August 28, 2008

Does An Independent Contractor Owe a Fiduciary Duty to The Company?

SEOmoz | Beware Pay-Per-Performance Agreements: SEM Sues Pop Phenomena 'The Secret' for Unpaid Share of Web Revenue

In November 2007 I blogged about a wacky lawsuit involving the movie/book/TV phenomena called "The Secret" and an SEO, Dan Hollings. Several months have gone by and both parties have been busy.

I've written before about the dangers involved in commissions-based or pay-per-performance contracts. ... There is tremendous potential for gain, but also tremendous risk. If you decide to take the plunge, make certain you have a solid written and signed contract. ....

There haven't been any rulings in the case yet about whether Hollings owed a duty of loyalty to The Secret by virtue of his relationship with the company. Generally, an SEO/M probably isn't an agent or fiduciary of his or her client. However, it is possible for an SEO/M to become an agent with special duties of loyalty depending on the nature of the relationship and the agreement between the parties.

To avoid unintentionally having a duty of loyalty to a client, expressly state in your contracts that you are an independent contractor, not the client's fiduciary or agent. Clarifying your relationship with clients helps them understand that you can work with their competitors and have no legal obligation to further their interests to the exclusion of others.

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