Kill fee clause

A contract provision entitling the agency to a specified payment if the client terminates the engagement or cancels a project after work has begun but before completion.

Example

A contract's kill fee clause guarantees the agency 30% of the total project fee if the client cancels after the discovery phase but before design work begins.

Why it matters for agencies

A kill fee protects against a specific kind of loss distinct from scope creep — work already performed that becomes worthless because a project is cancelled outright, rather than expanded without corresponding pay. Both problems come from the same root cause: an engagement's boundaries and commitments weren't clearly defined upfront.