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Legal Considerations For Becoming A Freelance Project Manager

Becoming a freelance project manager can be a rewarding and lucrative career opportunity. Self-employed project managers can find themselves in high demand with small to large companies that require a strong leader to plan, oversee and execute projects. Project management requires a range of skills and, although it’s common for project managers to have business-related degrees, it is often the business and project planning experience someone has accumulated that provides them with the skills needed. Many in-house project managers and business employees who have taken a leading role in commercial projects, decide to go freelance. Often because they require more flexibility, are looking for more variety in their work or want to increase their earning potential. Whatever the reason, freelance project managers will need to think carefully about how they establish their self-employment, adhere to legal requirements and ensure their business is protected and compliant.

Here are a few required steps you’ll need to take and legal considerations for becoming a freelance project manager:

Registering As A Freelance Project Manager

It’s essential you inform HMRC that you are becoming self-employed. This is required for tax purposes. It is then up to you whether you decide to operate as a sole trader or set up a limited company and make yourself a Director.

As a sole trader, you’ll need to register with HMRC and ensure you fill out a self-assessment form every year to pay tax on your earnings. Becoming a sole trader is a fairly simple process and you won't need to make anything about your earnings/turnover public. However, as a sole trader, you will also be personally liable for any business debts.

Setting up a limited company can be harder to manage and there is more ongoing paperwork. You will need to register with Companies House and supply them with annual tax returns for the business. If your business stands to make a sizable profit it can be more cost-effective to run it as a registered company and this also means that it is the business, and not you personally, who would be liable for any business-related debts. It also makes it easier to hire staff if needed and it can make you appear more professional. Companies may prefer to contract projects out to a business entity rather than a person, in some circumstances. However, many project managers also operate as sole traders without any issues.

Terms And Conditions Or Service Agreements For Project Managers

This is potentially the most important document for any person contracting out services. This document lays out the terms of your working relationship, including:

  • The status of your working relationship - it’s important to emphasize that you are not an employee of the client

  • An overview of the service you will provide and what that will comprise of

  • When work will commence, when milestones will be reached and when the project will be completed

  • What would be considered a completed project

  • What will happen when the project is delayed by the client and/or is delayed due to the contractor

  • What payment will be, how it should be made and when it should be made

  • Cancellation policies

  • Liability levels

  • Termination provisions

  • How potential disputes between the parties will be resolved

Your terms and conditions may also include other clauses, including copyright or materials supplied by you (and whether you will license these to the company) and non-disclosure agreements, should that be necessary.

As a freelance project manager, you will likely find that companies provide a service agreement for you to sign. However, you may still have your own terms and conditions to ensure you are protected and that the company to whom you are supplying services understands their obligations.

Do you need help deciphering a services agreement provided to you by a client? I can review this for you and ensure that the agreement represents your interests and that the scope of work is reasonable. If there is anything you are unsure of, or unhappy with, in the contract, I can also advise you in approaching and resolving this with the client. Please do get in touch for legal guidance.

Intellectual Property And Project Management

It may be that as a project manager, you utilise your own created templates for managing workflows, organising data, formulating processes, etc. If you have created these, the copyright belongs to you. However, you may license the use of these materials to the client if you wish to.

It’s important to emphasize that you don’t have to. Using these in your work with them does not necessarily mean you need to grant permission for the client to use these after you have completed the contract. In fact, many service providers would include this clause in their service agreement to protect their intellectual property and increase their professional value.

You may also need to be mindful of the license agreements you have with any software subscriptions you use and other copyrighted materials you provide to clients. Licenses for any materials or software that will continue to be used by the company after project completion should be owned by the company and not the project manager.

Qualifications For Project Managers

There are no legal requirements in terms of qualifications to become a project manager. Often freelancer project managers have worked in-house in a project management role prior to going self-employed. Some have a business-related degree but that's not essential. Other qualifications can also assist in launching or furthering a freelance project management career, including Prince2 qualifications.

Insurance For Project Managers

As a freelance project manager, you will likely need professional indemnity insurance. This is essential for persons or businesses offering advice and services to other businesses.

Project management is highly challenging and, despite those who choose this career usually being organised and skilled in people management, meeting deadlines and following processes, projects can still get delayed or fail to meet objectives and/or desired outcomes. This is why professional indemnity insurance is essential for project managers because this enables you to take on any claims you may receive that your service was inadequate or resulted in a financial cost to the client's business. Should you be found to be liable, professional indemnity insurance should be able to cover the costs. Most importantly though, it should cover legal fees if you decide to challenge the claim, which may also protect your professional reputation.

Legal Advice For Freelance Project Managers

Do you need help with your contracts? Either drafting your own terms or reviewing a services agreement from a client? Then please get in touch.

I can advise you as to whether client contracts are fair and reasonable and ensure you're protected as you enter into a services agreement. Furthermore, I can advise you on any IP issues and other legal considerations that may arise in the course of your freelance project management career.


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