Legal Issues in Contracts with Lead Generators

Some inspectors hire lead generation companies to provide them with leads for potential customers. An InterNACHI member recently asked us to review a proposed contract submitted to him by one such company. We had several concerns about the proposed contract.

  • First, the contract did not promise to deliver the inspector a specific number of leads in a given time period. When considering such a contract, ask the provider to promise a minimum number of leads per month.

  • Second, the contract contained an arbitration clause. This means you surrender your right to sue if there is a dispute. There is no appeal from arbitration, so even if the arbitrator gets the facts or the law wrong, you’re stuck. Moreover, the quality of arbitrators can vary greatly. Finally, in arbitration your discovery rights are very limited.

  • Third, the contract required the inspector to pay the company’s legal fees if the company takes action to enforce the contract, but there was no provision requiring the company to pay the inspector’s legal fees if the inspector prevailed in any arbitration.

  • Fourth, the contract required the inspector to follow the company’s dispute resolution process if a customer complained about the inspector’s inspection. This removes control from the inspector and puts the inspector in a situation where the company may be more concerned about protecting itself than it is with the inspector’s reputation.

  • Finally, the contract contained a provision requiring the inspector to indemnify the company if the customer or a third party filed suit against the company even if the company was at fault.

This is not an exhaustive list of the issues you may encounter when you consider whether to contract with a lead generation company, but you should be aware of these issues and consider them carefully before entering such a contract.

Mark Cohen, J.D., LL.M., InterNACHI General Counsel
Nick Gromicko, InterNACHI Founder