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Company allowed to audit Translators business?
Thread poster: Hildegard Klein-Bodenheimer

Hildegard Klein-Bodenheimer  Identity Verified
Germany
Local time: 03:03
English to German
+ ...
Feb 22, 2009

I am just in the middle of negotiating with a large translation agency that provided me with an even "larger" independent contractor agreement. I have signed my share of contracts but here is one point that I haven't seen before.

"...The Company reserves the right to conduct audits of Contractor's facilities, business practices, and any other matters reasonably relating to the performance of Contractor's services hereunder... Although the Company ...will endeavor to provide advance notice...the parties agree that the Company may conduct an unannounced audit."

No Company ever "offered" to audit my business - and even more disturbing what are "any other matters reasonably relating to the performance of Contractor's services"? That seems to me they ask for the right to go through my office, my computer, my books, all my files and projects with other clients as they "might or might not?" be related.

Does anyone have experience with a contract like this? Should I ask them to leave this clause out? But I guess the likelihood that they will do that is slim.

Any thoughts on this?

Thank you all.


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ElleC  Identity Verified
United States
Local time: 20:03
English to Spanish
+ ...
You would give them the right Feb 22, 2009

If you sign the contract, then you give them the authority to conduct an audit. I would try to negotiate that clause out of the contract, but if they won't go for it, then you'll just have to decide whether working with that company is worth the potential hassle.

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KSL Berlin  Identity Verified
Portugal
Local time: 02:03
Member (2003)
German to English
+ ...
Sounds intrusive Feb 22, 2009

Tell them to take it out or get stuffed. There is plenty of work in your language pair; you don't need to put up with such nonsense. Or insist that you have a reciprocal right to audit them. That could be even more interesting.

As a medical device consultant I once showed up to do a spontaneous audit of a silicone products supplier on a lark. It was great fun, but if someone tries it with me, I'll toss him in the creek.


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Laurent KRAULAND  Identity Verified
France
Local time: 03:03
French to German
+ ...
I flatly declined it Feb 22, 2009

Hildegard Klein-Bodenheimer wrote:

I am just in the middle of negotiating with a large translation agency that provided me with an even "larger" independent contractor agreement. I have signed my share of contracts but here is one point that I haven't seen before.

"...The Company reserves the right to conduct audits of Contractor's facilities, business practices, and any other matters reasonably relating to the performance of Contractor's services hereunder... Although the Company ...will endeavor to provide advance notice...the parties agree that the Company may conduct an unannounced audit."


I think I know which translation agency asked for this kind of agreement to be signed, as I had some dealings with them. From my point of view, it is not a matter of negotiating as the PM who contacted me made it very clear, it was a matter of "Love it or leave it".

As the rate generously offered by this outsourcer in my case (0.08 USD) was a bit of low at the time being, I flatly declined the agreement and therefore put an end to my contacts with this agency.

There were other points in the agreement that were barely legal under EU law - this company has its HQ in the States. So, and to make a long story short, I told them that their agreement was a leonine contract.


Laurent K.

PS: some colleagues also voiced their concerns about what they call a non-negotiated contract.

[Edited at 2009-02-22 20:16 GMT]


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Aniello Scognamiglio  Identity Verified
Germany
Local time: 03:03
English to German
+ ...
A joke! Feb 22, 2009

Are you a business partner or a slave? Never heard of such a practice. I would drop them like a hot potato!

[Edited at 2009-02-22 19:18 GMT]


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Birthe Omark  Identity Verified
Denmark
Local time: 03:03
Member (2006)
French to Danish
+ ...
Not a joke, not slavery - a mark of professionalism! Feb 22, 2009

I am not surprised at all of the clause.

The company you are signing up with is most likely ISO-certified or similar. It is Good Business Practice and, I believe, even a requirement that suppliers must be audited. So, supplier audit is only normal, professional procedure.

Quite a few translation agencies have been awarded and ISO-certification. This is something we should welcome.
This forum is the living proof of how all the miseries that come from lack of professionalism an amateurism.

Take it, be proud of it. Work with it. Encourage it.

Birthe


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Katalin Horváth McClure  Identity Verified
United States
Local time: 21:03
Member (2002)
English to Hungarian
+ ...
I have seen something similar, but in a slightly different context Feb 22, 2009

A while ago I was asked to sign a supplementary agreement with one of the agencies I am working for regularly. This was related to work for a specific end client, where it was part of the work to access some files on the end client's servers and do testing on them. In this case the end client required the agency to sign an agreement (let's call it the Main NDA), with a large and detailed NDA clause, and they also required the agency to have every one of their subcontractors sign a similar, but not entirely identical document (let's call that the Sub-NDA).
The clause about the audit was in the Main NDA, but not in the Sub-NDA. I was shown the Main NDA, because the Sub NDA made reference to it, but I only had to sign the Sub-NDA.

