Consulting Contract Do's and Don'ts

When it’s time to work with a consultant, plan for the best but prepare for the worst with a solid contract.

Date: March 1, 2019
Originally published by ASAE.

A good contract forms the basis for your collaboration with a consultant. Follow these do’s and don’ts to improve the likelihood of a good working relationship and results that meet your association’s needs.

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 deliverables are expected. Don’t forget to include the association’s role—for example, providing background materials, scheduling meetings, or reviewing drafts of reports.

DO SPECIFY MILESTONES. These are project components that are to take place or due to be delivered on a certain date. For example: “The first draft of the communications analysis report will be delivered on or before May 1, 2019.” Milestones help to ensure that the project is proceeding on schedule and give you and the consultant the opportunity to identify any open issues or revise the schedule as needed. Identify any dates that you cannot change, such as dates of board meetings where the consultant’s work product will be presented.

DO IDENTIFY EXPENSES. Expenses typically passed on to the client include overnight courier charges, conference calls, copying, and online research fees. Note any allowable markup on expenses. Include any anticipated travel expenses for the consultant to attend meetings at your association’s office or other locations and disclose any travel expense policies that the consultant must follow.

DO 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 midway, and 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.

DO 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.

DO 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.

DON’T BE AFRAID TO SUGGEST CHANGES. If the consultant presents you with a proposal, scope of work, or contract terms that aren’t right for your association, work with the consultant to make appropriate revisions. The document you sign should reflect the actual terms of the deal.

DON’T EXPECT THE CONSULTANT TO CHANGE THE PROJECT’S SCOPE WITHOUT OTHER CHANGES. If the scope of the project expands beyond what is initially anticipated, the consultant will probably need to change the fee and the timeline for deliverables.

DON’T WITHHOLD INFORMATION. Your consultant needs the full picture in order to give you the best advice.

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 AGREE TO AUTOMATIC CONTRACT RENEWALS. If you have a reliable contract management system, then automatic renewals are not a problem. But without such a system, you might have contracts renewing that are no longer of value to your organization.

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.