🎉 Lock in 2020 Pricing Now: Tuition Increase January 1st, 2021! 🎉

Legal 101 for Life Coaches

Related Posts

Your Coaching Adventure Starts Here.
Schedule your 20-minute informational call to learn more.
Book A Call
The legal guidance in this article was developed in collaboration with attorney Valerie Del Grosso, creator of The Coach’s Legal Library. With more than 12 years in practice, Valerie specializes in working with life coaches to ensure your business operations are set up to run smoothly. To access the Library along with additional tools, resources and guidance, visit Del Grosso Law.

The Legal Nitty-Gritty Every Life Coach Needs to Know

With virtual life coaching and group programs on the rise, launching an online business is easier now than ever before. And if you’re operating as a solo coach practitioner, you can begin doing business today with little more than a phone and a laptop. But before investing in business cards and a website designer, there’s a few legal issues related to running a life coaching business that are helpful to be familiar with.

Yeah, we know - you became a life coach so you can help people! Is all this legal stuff really necessary? Yes, and here’s why:

  • Your heart, time and money all go into developing your unique brand. Do you know if your business or program name legally belongs to someone else already? What could happen if it does?
  • Program names, ideas, and content are frequently stolen online. Is your perfect business idea protected?
  • Imagery, photos, and art are subject to copyright laws. Do you know if the photos on your website are legally yours to use, and what could go down if they aren’t?
  • You’ve invested in extensive training as a life coach. When it comes to running your coaching business, we know you want to do it right.

Savvy coaches know their legal requirements!

In this article, we review the most common business startup questions that you are likely to have as a life coach. We'll also go over the specific legal requirements you need to be aware of. By the end, you’ll be able to put your nagging legal unknowns to rest so that you can send your work as a life coach out into the world with confidence.

Want a quick rundown of the topics included in this guide?

Here’s What We’ll Cover:

  • The one thing you absolutely must have when doing business online
  • Consumer privacy laws
  • Selecting (and protecting!) program and business names
  • Using other people’s content and images in your work
  • Client agreements and refund policies
  • Whether you need to set up a legal business entity

As we go, it's important to remember that individual circumstances vary. Depending upon where in the world you're practicing as a life coach, there may be specific legal requirements to be aware of in addition to what we’re covering here. When in doubt, consult a good advisor in your local area!

Privacy

Developing a robust contact list of prospective clients is a core strategy for building a sustainable coaching business. If you are doing it primarily through a social media platform like Instagram or Facebook, it's important to remember that you don’t own that asset. What this means is you don't actually have the contact information for your followers. In in the event that the platform you're relying upon shuts down or changes how it does business, you could lose your audience overnight.

To mitigate this risk, many life coaches develop their own contact lists in addition to having a social media presence. If that sounds like something you'd like to pursue, a simple way to populate your email list is by offering a freebie or bonus in exchange for the person's email address. For many coaches, this is a sound strategy for building your audience, demonstrating value, and attracting potential clients.

Now here comes the legal fine print...

If you are going to collect emails or other personal information, you need a privacy policy.

If there’s one thing you walk away from this article remembering, it should be this!

Your privacy policy needs to be accessible to the public in some fashion. A best practice is to include a link to that policy on the footer of your website, and on any sales pages that you may have. Again, this is essential if you are collecting contact information.

So what does a privacy policy entail?

If most of your coaching clients are in the United States, and you have fewer than 50,000 people on your list, privacy requirements are pretty straightforward. Here’s the 3 things you need to cover:

1) You need to let people know how you are collecting their information. This should include:

  • Your website contact form
  • The platform you use for managing contact information (ActiveCampaign, Constant Contact, MailChimp, etc.)
  • The system you use for collecting payments (Stripe, PayPal, etc.)
  • Any tracking tools you are using (Facebook Pixel, Google Analytics tag, etc.)

2) You must disclose what you are doing with the information you collect. This is often self-explanatory, and might sound like:

  • “I’ll be sending you a monthly e-newsletter.”
  •  “You’ll receive my e-newsletter and occasional offers.”
  • “I’ll be sharing information about the services you purchase from me.”
  • “I may use your information for advertising purposes.”
  • “I will never share or sell your personal information to others.”

3) Include how they can remove themselves from your list. A best practice is to make this available through an “unsubscribe” option in every communication that you send.

Privacy laws vary widely across the globe.

If you’re operating online, chances are a portion of your audience may be covered by the European Union General Data Protection Regulation (lovingly known as the GDPR), which governs how personal data is processed and transferred. You can learn more about those requirements here.

To see a sample privacy policy you can visit The Coaches Legal Library, a free resource offered by attorney Valerie Del Grosso.

Business and Product Names

Woman holding a lightbulb

Do you have a name in mind for your coaching business, or ideas about branding for the group program you’d like to offer? The first thing most people do at this stage is to check and see if the domain name is available. You might also search related social media handles on Facebook and Instagram for the name(s) you have in mind.

