Consulting Contract Do’s and Don’ts
When working with a consultant, always hope and plan for the best but prepare for the worst by drafting a solid consulting contract. A good contract will clearly set forth the expectations of each party, milestones, payments and expenses, and other significant terms. The following do's and don'ts for drafting consulting contracts will improve the likelihood that you will have a good working relationship with your consultant and that the results of the collaboration will meet your association's needs.
What To Do:
- Spell out expectations. Is the consultant providing advice, conducting research, leading a board retreat, designing a website or planning a conference? The contract should clearly identify what services or products are expected from the consultant. Don't forget to include the association's role – for example, providing background materials, scheduling meetings, or reviewing drafts of reports.
- Specify milestones in the project. These are project components that are to take place or due to be delivered on a certain date. For examples, “The first draft of the communications analysis report will be delivered on or before May 1, 2012”; “consultant will meet with the Strategic Planning Committee on July 1, 2012.” Milestones help to ensure that the project is proceeding on schedule and give both you and the consultant the opportunity to identify any open issues or revise the schedule as needed.
- Identify expenses. Expenses typically passed onto the client include overnight courier charges, conference calls, and online research fees. Be sure to include any anticipated travel expenses for the consultant to attend meetings at your association's office or other location.
- Outline payment terms. Payments can be tied to milestones or made according to another schedule. Most consultants charge on an hourly basis, although some will complete a project for a flat fee. A good rule of thumb is to pay no more than one-fourth of the total fee upon signing the contract, arrange for some payments mid-way, and then hold back at least one-fourth of the payment until the consultant has completed all work to your satisfaction. If the consultant is charging by the hour, make sure the contract specifies that the final invoice will not be paid until you are satisfied with the work product or service performed. Avoid paying on an hourly basis with payments made the same day as your association's payroll, as this could lead to the conclusion that the consultant is an employee.
- Specify ownership of any work product. If you hire a consultant to design a new website, be sure that the association owns the domain name and all content. Or if a consultant will design a new media kit, the association should own all rights to its contents so you won't have to get permission to make changes. Beware of shared copyrights, as either owner may use the work without the other's permission.
- Require the consultant to obtain rights for any third-party intellectual property used in the project. The consultant should turn over the copyright assignments or licenses to the association with the final work product. All rights should be in the association's name, with the consultant acting as an agent for the association.
What Not To Do:
- Don't agree to pay ongoing licensing fees for continued use of the consultant's work product. This requirement is sometimes found in consulting contracts for software development. This practice is not illegal, but it can be costly. Any ongoing licensing rights payment should be included in the total cost of the project.
- Don't sign a contract before your association is ready to begin work. Consultants schedule their time based on anticipated client needs. If you sign a contract and are not prepared to proceed, the consultant might miss opportunities to take on other projects before your association is ready to move forward.
- Don't be afraid to suggest changes. If the consultant presents you with a scope of work or contract terms that aren't right for your association, work with the consultant to make appropriate revisions.
This article originally appeared in the November 2011 issue of Associations Now, the journal of ASAE: The Center for Association Leadership.