31+ Sample Consulting Agreements

What is a Consulting Agreement?

A consulting agreement is a contract that defines the relationship between a consultant and a client. The agreement can also be called as a freelance agreement, independent contractor agreement, or business consulting agreement. The agreement you use depends on what type of consulting service you need. A freelance agreement is a contract between a free-lance worker and a company. It defines the processes of a project until it is complete. An independent contractor agreement is a document between an independent contractor and client. It describes the services a contractor has to perform to complete a specific task. An independent contractor can be a lawyer, doctor, freelancer, software developer, musician, etc. A business consulting agreement is a contract between a company and a consultant. It defines the services a consultant has to offer to a business.

Korn Ferry was first in the “top 200 executive search firms” specializing in obtaining positions with wages that are at least a minimum of $100,000.

In 2019, according to Statista, the company had annual revenue of $775 million. 

According to the Bureau of Labor Statistics in the U.S, more people will choose to be a Political Consulting job in the coming decades.

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The Distinct Categories of Consultancy

There are two types of consultants, the generalist consultant, and the specialist consultant. A generalist consultant is an expert in several fields and provides services to businesses making general improvements. A specialist consultant specializes in a particular industry and offers services to improve a section of an institution. Some work for establishments while some work as freelancers. Typically, in establishments, consultants get higher positions (e.g., vice president). According to Statista, Korn Ferry, which is a large consulting firm in the U.S., hired about 1,144 consultants worldwide in 2019. In the same year, the company had an annual revenue of $775 million. On the other hand, general consultants are categorized distinctly. Below are some distinct categories of consultancy.

Environmental consultant. An individual whose job is to help both public and private sector clients in dealing with issues of the environment, such as air and water pollution, is called an environmental consultant. Environmental consultants have expert knowledge in carrying out detailed environmental assessments that will benefit the companies they work for contractually. Their job is to conduct surveys in the field and gather data to create a database concerning the levels of contamination in a specific location.For example, a company that is planning to buy a property may hire an environmental consultant to inspect the site before purchase.Economic consultant. Commonly, economic consultants work for huge consulting establishments. Their job is to assist companies to grow economically. They investigate and analyze different economic setups for different businesses. Also, economic consultants may be hired to settle cases concerning economic situations and to serve as a witness supporting another expert in trial.Financial consultant. A financial consultant is a person who helps corporations improve their capital productivity and shareholder value. Compared to a financial analyst whose focus is to assess external companies, a financial consultant focuses on giving monetary advice to corporations internally. Note that financial advisors are also financial consultants, but they focus more on consulting individuals rather than businesses.Compensation consultant. One of the main objectives of a compensation consultant is to make correct incentives for employees who work for a company. Also, they advise businesses concerning compensation trends and the latest payment rates for certain work categories. Their specific responsibilities include creating and executing compensation programs, guaranteeing that compensation applications are adhering to the law.Healthcare consultant. Consultants who work in the medical field are called health consultants. They advise healthcare companies to upgrade their organizational framework and efficiency. In other words, healthcare consultants perform management analysis for companies in the health industry. They study the organizational structure, efficiency, and profit of every facility and offer advice for improvement.Human Resource consultant. An HR consultant is a professional hired by an entity externally whose tasks involve providing solutions to employment problems. Most often they are employed to come up with advanced solutions and suggestions to team leaders and managers of a company. The reason why small companies hire HR consultants is simply because they don’t have one, and the owners usually do accounting for themselves. Large companies hire HR consultants from the outside to gain a different point of view on a certain project.Technology consultant. To meet their business goals, companies usually ask help from technology consultants to advise them on how to best use technology for the business. Technology consulting may mean developing and designing technology solutions for a client. Commonly, clients request consulting firms to assist them in creating an IT system or to scrutinize an existing system.Political consultant. Politicians get assistance from political consultants during election campaigns. Political consultants help political candidates in researching, strategizing, and advertising them to the public. Also, they can study other opposing candidates and get information from the public about what they think about a particular candidate. These consultants normally work on a full schedule, and even work overtime just to finish any pending work. Their job may be demanding, but they are compensated very well. According to the Bureau of Labor Statistics in the U.S, more people will choose this job in the coming decades.Legal consultant. Professionals who guide businesses and clients concerning legal matters are called legal consultants. Compared to a lawyer, a legal consultant provides service only outside the courtroom. Also, they may specialize in different areas, such as foreign affairs, real estate, financial law, business law, etc. Generally, these consultants spend their time working in offices and often hold meetings with their clients.

