Starting a consulting firm is a great way to branch out and offer services under your own brand. However, you’ll need to consider four legal issues before starting your firm:

  1. Restraints in your employment contract
  2. Registering your trade mark
  3. Drafting a client agreement that ensures you get paid
  4. Deciding on a business structure

This article explains how to address each, so you can start your consulting firm on the right foot.

Restraints in Your Employment Contract

It’s important to ensure that you won’t breach restraint of trade obligations in your current or previous employment contracts. If you’re an employee or contractor of an existing firm, the contract will likely say that you:

  • can’t approach existing clients; and
  • can’t set up a competing business.

Restraints can apply for months or they can stretch on for years. Therefore, it’s crucial to find out what restrictions apply. It’s even a good idea to check previous employment contracts. Otherwise, you risk breaching your old contract. This might mean that your old firm can pursue you in court. The court may award damages against you, or order you to stop setting up the firm.

Registering your Trade Mark

Applying for a trade mark should be an early “to-do” list item. Registering a trade mark allows you to exclusively use the brand name you chose for your consulting firm.

Don’t get confused between registering a business name and registering a trade mark. Registering a business name just means that the Australian Business Register (ABR) now has your business name on a register. It doesn’t mean that you can stop other businesses from using the same or similar name.

Conversely, registering a trade mark means that you can prevent other businesses from using the same or similar trade mark or logo, which is crucial if you want to build a strong brand.

Drafting a Client Agreement that Ensures You Get Paid

Your next “to-do” list item is to obtain a well-drafted client agreement for your consulting firm which sets out:

  • the consulting services you will provide;
  • how and when your clients pay you; and
  • what actions you may take if your clients fail to pay.

Aside from these obvious matters, the client agreement should also address:

  • intellectual property;
  • termination of the client relationship; and
  • consumer guarantees.

Intellectual Property

If you create reports or other material for your clients, then your client agreement needs to address intellectual property (IP). Any material you use repeatedly, like a report template, should never be assigned to a client. The client agreement should state that you license the client to use any reports you provide, but that you don’t assign the IP in the base template.

Termination Clauses and Relationship Breakdowns

Consulting firms need great client relationships to provide the best services. You rely on your client to give you access to the information you need to be able to provide the services and in a timely manner. This should be drafted into the client agreement under a ‘warranties’ clause, where your client promises to provide you with information and comply with your reasonable requests in a timely manner.

The warranties clause then needs to be followed up by a tailored termination clause. Crucially, the termination clause should outline that if the relationship breaks down, then you have the right to terminate the agreement. For example, if the client hasn’t provided information in a timely fashion, leaving you unable to deliver what you promised. Usually this is a last resort scenario, but it’s important that you have the right to terminate when the client is at fault.

Consumer Guarantees

Even if you’re providing services to businesses, some clients may be entitled to rely on the consumer guarantees set out in the Australian Consumer Law (ACL). For your consulting firm, this means that you must provide your consulting services with due care and skill. You must also ensure that the services are fit for the purpose you advertise. If your services have a ‘minor’ or ‘major’ failure, then the client may be entitled to a refund. Alternatively, you may need to re-perform the services.

Deciding on a Business Structure

Finally, you should decide which business structure will suit your goals. It’s better to run the business as a company if you will be seeking external investment.

A company also limits your liability. Only company assets can be used to pay company debts. Debtors won’t be able to claim your personal assets. In contrast, being a sole trader means you are personally liable to pay the business’ debts.

Key Takeaways

Getting the legal considerations right at the start lets you grow your consulting firm with confidence. Otherwise, you may find your consultancy firm shut down by a previous employer, or enter disputes with clients that could have been avoided.

If you need advice on how to ensure your consulting fiorm starts out right, call LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Chloe Sevil
Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at

View Privacy Policy