What freelancers (and their clients) need to know

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You’re a freelancer and you’ve won a new client for a consulting project. Or you’re a business owner who is ready to engage a consultant to help with an important new business initiative you’ve been working on. You’re smarter than most folks in that you know that you need to get a written agreement in place with the other party – otherwise you’re just asking for trouble (if you’re not sure why this is the case check out our blog post on why you should always have a binding contract in place when doing business with others).

So, what does this consulting agreement need to say? Here’s what your consulting contract absolutely must contain:

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What work the consultant will perform. Both the consultant and the client need to come to an agreement on what work the consultant will actually do. This should include not only a written description of the services that the consultant will provide but also a written description of any tangible work product, or deliverables, that the consultant will provide. An example of such a deliverable might be a written report or assessment or a functioning website. The description of the work to be performed is often contained in an attachment to the consulting agreement (typically referred to as a “Statement of Work”) but can also be contained in the consulting agreement itself.

The timeline for commencement and completion of the work. Your consulting agreement should specify when work on the project should commence and also include a list of milestones or due dates when portions of the project should be completed. For example, a consulting contract for website development may require that the consultant provide an assessment of the client’s existing website in one week, a wireframe and functional spec of a new website in three weeks, and a functional website in 60 days.

Whether the consultant needs anything from the client before work can commence. Often a consultant will need the client to do something before the consultant can begin work on the project – provide client data, grant access to existing website code, etc. Why is it important to include this in the consulting agreement? Here’s one reason why: it ensures that the consultant is not penalized for failing to meet a deadline because the client dragged his feet and did not get something to the consultant that he or she needed in order to start the project.

Fees and payment terms. You will want to clearly set out how much the consultant will be paid for the engagement and at what point any payments are due to the consultant. Fees and payment terms can come in all forms and fashions – it’s not uncommon to charge a flat fee for the project, a per hour fee based on the number of hours the consultant works to complete the project, or provide for some other arrangement entirely.

It often makes sense to tie payment terms to any milestones you set. Returning to our website development example above, you may require that a third of the fees due the consultant might be paid when the initial website assessment is completed, a third be paid when the wireframe and spec for the new website are complete, and the final third be paid when the new website is up and running. If you’re a business owner, it’s obviously wise to be skeptical if a consultant requests payment in full up front before they have provided you any of the services or work product for which you are engaging them.

Reimbursement of expenses. You will want to specify whether the client will reimburse any expenses incurred by the consultant during the course of the engagement. It’s often wise to include a provision that provides that the client will reimburse any reasonable expenses up to a certain amount (or any one reasonable expense up to a certain amount) but that any expenses incurred by the consultant above that amount require prior written permission from the client.

Effective date of the contract. Make sure to include the effective date of the agreement in your consulting services contract! If the contract is not dated but provides that the client must pay the consultant 60 days after the effective date of the contract, when should the client pay the consultant?

Signatures. While you’re dating your consulting services agreement, you might as well sign it too. So many people neglect to actually sign contracts – all that does is create uncertainty in the law’s eyes around whether a binding contract was ever actually created in the first place. And who likes uncertainty?

Not that you know what every consulting agreement needs to contain – try using WhichDraft’s Consulting Services Agreement. It covers everything we’ve discussed here, was prepared by leading attorneys, and you can put one together in five minutes or less.

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