What if your search reveals that someone owns the domain name, but isn’t using it? Or you discover through a Google search an old blog or inactive website with a similar name?

If someone is sitting on a name, that isn't necessarily a deterrent to using it. Part of the legal criteria for determining if a name is up for grabs is whether it is actively being used for the sale of products and services.

Let's face it: great names are getting harder to find as more people enter the coaching industry. Attorney Valerie Del Grosso suggests that if you land on a name that you like and it doesn’t appear to be in active use, start using it ASAP. This helps to “stake your claim” around that name.

OK, so you've narrowed in on a name you'd like to use. Terrific!

Here’s what you’ll need to do next.

Search the name with the US Patent and Trademark Office. From the Quick Links menu under Trademarks, use the TESS database to run a cursory word search of the names you have in mind.

If someone else has trademarked the same or similar name, be aware that there could be legal ramifications to using it yourself. Should you do so, the person who “owns” that name – whether they are actively using it or not—has the right to send you a cease and desist letter.

If this happens, it can shut down your brand instantly.

The law around trademarks states that there is no “good faith” defense. What this means is that there’s a legal expectation that you’ll do your homework before doing business! "Not knowing" that someone already holds the trademark to the name you’re using isn’t a valid legal excuse, and you may be subject to penalties as a result.

Do YOU need to trademark your business or product name? Not right away, in most cases. Once you have gained some traction in your coaching business, that's the time to start thinking about Trademark Registration for your brand. This process can easily cost a thousand dollars or more, which is why it makes sense to play with names to see what works best before deciding to register it.

Content & Images

Old fashioned typerwriter displaying word "copyight"

Many people come into the coaching industry with a mistaken idea of what it means to properly “credit” other people’s work. And that’s not surprising, really. When it comes to citing sources, most of us learned how to do this in an academic setting. In educational settings, you are often able to use images, quotes, and other people’s ideas simply by “citing your source.”

Not so when it comes to business!

Citing a source essentially lets people know that you aren’t plagiarizing. However, in a commercial context, we don’t have the right to freely incorporate other people’s ideas and images into our work. Out here in the business world, that's considered theft.

Need a couple common examples?

  • Doing a Google search for an image, then using it on your website is most likely a violation of licensing law.
  • Taking the notes from a training you attended and turning those ideas into a blog or Instagram post may be a violation of the original content creator’s intellectual property.
  • Lifting language that you like from another website and incorporating that verbage into your own materials is plagiarism.

When in doubt, assume you do NOT have permission unless you can clearly document it. Even a search of “royalty free images” on Google will not give you reliable results.

Here’s how to stay on the right side of intellectual property laws:

  1. Use your original photos, words, and ideas.
  2. If you are going to use photos from other sources, make sure you have the rights to use them in the specific context you’re using them in. Digital image libraries such as Unsplash, Adobe, and others will make it clear what your license covers.

Admittedly, this can be tricky at times.

Let’s take one example that seems cut and dried… but isn’t! Imagine that you want to use a photo from your wedding album on your coaching website. You hired the photographer and paid for those images, so they belong to you, right?

Not exactly.

Often, the licensing is tied to a specific use. Commercial photography has different (and usually higher) pricing for this very reason. If you purchased those photos for personal use, then incorporate them into your business materials, the photographer may have legal standing to pursue action.

While this may seem intimidating, it’s not difficult to stay in compliance with brand, image, and copyright laws. You simply need to incorporate checking these details into your content creatioin workflow.

For very low cost, you can purchase beautiful professional imagery quickly and easily online – images that you’re legally entitled to use! And if writing copy is a chore you'd rather avoid, there are ways to purchase content at reasonable prices. There are copy businesses out there that cater to life coaches, offering everything from pre-baked social media posts to client workbooks. As part of your purchase you're given the rights to use the copy, word for word.

Contracts & Agreements

Men shaking hands

When it comes to coaching agreements, there’s two main schools of thought in the coaching world. Let’s take a look at both.

Opinion A: I don’t need a contract!

Here’s how this line of thinking often goes...

“I’m never going to sue anyone, so I don’t need this. Presenting my client with a contract is awkward and overly formal. It’s not how I operate, or the tone I want to set at the start of a new relationship. I’m just not going there.”

If this sounds like you, here’s what you need to know:

  • When a client is paying a sum of money for a coaching package or program, it’s natural (and often expected) to receive documentation that formalizes their investment.
  • A contract tells your client that you have thoughtfully considered the relationship in advance, and that you take your business – and your clients - seriously.
  • A contract is an opportunity to demonstrate your professionalism and expertise. It also helps the client know what to expect in working with you.

Opinion B: Contracts are a normal part of doing business as a life coach.

