Nonprofit Report - March 2019
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.
By: Eileen Morgan Johnson
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.
Be Prepared for When Meetings Go Wrong
By: Jeffrey P. Altman
Originally published in ASAE's Associations Now Plus.
It’s not if, but when: Events beyond your control will disrupt your meeting. To minimize your association’s risk, be sure your contracts and insurance are in order, and take practical steps to fend off preventable problems.
You can plan your meeting down to the last detail, but how do you prepare for natural disasters and other unforeseeable crises? Traditional disrupters include bad weather, floods, fires, earthquakes, and labor strikes. More recent additions include terrorism, riots and civil unrest, pandemics, controversial social laws, travel restrictions, marijuana legalization, and new privacy regulations.
Your obvious goal is to hold the meeting - or restructure or reschedule it with minimal losses. Above all, you need to keep attendees safe and satisfied. Hotels and other venues are sympathetic and can be helpful when the unexpected occurs, but they don’t want to bear all the losses.
What can go wrong? Here are several scenarios that present legal issues and risk management challenges:
. A hurricane is approaching your convention city, but the various weather models disagree dramatically on the storm speed, path, and intensity. Can you cancel or change the venue or the meeting date if necessary? What happens if there is a sudden change in the storm’s path after your meeting starts and your attendees are trapped at your meeting site?
. Dessert was served just before the beginning of your annual awards speeches. You learn that most of the nut-free desserts that were ordered for attendees with allergies are still in the kitchen.
. Your paid speaker is stumbling and incoherent during your opening program, so you hustle him off the stage. Later that week, many attendees leave your closing night event because they are offended by another speaker’s strong political commentary and by your entertainer’s obscene gestures. All three want to be paid in full and threaten lawsuits.
. Two prominent members and one of your staff executives are arrested for smoking marijuana in the park across from the convention hotel in a state where recreational use is allowed—but not by visitors in public locations.
International travel disruptions
. Many international attendees and speakers cannot get to your meeting city because of travel bans or changes in travel rules.
. A board member is making unwanted advances to your staff, volunteers, contractors, and attendees.
Controversial social laws
. Lawmakers in the state or city where you will hold your meeting have introduced a controversial measure that is offensive to your members and could substantially reduce attendance.
To protect your organization should these or other problematic scenarios arise, the place to start is with your hotel and venue contracts. Because of their size, they often pose the greatest potential liability. When negotiating these contracts, pay special attention to several key clauses:
. If your contract establishes room block, food and beverage, and other minimum commitments, this clause will likely specify the penalties for falling short. Build in flexibility to review the commitments as the meeting year approaches and to make changes as late as possible. Also make sure that formulas used to calculate damages are fair and consider profit margins, if possible.
. This clause is critical to eliminate or reduce your liability if things go wrong. Since it is almost always possible for some kind of meeting to be held, make sure you don’t use the word “impossible” in your force majeure clause, and negotiate broad language to cover as many situations as you can. The clause should allow you to restructure or cancel your meeting if it becomes impractical or unreasonable to hold the event as originally planned due to these situations beyond your control.
. If necessary, negotiate special clauses to cover situations such as controversial social laws or travel bans.
Other contracts related to the meeting should also include provisions that protect you if unforeseen circumstances threaten your event. For example:
- Draft your contracts with exhibitors, contractors, and suppliers to include performance standards and release, indemnification, and insurance provisions.
- Consider including language in your registration materials to manage expectations and protect the association from disgruntled attendees.
- In speaker agreements, allow presentations to be delivered remotely if necessary. Also specify your right to record and preserve the content for later use online.
- In sponsor agreements, address the possibility that a featured speaker might not appear in person, or state more generally that you may need to substitute promised sponsor benefits if the meeting must be restructured.
Many of the scenarios mentioned above may expose the association to liability for bodily injury or property damage, defamation, invasion of privacy, harassment, or other legal risks. These claims are normally covered under your directors and officers and general liability insurance policies. If the meeting represents a major source of your annual revenue, consider obtaining event cancellation insurance.
Risk Management in Advance
Although well-written contracts and the right insurance policies are helpful if things go wrong, the best protection is to avoid these issues in the first place. Here are some steps you can take to manage your meeting-related legal risks:
- If your members are sensitive to controversial social laws, schedule meetings in friendly states, even if doing so is more expensive. If the law in your scheduled state or city changes, start negotiating to move as early as possible. Or you can choose to stay and use your presence as an opportunity to advocate against the controversial change.
- Provide guidelines for acceptable conduct by staff, attendees, vendors, contractors, and others who may be involved with your meeting. Include meeting behavior in your sexual harassment training for staff. Act immediately and decisively to address such behavior if it happens at your meeting.
- Research the impact of laws and regulations like the European Union’s new General Data Protection Regulation. Make sure that your IT data protection, privacy policies, and consent forms are updated to accommodate attendees from the European Union.
- Be precise and include appropriate cautions in the materials you provide to attendees, including information about any local laws or restrictions that may be problematic. In states that have decriminalized marijuana use under state law, consider reminding attendees that marijuana possession and use remain prohibited under federal law, and flag any exceptions to state-law tolerance of marijuana use (such as no public use). Also note that such drug use may violate employer drug use rules both for the association and attendees, regardless of state law.
- If attendees or speakers may be unable to attend due to a travel ban or any other reason, plan ahead to provide virtual alternatives. Arrange for your speakers or attendees to participate remotely, or record your sessions to be viewed later online. Identifying these alternatives in the registration materials may help manage expectations, but be prepared to offer refunds to maintain member and attendee satisfaction.
Take these simple steps to plan ahead and be prepared to handle these situations and other challenges that may arise and disrupt your best-laid meeting plans.