How to Draft a Consulting Agreement
With consulting becoming a booming industry these days, it’s a good idea to have a contract in place to legalize your working relationships. Here’s what you need to know.
Consulting can be a lucrative business if you know what you’re talking about. Experts are needed in many areas to help people and businesses get rolling faster. As a consultant, you will have an area of expertise. If you are an expert in anything from computers to business and graphic design, you can put your skills to good use by giving people advice.
Like any service, consulting is best done after a contract has been signed, so you don’t need to worry about being paid and the client fully understands what she is getting for the price. Without a contract, you could end up losing money when a client refuses to pay, so it is vital to have. While most consultants use a contract drafted up by a lawyer, there’s no reason you can’t create one yourself.
Essentially, a consulting agreement needs to lay out the terms of your agreement with the client. What will you provide in exchange for the agreed upon payment? This is the contract in its most basic form.
Discuss the Agreement
The first thing to do is talk about what is expected with your client. Everything should be laid out for both of you, which means you will need to explain exactly what she will receive for the money paid. This is easier if you already have your prices set and in writing.
Talk to the client to get a feel for the job and to make sure that any questions she has are answered satisfactorily. Once you are both happy with the terms, it’s time to draft your contract and get it signed. Chances are, you’ll have a template to work with once you’ve had a few clients.
Write the Contract
You may wish to have a lawyer set up a draft version of a contract, but in most cases, you should be able to do this yourself. The process is a fairly simple one and there’s nothing wrong with keeping it simple. Your contract will need to include the following:
Names: The legal names of both the client and the service provider should be included in the contract. You will also need to name the relationship, such as “Client A will hire Consultant B for Project J.”
Tasks: Each task in the project should be listed. This is important since you can later go back to the list to prove that something was or was not included in the initial pricing. Each task should also include an expected completion date.
Approval Standards: How will you know that the job has been completed satisfactorily? Make sure this is specified in the contract so you both know exactly what procedure will be necessary in order to approve each step of the project.
Fees: Include the amount you will be paid, as well as the date or condition upon which it is due. This is very important, so double check it. A simple mistake can cost you thousands. This should also include any extra costs, such as additional work not covered by the original contract.
Termination of Project: If the project ends early, what happens? Is there a penalty for the person who ended it? An exit strategy should be written into the consulting agreement to make things easier if there are problems later on.
Confidentiality: For many clients, confidentiality is very important, so this needs to be included in most consulting contracts, as well. Decide whether the confidentiality extends beyond the job, or will it end when the project is complete?
Most of these terms are fairly common and would be included in any contract. This makes them very easy to research and you could even copy from an existing boilerplate contract, if desired. Adjust anything you need to, in order to fit your business requirements, before showing the client.
Review the Agreement
Once the agreement is drafted, you should both take a look at it. It is just as important that the client go over the agreement as it is for you to do so. If any changes need to be made, they should be discussed and then implemented if everyone is in agreement. Make sure that you proofread the document before passing it on to the client. Again, this is easier once you already have the basic template.
If everything is satisfactory, both parties will sign the contract and the project may begin. With the consulting agreement, you are both protected from potential issues that could come up in the future. Don’t forget to have two copies of the contract to sign so that you can each keep a copy.
You shouldn’t be afraid to write your own consulting agreement. It’s not difficult and as long as you cover all the bases, it should work very well. If you find yourself stuck, look at existing templates to help you out.