Consulting agreements are like most other agreements for services—they create the terms under which a consulting company will provide said consulting services to its clients. Consulting services can run the spectrum from code audits to financial advising to site selection to staffing, and the agreements should be customized to reflect the nuances of each different business. Beyond the usual contract clauses, and beyond the clauses that should be customized by your attorney to reflect the specific nature of your business, there are a few provisions most consulting agreements should make sure they cover.
- Scope of Work: Clearly defining the scope of work, including what does not fall within the scope of the services to be provided, is a crucial aspect of any consulting agreement. It is very common for effective consultants to be asked to increase the term of their services, as well as to take on more and more related work for a business as time goes by. These requests to change the scope of the agreement are particularly problematic if the work is being done for a flat fee or a capped fee, but even if you’re charging hourly, “scope creep” and the resulting higher bill can create issues for all parties. Setting clear expectations up front for your goals and expectations, the time and costs involved in those, how many revisions to the work you’re willing to produce under the initial contract, and more can avoid disputes later about whether you over-charged for your time or whether you accomplished expected goals. Placing these clear expectations in writing can also create a great jumping-off point for future negotiations, should you want to build a more long-term relationship with a particular business.
- Requesting Changes to the Scope: Once you’ve done a good job defining the scope of work for the agreement, you also need to think about provisions for changing the scope. If you’re doing a good job, your client is likely to request more work, so you’ll want clear provisions on exactly how to revise the scope. These provisions should state that changes need to be made in writing, for the same reasons that you want to set a clear scope in the first place. Then, when you make these revisions, you’ll want to make sure they’re attached to the original agreement and that both parties sign off on them.
- Payment Terms: Payment is another area where you want to set clear expectations. There are a number of different ways to tackle invoicing and fee collection, so it’s important to make sure you spell out exactly what payments are due when. For longer term contracts where if you anticipate fee increases based on time or particular metrics, you’ll want to make sure that those increases are indicated in the contract. It doesn’t help anyone if the client is surprised by higher invoices!
- ‘This is Not an Employment Agreement”: Should you and your tax advisor decide that it is beneficial to provide your consulting services as an independent contractor, rather than an employee (or should your clients require this), you’ll want to include a provision in your consulting agreement that makes it clear that you are not, in fact, an employee of your client. This is also a common place to place a provision clarifying that you are providing your services on a non-exclusive basis, and that you are free to provide your consulting services to multiple clients simultaneously. Note that certain consulting situations can create an employment relationship, contract or not, so you should make sure to work with your business attorney to ensure that you are not mis-classified.
- Intellectual Property Protection: Every business has some sort of intellectual property, from the logos they use on their materials to the trade secrets they carefully protect. Both you and your clients have a vested interest in protecting your respective intellectual property. Your clients will likely want to protect their business strategy, future plans, and trade secrets, and you will likely want to make sure that you can use your internal strategies, methods, and tools for multiple clients. You may also want to cite work you do for particular clients on your website or in a portfolio. An experienced attorney can help draft an intellectual property provision that serves both parties’ interests in protecting their IP, while still allowing them to advertise their relationship and to otherwise have an effective collaboration.
Both consultants and businesses benefit when an experienced business attorney helps them draft these consulting agreements. The attorney will help ensure that all the details important to your specific industry are addressed. Reach out to the team at Chase Law Group, P.C. by calling (310) 545-7700 to set up a consultation and learn how our team of experienced business attorneys can help you prepare your consulting agreements.