Consulting contracts: doing it yourself

You've quit your job to set up as a consultant; you've got yourself an office, a new laptop and a new suit; best of all, you've shaken hands on your first project.

The client asks for your T&Cs, but you have none.

What are the options?

In increasing order of cost, you could:

When should you DIY, and when should you use a professional? In this post, I look at the DIY option. In particular, I consider the circumstances in which the DIY route may be the right one, the factors affecting template selection, and some of the issues you'll need to deal with when adapting the template for your business.

DIY or professional?

A certain breed of lawyer likes the idea of DIY contract drafting about as much as a surgeon might like DIY surgery – but there are obvious and relevant differences.

A badly drafted consulting contract is unlikely to result in bleeding or an infection. Small-scale consulting contracts are usually low risk. Often enough, the contract will not be read carefully before signature and will not be read at all after signature. It is rare for consultancy contracts to be the subject of court proceedings.

Just as important, we have no NHS for commercial contracts, and if you want a lawyer to write a contract for you, you're going to have to pay. Fees will range from around £500 to around £10,000 for a consultancy agreement of simple or moderate complexity. If the charges payable under a contract are below a certain level, it will make no commercial sense to instruct a lawyer.

In many but not all cases, consultancy contracts are straightforward. If you're smart enough to make it as an independent consultant, you'll likely be able to make a good fist of a simple contract.

There are lots of templates, some of good quality, available for free or for modest licence fees, and so you won't need to start from scratch. So, consider a DIY approach where:

  • the subject matter of the contract is low risk;
  • the value of the contract is relatively low;
  • you can identify a good template to start with; and
  • the contract terms will be straightforward.

Where serious loss could result from a failure of performance, where lots of money is changing hands, where you can't find a good template, or where the contract involves significant factual or legal complexity, then you should seriously consider using a lawyer.

If you are working in an employee-like role, then you – and the customer – may want to ensure that this doesn't amount to disguised employment. Professional advice may also be helpful here.

Naming conventions for contractual documents

Before getting into the details of choosing a template, I'd like to say something about names. Contract templates with identical names may have different contents; and templates with different names may have substantially identical contents. When searching for a template, it's helpful if you can determine in advance the range of names that might be used. In the case of a consulting contract you should look for names combining:

consulting / consultancy / consultant / freelance / freelancer / subcontractor / services

AND

contract / agreement / framework agreement / terms and conditions / T&Cs / terms

There are differences in meaning between the terms in each set, but those differences will not always be determinative when you're choosing a document. The description and contents list will usually be more important than the name.

Which template supplier?

With common contract templates such as consulting contracts, a series of Google searches of the various combinations should help you to identify a range of suppliers.

Ask yourself these questions when selecting a supplier.

  • Do they specialise in the law of the relevant jurisdiction (e.g. English law)?
  • Do they specialise in the relevant area of law (e.g. commercial law)?
  • Do they identify the author or source of the document?
  • Is any identified author or source credible?
  • Do they provide enough information about their products to allow you to make a decision?
  • Can you view or access a sample document?
  • Will they provide guidance on template choice?
  • Will they give you a refund if you choose the wrong document?

How do I find the right template?

You won't be able to find the perfect template: if template contractual documents could be used by business people without adaptation, there would be little work for us commercial lawyers. Every deal is different, and the documents should reflect those differences. So, you're going to have to do some work, but if you start with a template that is a good fit for your circumstances, it will be a lot less work.

There are three main aspects of "fit": structure, style and content. These break down into the following questions.

Structure:

  • Does the document anticipate the right formation and form of the contract? For example, will the parties sign with ink, or electronically, or tick a check box online?
  • Does the document create a single overarching contract, or does it create a framework for multiple contracts?
  • What level of flexibility is needed, and how is such flexibility accommodated?