There are ways to communicate the technical details of a coaching relationship in a tone and style that feels authentic to you. You really don’t need to use a bunch of legal jargon. In fact, it's best not to! A good contract is one where you and your client clearly understand the scope of work, and your respective rights within the relationship.

The one thing you must include in your contract is a clear statement of the exchange of value. For example:

  • # of sessions for $X dollars
  • Access to a 6 month group program for $Y dollars

While this is all you technically need, you’ll likely want to say more.

According to attorney Valerie del Grosso, most coaching contract disputes are not about the amount paid for the service. Instead, disputes are usually over the finer points, such as:

  • The client repeatedly cancels 5 minutes before their scheduled sessions. You held the time for them on your calendar in good faith, but they don’t think it’s fair to be charged for a no-show.
  • The client disappears for 2 years, then reemerges. They now want the rest of their unused sessions, but you are no longer offering that service.
  • A client goes through your entire coaching program, then tells you at the end that they are not satisfied and want a full refund.
  • A client gets inspired by what they learn in your coaching program. So much so that they decide to go into the same line of business as you… using the materials and knowledge they received from YOU! Your former client is now building a business based on your intellectual property, and is operating in direct competition with you.

Refunds

Person sliding money across a table

Often, life coaches are not sufficiently clear about their stance on refunds. A well-intended, but ineffective refund policy sounds like:

“I offer refunds in the case of emergencies only.”

The problem with this approach is that if there is a dispute, your criteria for issuing a refund is subjective and unclear. In Del Grosso's experience, the clients who are most likely to want a full refunds are often willing to jump through a number of hoops to get it! What happens when you determine the client's reason for cancellation was not an "emergency", but the client sees it differently?

Most payment disputes will land with your payment processor.

A client may choose at any time to dispute the credit card transaction that paid for their coaching with you. If your policies are not clear, the client might offer proof to the bank that they "met" your refund criteria. It’s then up to you to prove that’s not the case.

Here’s the thing: credit card companies and banks are not courts or judges. But they are often who decides. Outlining your refund policy clearly in the contract helps you provide the necessary documentation to banks and other decision makers.

If your contract states “no refunds”, know that you DO have the flexibility to offer them in cases where it feels appropriate to do so.

As a business owner, it’s also important to be aware that consumers typically have more legal protections than your business does. These rights are often specific to where the client lives. If you’re selling services online, it’s generally OK to have a “No Refunds” policy. However, be aware that in some states or regions, there is a specific period of time (such as 3, 5, or 7 days) in which a consumer can request and receive a full refund, “no questions asked.”

If you have a remote coaching practice with clients that span the globe, it’s not feasible to have a different contract for every location. You’ll just need to do a reasonable risk assessment, and be prepared to honor regional requirements should they arise.

Incorporating Your Business

Woman sitting with laptop, looking away

For many life coaches, operating as a sole proprietor is a sound approach. You may never decide to incorporate your coaching business, and that’s OK. This decision looks different for everyone, and has a lot to do with your financial circumstances, local laws, and personal tax status.

The main thing to understand is this: if your business is not incorporated as a separate legal entity, you are personally liable for all financial obligations associated with your business. You’ll also need to report business income as part of your personal tax return.

Your fiscal responsibilities as an individual includes any legal judgements made against your business. While such occurances are rare, this is important to know if you are sued as a result of any of the scenarios discussed in this article.

In contrast, once your business is incorporated, none of your personal assets (such as your house and retirement accounts) are tied to the fate of your business.

To explore what approach may be right for your situation, check out “Is It Time to Set Up an LLC?” in The Coaches Legal Library.

Regardless of which direction you go, make sure you understand your location’s laws regarding small business operations. Even if you don’t legally incorporate, it may be necessary for you to obtain a business license.

Liability Insurance

Insurance is available to life coaches from a number of companies at reasonable annual rates. A few providers to check out include Alternative Balance, CPH, or Hiscox. You’ll want to explore what’s offered, and decide if this is something you might need for your business.

Be aware that insurance itself is not a substitute for incorporating your business. Liability insurance is simply a payment source in the event that you are sued and there is a monetary judgement against your business.

Put another way, insurance is a good backstop, but it’s not a replacement for having sound business practices in place.

Ready to Be A Life Coach?

Launch your coaching practice right! Check out JRNI Life Coach Training - a program that's every bit as unique as you are. Grounded in science, our ICF accredited program features authentic instructors, a robust curriculum, business instruction to prepare you for liftoff as an entrepreneur, and fellow students dedicated to becoming a collective force for good.

JRNI Coaching: Vibrant community. Evidence-based life coach training. Lifetime support.

[Free Guide] 6 Steps to Start Coaching Today

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

STAY IN TOUCH

Sign up here and we’ll keep you up to date on the very best of JRNI, live events and everything you need for your own journey.

Remarkable inspiration delivered weekly to your inbox. No spam, we promise.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.