For those who work as consultants, the opportunity to think through a client’s problems and offer them solutions is often the most rewarding part of the job. However, like everyone else, they need to be paid for their efforts. That means that they require a consulting agreement. If you work as a consultant, this article discusses seven things you should include in your consulting contract.
1. Description of Services
Your consulting agreement needs to tell all potential clients what services you will provide and not provide for their business. You will need to be specific.
For example, will you look into any productivity issues that an organisation is having? Will you offer them tailored solutions? Will you help a firm to know where they should focus for the future?
If there are any services that you do not provide, include them as well. Include key deliverables to inform the client of completed tasks.
A detailed description of services (including key tasks) can assist you for legal and commercial reasons. Most legal disputes about consulting agreements centre on the scope of services that a party was to provide. As such, the more detailed your consulting contract is on this point, the lesser your likelihood of such a dispute in the future.
It can assist you commercially as well. If clients have clear expectations from the consulting contract that you subsequently meet, your reputation and good will may increase.
2. Payment and Terms of Payment
Although some people avoid talking about money, your consulting agreement should not. Your client needs to know how much you charge, and you need to know how you will get paid for a particular consulting job.
Of course, how you want to express your fee is up to you. Some consultants might wish to give a total and then break that figure down into its constituent parts. Others might want to provide an overall sum. However, be sure to state the total amount payable expressly.
Also, be sure to specify terms of payment. For example, you may be happy for clients to pay you within a certain amount of time after you have completed a key deliverable. You could also request payments upfront. Far from being awkward, being clear about when a client needs to pay you can help the professional relationship.
3. Dispute Resolution and Mediation
Despite everyone’s efforts and best intentions, conflicts sometimes arise. In those instances, it is best that you and the client pursue formal dispute mediation and resolution processes before instigating legal action. Mediation and dispute reasoning is more cost effective at first instance for both parties.
To that end, be sure to insert a dispute resolution clause in your consulting agreement that requires both contractual parties to pursue mediation and dispute resolution before commencing legal action.
4. Limitations of Liability
No matter how good your professional relationship with your client, on this point you and your client will necessarily have conflicting interests. As the service provider, you need to limit your liability as much as possible under applicable legislation. Conversely, your client will want you to bear as much of it as possible.
The best solution is a clear, accessible and detailed clause that limits your liability within legal parameters. Of course, the content will depend on the industries with which you consult. Nonetheless, the guiding principle is to limit liability as much as legally possible.
For example, if you assist a client to know where to focus their energies and expenditure for future development and growth, your clause needs to minimise legally the client’s ability to sue you if that growth does not materialise as predicted.
Your consulting agreement should detail how either party can terminate the contract. Focus on all those circumstances that would require termination. For example, termination on your part might be necessary if a client consistently failed to provide you correct information such that it materially affected your ability to perform your job.
Also, specify how the circumstances of termination would affect your fee. Would you require payment in full or only for services rendered thus far? Be clear so that if termination does occur, both parties are acutely aware of their obligations under the consulting contract.
Be clear about when you intend to undertake your consulting services. Include your start date and estimated finish date. Also, include relevant timelines by which time you plan to complete critical tasks. Timelines can help you plan and enables the client to measure progress.
Your consulting services agreement should also provide that the client pays for all relevant expenses incurred in the course of your work. Be sure to detail a procedure through which you detail and account for all expenses to the client.
If you run a consulting service and require assistance drafting or reviewing your consulting agreement, get in touch with LegalVision’s contract lawyers. Call LegalVision today on 1300 544 755.