Consulting Agreement
If you’re about to hire a consultant to provide strategic advice, lead a project, or lend specialised skills, a well-crafted consulting agreement is essential to protect your interests and ensure a successful partnership.
Consulting agreements are the backbone of a professional and effective consulting relationship. They can be used to great effect to avoid ambiguity, define relationship boundaries, safeguard confidential information, and set transparent payment terms.
At Lawhive, our network of experienced small business lawyers is on hand to draft consulting agreements that are tailored to your specific needs and industry at a fraction of the cost of traditional high-street law firms.
Through our innovative online platform, they are available to answer your questions, simplify legal jargon, and make sure your consulting agreement aligns perfectly with your business goal.
With us, you can enter consulting partnerships with confidence, knowing that your agreement provides a solid foundation for success. Contact us today to schedule a free case evaluation and get a no-obligation quote for our consulting agreement services.
What is a consulting agreement?
A consulting agreement is a legally binding contract that outlines the terms and conditions under which a consultant provides services to a business or individual.
Why do I need a consulting agreement?
A consulting agreement is an important part of any consulting relationship as it:
Sets clear expectations and prevents scope creep;
Protects sensitive information from being disclosed or misused;
Helps avoid financial and intellectual property disputes;
Ensures your business retains control over critical assets developed during the consultancy;
Limits legal and financial liabilities;
Fosters professional and productive relationships.
What should be included in a consulting agreement?
A consulting agreement should include:
A clear scope of work describing the consultant’s role, deliverables, and boundaries;
The start and end dates of the consulting agreement;
How the consultant will be compensated;
A confidentiality clause;
Who owns the intellectual property created during the consultancy;
Any rights the client has to use the consultant’s existing intellectual property or tools;
The circumstances under which the agreement can be terminated;
The notice period for termination;
Provisions for resolving disputes;
How each party will handle liability and protect against potential claims;
Limits on the types and amounts of liabilities each party is willing to accept;
Restrictive covenants, including non-compete or non-solicitation clauses.
At Lawhive, our network of small business solicitors offers expert support in drafting and reviewing consulting agreements to make sure they meet your specific needs.
Contact us today to schedule a free case evaluation and receive expert guidance on creating a consulting agreement to fit your requirements.
Can I use a template for my consulting agreement?
Consulting agreement templates can be a quick and cost-effective way to get started, especially for startups or small businesses with limited budgets. Most templates cover the essential components of a consulting agreement, providing a useful starting point.
However, more often than not consulting agreement templates fall short of addressing the needs and nuances of your specific consulting arrangement. Standard templates are often too generic and might not cover all the necessary legal protections specific to your situation, leaving you open to misunderstandings and disputes.
When engaging a consultant, you should protect confidential information through a detailed confidentiality clause written into the consulting agreement, a separate, standalone non-disclosure agreement (NDA), or both.
Non-compete clauses can also be used in a consulting agreement to prevent a consultant from using your confidential information to compete against you or to work with direct competitors for a specified period after the arrangement ends.
Who owns the intellectual property created during the consultancy?
Under UK law, the default position is that the creator of the intellectual property owns it. This means that with specific contractual agreements, the consultant would own the intellectual property they create during the consultancy.
Or, in certain cases, if the consultant is considered an employee or the work falls under the scope of “work made for hire,” the client may automatically own the intellectual property. But, most consultants operate as independent contractors, so this exception rarely applies.
A consultancy agreement, however, can be used to clearly define intellectual property rights and ownership through ownership clauses and assignments of rights clauses in which the consultant assigns all intellectual property rights to your business.
What are typical payment terms for consultants?
Payment terms for consultancy can vary widely depending on the nature of the services provided and the duration of the agreement. For example, common payment structures used by consultants include hourly rates, fixed fees, retainer fees, milestone payments, and performance-based payments
Other payment terms to consider in a consultancy agreement include:
How often the consultant will submit invoices and the timeframe in which payments must be made;
Early payment discounts or late payments;
Which expenses are reimbursable and how and when the consultant should report expenses and provide receipts;
Advance payments and deposits;
Acceptable payment methods.
How can I end a consulting agreement?
Ending a consultancy agreement can become necessary if the project has been completed, circumstances have changed, or the relationship is no longer working effectively.
A well-drafted consultancy agreement should include clear termination clauses that outline the conditions and procedures for ending the contract, including any final payments, return of property, and confidentiality obligations.
Mutual agreement
Both parties can agree to end the consulting agreement by mutual consent at any time.
The consultancy agreement should specify the process for documenting mutual termination, such as written notice by both parties.
Completion of work
The consulting agreement may naturally end when the consultant has completed all the deliverables and obligations specified in the contract.
Termination for convenience
The client may want the flexibility to terminate the agreement for any reason (or no reason) by providing notice to the consultant.
In these cases, the consulting agreement should specify a reasonable notice period that the client must give, often ranging from 30 to 60 days.
Termination for cause
Either party can terminate the agreement if the other party materially breaches its obligations under the contract and fails to remedy the breach within a specified period.
This clause should clearly outline what constitutes a material breach, such as failure to perform services, non-payment, or breach of confidentiality.