How to Outline a Standard Consulting Agreement

Several business entities ask help from consultants from the outside for expert help when the need arises. A consulting agreement can be likened to any business agreement where the parties involved sign an agreement that clearly defines its terms and conditions. Not all contracts look identical, but most likely they have the same key elements. So, here are the steps in outlining a standard consulting agreement.

Step 1: Describe the Purpose of the Contract

It is essential that the agreement clearly states its purpose and its scope. The description must answer questions concerning how a consultant will execute his/her job, what a client or business needs, what the problems are, what methods will the consultant apply to address the problem or need, etc.

Step 2: Set a Schedule for Your Agreement

Set deadlines for tasks and project plans that need to be completed. Add provisions concerning delayed work. Write in detail when a project or task will be considered as accomplished. Additionally, don’t forget to lay out the criteria for a task or project.

Step 3: Include Ownership Terms in the Contract

This section of the agreement determines who has the right to own the end-product, the consultant or the client. If the contract deals with property, such as, copyright, intellectual property, or creative work, terms concerning this should be plain and clear. For example, if the agreement states that any effort a consultant does is “for hire”, then the client has the right to own the finished product.

Step 4: Write the Payment Details

Any kind of service has a fee. Payment details include the amount of payment and conditions to get incentives. Also, payment details may state if a consultant will collect a flat-rate, retainer, day rate, or an hourly consultant fee once he/she finishes the job.

Step 5: Incorporate a Confidentiality Clauses

A confidentiality clause can be a non-competition clause or a non-solicitation clause. These clauses detail the conditions of confidentiality a consultant must follow. A non disclosure agreement is very crucial for the security of a client or a company’s trade secrets. This clause will define the penalties in case a consultant shares sensitive information.

Step 6: Type In the Conditions for Termination

The conditions for termination will determine what are the necessary actions to take in case one party decides to terminate the contract. Also, it will decide the penalties if one party chooses to cancel the agreement. Note that before actual termination, a 30-day prior notice should be given to the other party.

FAQs

Why are verbal agreements not enough?

Verbal agreements are hard to prove once you bring a case to court. If conflicts arise, the court will normally look for evidence before it hears one party out. With a written contract, courts will be forced to obey the terms written in the agreement even if it is against their convictions.

What is the difference between a Consulting Agreement and an Employment Contract?

A consulting agreement is a document used to temporarily hire independent contractors or consultants, while an employment contract is a contract used to employ workers.

What differentiates an employee from an independent contractor?

An independent contractor is a person who offers project-based services for a price and is self-employed. On the other hand, an employee works for an employer for a long period of time depending on the employment contract. To differentiate an employee from an independent contractor the following factors must be considered: who provides the tools, what skills are needed, who will manage the work, what is required of the hired individual, where the job is executed, what the term of the agreement is, what the status of the hired worker is, what the payment methods are, and more.

What is a non-competition clause and a non-solicitation clause?

After a consulting agreement is terminated, a non-competition clause will prohibit a consultant from unjustly competing with a client. A consultant must not accept a work that will compete with a client he/she recently handled. A non-solicitation clause is a clause that prevents a consultant from drawing the employees of a client or company away, therefore, affecting the employee-employer relationship. Note that courts may not regard a non-competition or non-solicitation clause as enforceable if it greatly affects the public, if it is too broad in its scope, if the consultant finds it difficult to find another job, or if it has geographical limitations.

What is the meaning of “notice” in an agreement?

Notice is the amount of time one party provides another if they decide to cancel their contract before the agreed date. The main intention of a notice is to give a client time to look for a replacement or the other way around. In most cases, employees benefit more from notices than independent contractors because the law doesn’t offer this kind of protection unless the contract provides it. However, jurisdictions may pay attention to a freelancer if he/she can prove that he/she was dependent on the client.

If you are a consultant, you want to be sure of your compensation before offering your services to a client or a company. If you are a client, you also want to ensure that the services you pay for are rendered well. As a consultant, you should protect your interest and make sure that you are compensated fairly after accomplishing a project or a business plan. If you are a client or if you own a business, a consulting agreement will protect your company’s trade secrets via confidentiality clauses. In both ways, consulting agreements protect the interest of both parties.