By Lindsay Field Penticuff
After working as in-house counsel for companies in the construction industry for nearly 15 years, Wendy Estela, a partner at Kahan Kerensky Capossela LLP, switched gears so she could support interior designers with their design contracts.
“I worked for an elevator company and a general contractor that built power plants—managing a lot of subcontracts,” says Estela, who has been practicing law for 24 years—10 working exclusively with interior designers—and has her license in Connecticut, New York and Utah. “It was all great and it was good training for me, but it never quite clicked. I learned very good basics for contracts, subcontracts and trades, coordinating trades and all of that.”
Parallel to that, she had an interest in design and made many friends in the industry throughout the years.
“A very good friend is an interior designer and she’d be venting to me about some of the experiences she is having. It just sort of naturally evolved into me helping her with a contract and her telling her other friends about me. I really liked working with them and they appreciated the guidance I was giving them,” Estela says.
She felt like that was an opportunity to represent a group of professionals who didn’t seem to have guidance in the way of legal support.
“I had all this experience that fit with my friend group that became my clients, and it’s a circle— friends who become clients and clients who become friends,” she says. “I really love it … and I think it’s the right fit because of my personality type.”
Below, learn more about Estela’s background in law and how she’s supporting interior designers in our industry, and be sure to review the essential elements she believes should be included in design contracts to help strengthen client relationships and protect designers from potential legal disputes.
Given your experience in contract negotiations and disputes, what are some common legal challenges that interior designers face, and how do you advise them to navigate these issues effectively?
In the relationship: “Even though everyone calls me for their contract, it never comes down to the piece of paper—ever. It comes down to the relationship. Listening to your client, paying attention, and watching body language and good communication … those are the things you can never overlook. When you’re negotiating, you have to actively listen and understand not just what the client wants out of the design, but what are their interests and why do they want these things. I think designers do a really good job of asking questions like, ‘How do you want to use your space?’, but you have to understand what they want out of this deal and when you start understanding the interests at play, it’s a lot easier to start negotiating the specifics of the project. It rarely comes down to negotiating over the number.”
In the contract negotiation: “The most important things to negotiate are holding the money upfront, having some sort of cash flow. Beyond the relationship, you have to know how to protect yourself. Making sure the cashflow is there, making sure the disputes stay out of court if they happen (happen through arbitration) and when there’s a dispute, no one is disparaging each other (online reputation protections), tapping your legal liabilities (if you as a designer massively screwup, you want to make sure the most you’re getting screwed for is your design fee and you can write that into a contract). … Holding the money upfront is the No. 1 thing I tell people, because most disputes are under $40,000, and if you’re under $40,000, it not worthwhile to go to court, because you’re going to pay $20,000 to a lawyer, and you might settle and get $30,000, and most of that goes to your lawyer. It’s always important to hold any amounts that you’re owed on a month-to-month basis.”
You’ve mentioned your commitment to supporting minority-owned, women-owned and veteran-owned businesses. How do you approach legal counsel differently for these clients, considering their unique challenges and goals?
“I understand that the business and a person are very much intertwined, and I understand that with businesses owned by women, minorities, LGBTQ+ and veterans, there are a lot of issues where our self-esteem may not quite be where it should, because we deal with imposter syndrome. I have an element like a coach, where I am telling clients all the time, ‘You have to know your worth.’ I coach them how to negotiate a contract or deal. They often need that encouragement. Anyone who has been on the outside before struggles to stand up for themselves at times, so I spend extra time in that role as a coach verses not just an adviser. I really try to do a lot of the face to face, because it’s important to get to know others as people, and that’s the difference. You have to connect on a human level.”
In your experience, what are some essential elements that should be included in design contracts to strengthen client relationships and protect designers from potential legal disputes?
- Make sure cash flow is positive and front-loaded for the designer. You don’t want a situation where you are fighting over the last invoice. Whatever combination of ways you’re charging, you want to be able to have enough to cover your last invoice, so if you have a retainer, hold it until the last invoice. Don’t charge against it month to month, unless you’re religiously doing it and you’re replenishing it.
