitted her article to multiple publishing companies and industry organizations, none of them were willing to publish it because of the subject matter]

Contract Indemnification: A Freelance Writer’s Conundrum

by Gloria Arminio Berlinski, MS

As business owners, freelance medical writers often have the daunting task of reviewing and negotiating complex corporate contracts. These agreements typically have a number of red flags, but one of the most alarming provisions is the indemnification clause (Boxes 1 and 2). With broad, one-sided indemnification, liability for all legal claims related in any way to the freelance writer’s work shifts from the client to the writer. Although the risk a writer could be on the hook for a claim is small, the legal costs could be enormous if a lawsuit does arise.

After refusing to sign a contract that required her to indemnify a large corporate client, freelance medical writer Gloria Arminio Berlinski, MS, used her experience as grist for the mill and interviewed William Sullivan, DO, JD, to increase awareness about the issues surrounding unfavorable indemnification provisions. Dr. Sullivan is an attending emergency physician at OSF Saint Elizabeth Medical Center in Peru, IL, a clinical assistant professor of emergency medicine at Midwestern University in Downers Grove, IL, as well as a senior editor of Emergency Physicians Monthly. Dr. Sullivan’s law practice, located in Frankfort, IL, focuses in large part on medical contract review.

The more vigilant medical freelance writers are about troublesome contracts and the pervasive use of sweeping indemnification clauses, the better equipped they will be to mitigate risk and run their businesses successfully.

The conversation has been edited for length and clarity.

Ms. Berlinski: Can you provide some insight as to why broad indemnification clauses are so common in corporate contracts for freelance writers?

Dr. Sullivan: Indemnification is common in certain industries, but what’s happening, I think, is that corporate lawyers who create those contracts start to apply broad indemnification principles to agreements where they don’t belong. That’s my gut feeling why it’s happening. In freelance writing, indemnification may be becoming more prevalent because people often don’t understand what the concept of indemnification means and need to sign contracts so their articles can get published. The more people agree to indemnification, the more companies and lawyers feel emboldened to include indemnification clauses in their contracts.

I can tell you from reviewing medical contracts, indemnification, probably about 10 years ago, didn’t use to be an issue. You didn’t see it, but it’s becoming more common now—at least in medical contracts.

A lot of corporate contracts, especially manufacturing contracts, include indemnification clauses. For example, if someone sues Home Depot because of an injury from a faulty product, the company is going to have the stance that they’re just selling the product and don’t have any responsibility for manufacturing, so they want indemnification from the manufacturer who actually made the product. Then, if someone sues the company, then the manufacturer is going to reimburse that company. Leases are another example. If a tenant sues their landlord because someone gets injured on the premises from something that’s out of the landlord’s control, then the landlord wants to be indemnified because they had nothing to do with what happened. I think in these types of situations, indemnification may be appropriate.

I recently spoke with a freelance medical writer who indicated that, for years, she was able to contract with large corporations. But she can’t do so any longer, primarily because of contract indemnification. So it’s taking a whole block of potential clients off the table for her. What do you make of this?

In general, that’s one of the problems dealing with large corporations that impose adverse contract terms. If a company has a large market share, it can demand contractual terms that create a “take it or leave it” situation. If you want work and you want to get published with that company, then you have to agree to the company’s terms. I see the same thing in medicine. There are some regions of the country where a contract management group for emergency medicine has a huge footprint and, if you want to work in that area, then you have to agree to that group’s contract terms. Some companies may be able to force their contractors into indemnification because they have such disproportionate bargaining power.

What are the chances of freelance medical writers slashing broad indemnification clauses out of client contracts?

I think it depends on your stature in the community. Medical writers in high-profile positions can dictate the terms of a contract more than those just starting out. There’s a symbiotic relationship between writers and publishers. Large publishers need to create a lot of content to maintain their relevance.  If they don’t get that content, then they’re going to have to reevaluate their business practices.

Excluding one writer because they won’t agree to indemnification is probably not going to have much of an effect on the content stream. But if a large group of writers refused to agree to any contracts with indemnification, that would affect the number and quality of submissions to publishers and may make companies stop and think about whether they want to continue including indemnification in their contracts with freelance writers.

At some point, the scales would tip in the other direction.  Issues like this may be what spurs on the next publishing company that would be willing to break the mold and take into account the interests of freelance writers – and do what’s right.

 What are the implications of broad indemnification clauses for freelance medical writers?

Indemnification started as a concept where, if one party didn’t do anything wrong and that party got sued, then they shouldn’t have to bear the brunt of a lawsuit and pay for any damages if someone got injured. With the example before about a retail store stocking a product, if there’s some inherent defect in a product manufactured by a third party that injures someone, the store doesn’t want to be responsible for injuries related to that defect because the store is merely stocking the product. The store didn’t create the product. The whole idea behind indemnification started out based on fairness—that a party without liability shouldn’t be sued for the actions of another party who did do something wrong.

With an indemnification agreement, that whole concept is thrown out. When people agree to indemnification in contracts, it doesn’t have to do with just the other party doing nothing wrong. The indemnified party can demand that the party agreeing to indemnification reimburse them for any damages related to the contract. Contractual indemnification can turn the concept of indemnification on its head by taking it further than it was intended.