Force majeure
Under a force majeure clause, the consulting agreement can be terminated if extraordinary events beyond the control of either party prevent the fulfillment of the contract.
What happens if the consultant does not deliver as promised?
Many consulting agreements include a provision that allows the consultant a certain period to correct or “cure” a breach. This gives them a chance to address the problems and meet their obligations.
If the consultant fails to remedy the breach within the specified period or if the breach is significant, you may have grounds to terminate the agreement for cause. To do this, you should follow the termination procedures outlined in the agreement, including providing the required notice and documenting the reasons for terminations.
If the consultant’s failure to deliver has caused your business financial harm or other damages, you may be entitled to seek compensation. The agreement should specify the types of remedies available, such as refund of fees or compensation for losses.
Do I need a solicitor to draft or review my consulting agreement?
When entering into a consulting agreement, you may wonder if it's necessary to engage a solicitor. While it is possible to draft a consulting agreement on your own or use a template, there are several compelling reasons why consulting a solicitor is advisable, particularly if the consulting agreement is complex, high-value, or involves critical business operations.
Expertise in contractual matters
Solicitors have extensive knowledge of contract law and are trained to identify and address potential legal issues that might not be apparent to those without legal expertise.
They can provide tailored advice that is specific to your business needs and the nature of the consulting engagement, ensuring that all legal and operational aspects are covered.
Customised agreements
A solicitor can draft a bespoke consulting agreement that reflects your business requirements and the specifics of the consultancy. This is particularly important if your consulting needs are complex or involve specialised services.
Solicitors also ensure that the agreement includes critical clauses, such as detailed scope of work, confidentiality, intellectual property rights, payment terms, termination conditions, and dispute resolution procedures.
Handling disputes
If disputes arise during the consultancy, having a solicitor involved from the beginning can facilitate quicker and more effective resolution, potentially avoiding costly litigation.
They can include robust provisions for addressing non-performance or breach of contract, detailing remedies and procedures to handle such issues.
At Lawhive, our network of small business lawyers is on hand to provide thorough review services to identify any potential risks and suggest improvements for clarity and enforceability.
Alternatively, they can draft a bespoke consulting agreement tailored to your business and the consulting services required.
Contact us today to schedule a free case evaluation and learn how our expert network of lawyers can assist with your consulting agreement.
Engaging a consultant without a formal consulting agreement can expose your business to significant risks. While it may seem easier or more cost-effective to proceed without one, the absence of a structured agreement often leads to:
Ambiguity in deliverable and scope creep;
Unclear payment terms and what constitutes satisfactory completion of work;
Disputes over the use and ownership of key assets, like software, designs, or written materials;
Loss of control over the use of intellectual property;
Costly, time-consuming litigation.
What should I do if a dispute arises with a consultant?
If a dispute arises with a consultant and informal efforts to resolve it are unsuccessful you should refer to the dispute resolution clause in the consulting agreement.
If the dispute is serious and cannot be resolved, consider whether you have grounds to terminate the agreement.
If the dispute remains unresolved or if it escalates, consult a solicitor for legal advice. They can provide guidance on your rights and options, help you with the dispute resolution process, and represent your interests if the matter goes to court.
How long does it take to draft a consulting agreement?
For straightforward consulting engagements with clear and limited scope, the drafting process can take 1-3 days.
More complex agreements, such as those involving multiple phases, detailed deliverables, proprietary technology, or significant intellectual property considerations, may take a couple of weeks to draft.
Further, if significant negotiation is required to reach a consensus on key terms, such as payment structures, IP rights, or termination clauses, the process can take even longer.
Can a consulting agreement be used for international consultants?
A consulting agreement can be used for international consultants. However, it’s important to specify which country’s laws will govern the agreement because different legal systems have varying rules on contract enforcement. For international agreements, it’s common to choose the client’s home country or a neutral jurisdiction.
What is the difference between a service agreement and a consulting agreement?
A service agreement is a broad contract that specifies the terms for a wide variety of operational or routine services like maintenance, repairs, IT support, cleaning, or tasks that are generally ongoing and predefined.
A consulting agreement is a type of service agreement that focuses on providing expert advice, strategic guidance, or specialised services by a consultant.
What is the difference between a consulting agreement and an NDA?
A consulting agreement and an NDA can coexist and complement each other in a business relationship, but they serve different functions.
A consulting agreement governs the entire scope of consulting services, while the NDA focuses solely on maintaining the confidentiality of sensitive information shared during the engagement.
Why choose Lawhive for your consulting agreement?
Consulting agreements help to define the boundaries of your working relationship, ensuring both parties have a clear understanding of their roles and responsibilities, which is crucial for smooth and productive collaborations.
At Lawhive, our network of experienced small business lawyers is ready to draft consulting agreements tailored to your specific needs and industry, all at a fraction of the cost of traditional high-street law firms.
Through our innovative online platform, we simplify the legal process, answer your questions, and ensure your consulting agreement aligns perfectly with your business goals.
Contact us today to schedule a free case evaluation and get a no-obligation quote for our consulting agreement services.