- Make sure during dispute resolution, you stay out of court, because I feel like the homeowner/clients—when a dispute happens—they will go ‘scorched earth’ against the designer and spend all this money to out-fight you and out-lawyer you. If you keep it private, there’s no public record of your dispute.
- I would have a provision for delays. I like to say that in no circumstances is a designer liable for a delay. There’s a million moving pieces the designer has no control over, so that has to be clear in the contract and communicated to the client. The designer also has no responsibility for contractors and that coordination of that. Make sure there’s no contractual tie to the designer. Having the right words and making sure it’s clear is important.
- When clients cause delays and don’t make decisions swiftly, you should have the ability to charge them a delay fee. I recommend putting a dollar amount in the contract. You don’t want to have to charge that amount, but you want the client to see that if they don’t make quick decisions, they are going to get charge ‘X’ amount of money if a project is delayed several months, and make sure it’s charged at the designer’s discretion.
- Clearly explain your processes and pricing; the scope of work of the project; the design scope and process. That’s the one thing everyone does a little different, and some people want to get very detailed, while others just lay out three phases. You want to make sure it’s very clear what’s included and what’s excluded.
- When thinking about intellectual property, you want a disclosure saying you own everything related to the design.
- Make sure there’s contractual details regarding termination—the ability for the designer to terminate the client and for the client to terminate the designer.
- Risk-shifting provisions like indemnity, insurance and a cap on your liability should be run by lawyer to make sure it’s right.
- At the end of the project, make sure you formally closeout the project, meaning this project doesn’t last forever. Include a letter saying this formally concludes the contract with a date.
- With regards to change orders, outline the late date to make changes so that they know when you’re no longer available.
The intersection of business law and interior design is intriguing. Can you share a memorable case or scenario where your legal expertise significantly impacted the outcome for an interior design client?
“I’ve got one client in New York City who had a very comprehensive contract written by a lawyer and said a lot of people weren’t calling him back. I read the contract and I even had hard time getting through it. It needed to be more concise, so we took his very long, thorough contract and took sections that were a paragraph and cut them down to one or two sentences. I tend to put things into the letter of agreement format with a page of legal terms and conditions, and make it more of a letter document for the client. We’ll flip it into landscape format so that it can also be put into a PowerPoint and have photos. It makes it more palatable to the client. It’s not intimidating.”
“I had two designers who worked together for a long time, and they reached out to me because they were not quite ready to retire, but they had been friends for a long time and their design philosophies and business model was going different ways. I helped them go through everything over months—they were crying and mad at each other. It wasn’t easy, but we were able to go through everything. It always comes back to intellectual property like the Instagram account and who gets the pictures and how are they credited; the client list; and questions about inventory and points on credit cards. When you’re starting a business, you’re not thinking about breaking up. … That’s something that I didn’t expect to have so much involvement in, but most people I work through contracts will almost inevitably call back with these types of issues. I know that I’m helping them with things that are fairly straightforward for me, but they don’t want to deal with it. It can detract from the creative energy and process to deal with that kind of stuff.”
What advice would you like to share with new and seasoned interior designers?
Be your authentic self. As far as your contract and how you run your business, your contract should also be a reflection of you. That’s why templates are fine in the beginning, but the minute you can afford having a bespoke contract, make it yours. Put it in your own words, have a cover letter that you write. Use the adjectives that you use. Be you and let that document reflect you, because if you don’t own it and know it, you’re going to be working for the contract rather than have it support you.
Trust your gut. You know when a situation is not good, or you know when you’re being taken advantage of. There are times when you’re going to take a risk, and that’s OK, because business risks are OK, but be aware that you are taking that risk and deviating from the way that you generally work. But manage it. Risk isn’t bad, it just has to be managed and you have to be aware of it.
Know yourself, know your business, be true to yourself, trust your instincts and your gut, and run your business the way that it works for you.
You can’t just copy another person’s model, because no two designers run it the same. There’s no template for a design business. The way you’re managing your clients is so specialized and intimate that it’s different. I really like working in this niche because every day is different, and I love it.
“Be sure to keep up with Wendy via her socials and learn more here.