If indemnification clauses in contracts didn’t exist, one party could still bring legal action to recover any damages it incurred because of the wrongful acts of a third party. There’s a concept called “contribution” where a defendant in a lawsuit can file a claim against another party it believes was responsible for a plaintiff’s injuries, forcing that third party to pay for some or all of the plaintiff’s damages. Also, if one party’s negligent actions contributed only minimally to a plaintiff’s injury, when determining damages, a judge or jury may apportion the amount of the verdict based upon how each defendant’s negligence contributed to the plaintiff’s injury.

Again, the idea behind a lot of these concepts is fairness and equity. However, if agreeing to contractual indemnification, depending on the wording of the contract, a freelance medical writer could be held responsible for all damages alleged by a publisher, even if the publisher was negligent and the writer was not. This is why contractual indemnification can be such a dangerous concept.

Can you comment on indemnifying frivolous claims? What if both parties did nothing wrong and a third party’s claim has no merit?

That’s another way indemnification got turned on its head. I really don’t think indemnification belongs in publishing contracts at all. But, if a broad indemnification clause is included in the contract, the medical writer would be responsible for a frivolous lawsuit brought against a publisher because of an article written by the medical writer.

The medical writer could be required to reimburse the publisher for legal fees and court costs, even though there was no merit to the lawsuit. For example, if someone claims an author violated a copyright, even if the author didn’t do so, it doesn’t matter. If the publisher gets sued and the author agreed to indemnification, then the author may be legally responsible for compensating the publisher for all the costs of defending the lawsuit and any judgements. Writers who agree to indemnification are essentially becoming the insurance company for the publisher.

How would you respond to the stance that having indemnification clauses in contracts is standard because the risk of a claim is so minuscule that there’s no need to be concerned?

If the risk is so minuscule, then why does a publishing company want indemnification to begin with? They can’t argue that the risk is so small that the writer doesn’t have to worry about liability, yet at the same time, the risk is so large that they have to protect themselves with language that’s against the interest of the writer. To me, it’s a silly argument – companies need indemnification to protect themselves from a huge legal risk, while at the same time, the risk is so small that writers shouldn’t be concerned.

What are some practical steps freelance medical writers could take when confronted with an indemnification clause?

The first response to seeing an indemnification clause should be to delete it. It shouldn’t be in a writing contract at all. If you’re absolutely stuck and you really want to work with the publisher and they refuse to remove indemnification, then the second best option that may be able to lessen your liability is to indicate indemnification for “intentional acts” or “bad faith” that results in damages. The term “intentional acts” means that writers knew that there was something wrong – for example, they knew that there was a copyright violation or they knew that what they were publishing was defamatory and they chose to submit the article anyway. “Bad faith” is a term used frequently in contract language and roughly translates into a lack of honesty in dealing with others or an improper intent.

Keep in mind, if a writer indemnifies a publisher and the publisher gets sued for something the writer wrote, the issue will still involve court proceedings, the writer will need to hire an attorney, and the writer will have to pay a lawyer for legal representation. If you agree to indemnification, you’re opening yourself up to having to pay out of pocket for an attorney to defend you in that case.  A defense to a claim of indemnification for an intentional act would be that you submitted an article in good faith—that you researched it and you can show your research, you interviewed people and you can show notes from the interview. While you may have a defense in such a situation, you’re still going to have to go to court and pay a lawyer to defend you if you contractually agree to indemnification and the publisher chooses to enforce those terms.

So, in my mind, the best option would be to delete the indemnification clause. The next best option to limit liability would be to add that the indemnification only applies if a freelance medical writer’s work was made in bad faith or was intentionally harmful. In this case, it would then have to be proven that the medical writer wasn’t acting as a medical writer should and they were doing things for some ulterior motive.

Could freelance medical writers try to limit the scope of damages in a contract to the amount the writer’s liability insurance will cover?

Liability insurance generally does not cover indemnification. I can absolutely tell you that medical malpractice insurance policies do not cover indemnification. I’m going to imagine, at first blush, without researching, that it would be pretty unlikely that liability insurance is available to cover indemnification for a freelance writer. You’ll have to look into that. If you’re thinking about buying insurance for this reason, ask the potential insurer whether it will cover indemnification before you purchase a policy.

Can you comment on the enforceability of broad indemnification clauses in contracts for freelance writers?

For the most part, courts view contracts as an agreement between two parties who understand what they’re bargaining for. They agree to the bargain when they sign the contract and therefore they’re bound by the terms, even if those terms end up being against the interest of one of the parties. In an article I wrote for my blog [https://sullivanlegal.us/indemnification-in-scholarly-writing/], I cite a few cases where courts have ruled that, under certain circumstances, indemnification is unenforceable and against public policy. Unfortunately, those rulings vary by state and industry.

Broad indemnification is such a big ask for freelance writers and other small vendors. I wonder to what extent people really understand this.

I often take the time at the beginning of my lectures to ask the physician audience if they know what indemnification means. I found very few physicians understand indemnification. Hopefully this interview helps educate your readers. Do not agree to indemnifications clauses — they’re bad news.