I have never signed any paper to allow anyone conduct an audit on my business, and I don't think I would have signed that Sub NDA if that was included, at least not without consulting an attorney.

One more thing: Since I had a blanket NDA signed with this agency, I made some noise about the possibility of a "double whammy" if I signed this additional NDA for this specific and client. in other words, if something went wrong, both the agency and the end client could sue me, for the same thing. The agency accepted my reasoning and they signed a waiver, which said that for this specific end client, only the end client's NDA is valid, the blanket NDA of the agency is not. I found this acceptable, and I thought I would mention it in case somebody else finds himself/herself in a similar situation.

Katalin

[Edited at 2009-02-22 20:14 GMT]


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Laurent KRAULAND  Identity Verified
France
Local time: 03:03
French to German
+ ...
Quality audits... Feb 22, 2009

Birthe Omark wrote:

The company you are signing up with is most likely ISO-certified or similar. It is Good Business Practice and, I believe, even a requirement that suppliers must be audited. So, supplier audit is only normal, professional procedure.


can be made (against payment, of cause) by neutral third-party certification bodies, which then declare that the working conditions of outsourcee X meet or don't meet the quality standards as described in the reference documents - e.g. those relevant for EN 15038.

This makes a great difference to the above mentioned agreement, according to which the outsourcer gives themselves the "right" to audit their subcontractors at nearly any time they like - which, imho, is not a sign of professionalism or seriousness.

Moreover, and as far as I can remember, the agreement mentioned by Hildegard does not contain any reference neither to a known quality standard, nor to a transparent auditing procedure - which is against all rules of QA.

Laurent K.

[Edited at 2009-02-22 21:22 GMT]


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Marcus Geibel
Germany
Local time: 03:03
English to German
I know such clauses.. Feb 22, 2009

...from franchise agreements.
But you aren't entering into a franchise with this client, or are you?

And still, if the franchiser reserves the right to audit you, this is still limited to the extent you are doing business with him - any other parts of your business are "off limits" for such audits.

And if it is in the context of ISO certification, there should be some verification that such audits are required - and a limitation to the particular business relationship will of course be necessary.

Who would think of letting a customer spy in her/his business affairs? You are an independent enterprise yourself, keeping business secrets as they are meant to be - secret! What would this very customer say if he saw his business details revealed to other "auditors" of your business?

So take it as it is - love it or leave it.

Good luck!


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RobinB  Identity Verified
Germany
Local time: 03:03
German to English
Certainly not unannounced Feb 22, 2009

This sort of supplier audit is standard practice in the financial services industry, and we've agreed to this sort of provision in master agreements we've signed with banks and other financial services clients. The main issues here are data security, compliance, and data protection. Nothing else. The standard stipulations are 1) the audit must take place during normal business hours; 2) at least 24 hours' notice must be given; 3) the audit only extends to the data relating to that specific bank or financial services company; and 4) the auditors (either internal staff from the bank or external staff from a large audit firm) have to sign *our* NDAs before they're permitted access to the data concerned.

I think this sort of ring-fencing arrangement is also standard practice, as is at least 24 hours' notice of an audit. What your agency is trying to impose is IMHO unreasonable and unenforceable.

Robin


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Hildegard Klein-Bodenheimer  Identity Verified
Germany
Local time: 03:03
English to German
+ ...
TOPIC STARTER
Rights of other clients Feb 22, 2009

Thanks to everyone for your input.

Reading the Pros and Cons shows me that others have experience with this type of request too. My main concern is the very vague phrasing of their rights
"reserves the right to conduct audits of Contractor's facilities, business practices, and any other matters reasonably relating to the performance..."

Which facilities, which business practices, and especially which reasonably related matters?

This opens the doors to everything translation related in my business. What about the rights of my other clients, what about their expectations of confidentiality? Who draws the line and decides what is reasonably related?

@ Birthe - Your sentence: "This forum is the living proof of how all the miseries that come from lack of professionalism an amateurism." suggests that we try to hide improper business practices. I am certainly rejecting this allegation for my person.

Providing professional and good work for clients also means to protect their property and their projects from any other agency. This clause does not provide that protection.