Content:

  • Does the template include all the basic provisions that you would expect to find in a consultancy contract? The basics should cover scope of services, time for delivery, fees and payments, confidentiality, warranties, limits of liability, term and termination, effects of termination and interpretation. In relation to the scope of services, does the contract assume that the supplier will be committing to achieve a particular goal or outcome?
  • Does the template include provisions to deal with the particular issues that you will face? See the table below for information about some of the key issues.
Clause typeMay be required if...Notes
 Intellectual property rights … you will be supplying materials in which intellectual property rights subsist. If you are retaining ownership of rights in such materials, then you may need to grant a licence to customers. If customers will own the rights, you should formally assign them. In some cases, the correct approach will be a mix of licensing and assignment.
 On-premises services … you will be working at or from the customer's premises.You may want to see contractual obligations to provide you with office space and necessary services. Customers may want you to undertake to follow their rules while on site.
Personal data processing… you will be processing personal data on behalf of your customers. Article 28 of the GDPR specifies the clauses which must be included in contracts between controllers of personal data and their processors.
Non-solicitation… you and/or your customers will be concerned about the poaching of staff or others.Non-solicitation clauses may be prima facie in restraint of trade, and so need to be appropriately limited.
Charges variation… the contract is or may be long term, or your costs are uncertain.Typically, variation will be allowed on notice, perhaps at some defined point during the contract year. Customers will want some protection from arbitrary increases.
 Contract management… your customers are larger, your projects more complex, and miscommunication is a material risk.Contract management clauses cover such matters as the formal appointment of representatives, project management meetings, change control procedures.

 

  • Just as important, does the template omit provisions which are irrelevant to your business?
  • Is the template up-to-date? A good, if rough, way to confirm this at the time of writing is to check whether any data processing clauses have been updated to reflect the requirements of the General Data Protection Regulation (GDPR).

Style:

  • Is the level of formality in the document appropriate for the circumstances in which it will be used? Corporate customers may expect a more formal document than SMEs.
  • Is the document in your contractual Goldilocks zone, neither too short nor too long, neither too simple nor too complex?
  • Does the document exhibit any bias? If so, is it the right kind of bias? As a supplier, a document that is partial to the customer will not be a good place start.
  • Is the document clearly written? Will you easily understand the language used in the document? Will your customers?

Adapting the contract

When using a template, you are taking on the job of a lawyer, and you will need to invest time in adapting the template for your business. I might spend anything from 2 to 10 hours creating a client consulting contract from a template. You should expect to spend the same – or more.

When adapting the template, aim for simplicity and clarity. Omit needless clauses and use short sentences. Use defined terms to limit the need for repetition.

Deliberately confusing or misleading your customers is rarely a good idea.

The primary function of a contract is to create legally-enforceable rights and obligations. The majority of the content of most contracts should reflect this: Party A shall do X; Party B warrants to Party A that Y is the case; Party B must not do Z. In general, you should avoid descriptive language which does not contribute to the clarification of the meaning / scope of the rights and obligations.

For the most part, the meaning of an English law contract will be apparent on the face of the contract; moreover, the parties to an English law contract are, in general, free to agree what they want to agree. Nonetheless, in those areas where the law does intervene, you should be wary of amending the text in your template. Particular care should be taken in relation to: limitations of liability (which are drafted to reflect a long history of precedent as well as Unfair Contract Terms Act 1977 and other legislation); data protection (which is tightly-regulated under the GDPR); intellectual property transfers (which have certain formal requirements); and non-compete or non-solicitation clauses (which are subject to public policy rules).

Think about what is missing from the template, as well as what is already there.

Try to imagine what kinds of disputes are most likely to arise between you and your customers, and ensure that the contract will help in the case of such disputes.

Consider the contract from your customers' points of view.

Lastly, read and re-read the entire document. Ask someone else to read and comment on it before you finalise the text. Consider asking a proof reader to review it. A good proof reader will read for both sense and errors, and whilst proof readers won't take responsibility for legal errors or issues of conceptual consistency, they will often spot issues which have a material effect upon meaning.

You can see the full range of our consultancy agreement templates on Docular. If you would like help choosing a template, please get in touch.

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