Once you have a signed NDA and you have sent out your specs and chosen someone to your liking the next step is drafting a contract.  What worked well for me was to create a contract between the developer and myself outlining, via milestones and detailed specs, what was going to be done at each stage.  While it takes a lot more up front work on your end to know exactly what you are looking for, it pays off in the end by having everything out on the table for everyone involved.  I learned from my experience developing application for The App Farm^tm , that it is worth the trouble to get it right the first time to avoid confusion down the line.

Things to consider in terms of a contract with a developer for an iPhone application:

1. Make sure the developer guarantees that they will have a bug-free working version of the application acceptable to Apple in terms of code quality (there are cases where the code is buggy and Apple rejects your application, so you want to make sure the developer stands by their work at least through this initial approval process)
2. That the developer relinquish and assign all worldwide rights and privileges and code to the contractor
3. That there be some sort of penalty for late delivery (to prevent low-ball time estimates just to get your business)
4. That the code and application created be built with proprietary and non conflicted code (you don’t want a previous contractor to recognize or see that their IP has been copied by the developer – this is a logical shortcut some developers might try to take to leverage past projects)
5. Make sure you have a process established in case something goes wrong in one of the steps of delivery (need to have clear plan for payment after a milestone or proceedings to fix flaws within a certain time frame)
6. Define the method and frequency of payment.  Define this early so there are no delays or discussions later

Obviously not all contracts or projects will be so clearly defined so then an hourly wage would be better.  I recommend using oDesk for this as they allow you to monitor work in progress, pay via credit card on line, and even challenge a payment if you feel the work is not executed as agreed.  Not sure how easy contesting a charge is, but again having the possibility of doing this ensures a minimum level of accountability.  All depends what you are looking for.

With regard to the contract, I would recommend you use an experienced lawyer because you want to be certain you are creating a contract that protects your claim to the idea, the code and its implementation, especially if your application does well.  I think anyone willing to go it without a strong contract is risking getting screwed because there is nothing preventing a developer from claiming ownership or filing in the App store under their own certificate if they so choose.

In terms of other legal issues to consider around your idea, make sure that:

1. The name of your application is not trademarked or otherwise reserved
2. The idea and concept you are using is not copyrighted or patented.  The laws around this are inconsistent, divided and are always changing so best to consult with an attorney or at minimum spend the time to educate yourself if you have any concerns
3. Create a legal entity to shield yourself from any sort of liability.  In case there was a trademark or copyright issue you were not aware of, you want to protect your personal assets from any sort of litigation that might result down the line.  This can be done fairly cheaply, just head to LegalZoom to figure out which structure works best.
4. In terms of any music or images or code you use, make sure that it is not protected or under a general public license.  You do not want to face royalty payments for a certain song playing in the background or be forced to share your code because you used a line of code or an image protected under the GNU General Public Use license.

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