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Roberto Cavalcanti  Identity Verified
Brazil
Local time: 22:03
English to Portuguese
Ask for clarification/modification Feb 22, 2009

Hi Hildegard,

To accept this clause you should ask it to be detailed, what would be audited and how and by who?
Also you need to include some clauses to protect your information and of your clients.
Agree first the scope of the audit.
Regards,
Roberto


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Laurent KRAULAND  Identity Verified
France
Local time: 03:03
French to German
+ ...
OT: What these fora Feb 22, 2009

and their recurrings topics show first and foremost is that the "translation industry" more than badly needs a few simple, universally accepted and enforceable rules for both agencies and translators so that it appears as a professional part of the global market and not as a lobster cage or as a backwater ruled by the law of the jungle!

Laurent K.

[Edited at 2009-02-22 21:42 GMT]


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Laura Tridico  Identity Verified
United States
Local time: 21:03
Member (2006)
French to English
+ ...
I'll bet they're using some sort of form contract... Feb 22, 2009

except that this kind of provision is silly in an agency-translator relationship. I doubt they would ever have any intention of enforcing the provision, and they probably never gave it a second thought.

I've seen this sort of in a manufacturing context - for example, if Company A is manufacturing goods for Company B, Company B may want a right to inspect Company A's factory to confirm that the products meet specifications, safety standards and the like. As someone else mentioned, a franchisor may want the right to inspect franchisees (which is also logical). In general, however, it would be nonsensical (and a total waste of time) for an agency to inspect a freelance translator's office.

I would strike the provision, point out to the agency that it makes no sense, and tell them that you don't believe in putting unnecessary, superfluous language in your agreements. I suspect they'll agree with you and delete the clause. If they insist, however, I would question whether you want to work with such an inflexible client.

Just my two cents...

Laura


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Narasimhan Raghavan  Identity Verified
Local time: 06:33
English to Tamil
+ ...
One-sided agreements Feb 22, 2009

The translation agencies act under the impression that they do us some favor. Actually it should be a mutually beneficial agreement. The other day one agency approached me with an offer along with a template NDA. I give below my exchange of emails with this agency.

I approached the matter with the following mail.
"As for the NDA, it should be mutual. That is to say, you too shall refrain from disclosing any details that I might give you to third parties. A sentence to this effect has to be added.

Either we proceed on a gentleman's agreement without becoming too formal or if at all formality is to be respected, the NDA should be altered to include your obligation too as described above".

The agency replied thus:
"As far as the NDA is concerned I am afraid you have to accept it the way it is and we wont be able to modify it since this is our standard format for all the translators. Besides I don’t see any information from your end as being sensitive".

To this I promptly replied thus:
"I am sorry, I still have reservations. For example, the condition:
6. The translator will not approach the clients of XXXXXX directly without the express consent of XXXXXX.
What am I to make of it? After all I am a service provider on my own and I too have my own clients and new clients do approach me every second or third day. Surely you cannot expect me to ask you for permission every time a new client approaches me. This rule seems to be quite vague and hangs like a Domocles' sword. We in Proz com have already discussed this sort of one-sided agreements and the consensus is not to accept such agreements. Will you give an undertaking not to approach my clients without my written permission?

Besides, you write, "Besides I don't see any information from your end as being sensitive".

How do you know? My bank details are sensitive. My contact information is sensitive. There are mail order companies buying just such information. You cannot just dismiss my own fears in such an offhand manner.

You say that the NDA template is fixed and it cannot be altered. That is your problem. And, I disagree. It is not gospel and even gospels get changed over the years.

Even the definition of discloser and recipient is loaded against me. When I disclose something I become the discloser and you become the recipient but your template agreement refuses even to take into account that possibility.

I repeat. Either let us not go in for these rigmaroles and just get on with collaboration or make it mutually binding. After all I have not signed this sort of NDA with any of my clients and I intend to keep it that way".

The PM phoned me and said that they are gentlemen and will not disclose my details just like that. I replied that I too am a gentleman and offered to keep the whole thing as gentleman's agreement.

In the end he agreed to alter the NDA to make the secrecy keeping a mutual affair. As for not approaching the end client directly, the end client was defined as the one whose identity is known to me solely due to the particular translation assignments. And the definition of discloser of information as well as that of recipient of the same information was made to include both the parties.

I sent him a modified NDA incorporating all these points and he accepted it in toto. Since then he has become a good client of mine.

Regards,
N. Raghavan







[Edited at 2009-02-22 22:18 GMT]


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