At our business (Practice Technologies Inc, a technology and content provider for law firms and business professionals), we’ve recently updated our consulting services agreements in conjunction with kicking off two new consulting engagements.  One of the consulting engagements will be with an individual, the other is likely to be a search engine optimization project with a company specializing in those activities.  I thought I’d share some of the key issues in retaining both individuals and companies in consulting agreements and contracts.

In any consulting agreement, basic terms include:

• A description of the services to be provided by the consultant 
• Compensation terms, including timing of payments
• Some type of performance metrics or specific deliverables are very desirable, although I’ve frequently seen them left out of far too many consulting agreements
• The usual representations and warranties of both the company and the consultant
• A clear statement that the engagement is on an independent contractor basis (not as an employer-employee relationship)
• Termination provisions, including a discussion of how disputes are to be resolved
• Liability limitations (usually to the benefit of the consultant)

Depending on the work to be performed, it can be essential that the Company also obtain specific assignments of any intellectual property that is created by the consultant which would otherwise belong to the consultant under intellectual property law.  This can be done either within the body of the Consulting Services Agreement itself, or in a separate Intellectual Property Assignment Agreement.

When working with a company as the service provider, or even with an individual, it is my experience that the consulting agreement should be carefully negotiated to make sure that the termination provisions, particularly the notice period, appropriately reflect how the end game should be played out.  That seems rather self-evident, but I’ve seen that provision overlooked in the drafting phase, usually resulting in the service provider being paid for too long a period following the realization that the engagement is not working out for the client company.

For those of you who follow my blog posts, you’ll note that I’m a big advocate of leveraging the legal drafting work of others, particularly when it comes to drafting legal agreements and contracts.  I’ve provided some links to literally thousands of consulting agreements that have been drafted by large law firms for big and small companies alike.