Business Advice for a Consulting Agreement
One of the few protections an independent consultant has is a good consulting agreement that covers all the important areas of what the client expects in terms of performance, what the consultant expects in terms of pay, and a mutual understanding of liabilities and remedies. The consulting agreement, also called a services contract, is the best place to define anything that might come into question later, and do so in a way that will give a clear picture in court.
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Terms
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The start date of the contract, when it terminates and whether it continues until written termination defines the timeframe of the consulting gig. Include whether it is an exclusive engagement or whether you may work on other projects with other clients. Also describe in detail when you will be paid, how much and any penalties for late payment. Many consultants work on retainer, paid in advance, because they provide advice based on expertise, which cannot be recovered in the event of non-payment. Terms also include the location where the work will be performed and the procedure for termination of services.
Work Description
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Many consultants fail to include in their contracts detailed descriptions of the work to be performed. This is what the client is agreeing to pay for, so if you fail to fully describe what both you and your client expect of the work product, you will lose money. Clients always add more tasks to a consultant's project, and if they are not included in the original contract, you are within your rights to charge extra.
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Liability
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A consultant's work depends on the information relayed by the client, so if the consultant accidentally causes some outside legal problems such as patent infringement owing to incorrect guidance from the client, the contract should stipulate that the client will indemnify the consultant and pay any legal fees incurred by the consultant. This is very important because lawsuits may name you, as the consultant, out of legal strategy, causing you great expense to defend yourself even though you are not a direct target of the complaint.
Considerations
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Keep the language of your agreement simple and understand it fully yourself. Always have an attorney review it for completeness but resist long involved agreements that contain confusing legal terminology. The less you understand your own contract, the more likely you will get caught in a situation you did not foresee and find yourself unable to avoid. This is particularly true when it comes to controlling the scope of your work and collecting your payment because every consultant eventually works for a client who is adept at saving money by finding reasons why not to pay you because you didn't perform as promised.
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