Attention Consultants: Why You Need a Written Agreement
by Sylvia Ho
You've just landed a consulting assignment at a terrific rate. Should you
put your agreement in writing? Chances are, your new client will present
you with a written contract. If so, should you sign the agreement? And what
should you look for in the agreement?
The practice of hiring consultants in the corporate world is increasing and
so is the practice of using written agreements to define the parameters of
the working relationship. Here are some guidelines to help you initiate and
maintain a satisfying partnership:
A Written Agreement...
...Helps You Stay Profitable
A well-drafted agreement helps avoid future misunderstandings. Make sure you
clearly define your responsibilities and your fees. If you are being paid a
flat fee, for instance, you'll want to enumerate all your obligations to
avoid doing additional work that will cost you time and money. For example,
a computer software developer working as a consultant would use a written
agreement to limit his or her work to software development and specifically exclude
other work, such as proogram testing.
...Defines How and When You Get Paid
Many consultants negotiate a standard up-front retainer and specify a
timetable for being paid. If the consultant is not paid on time, the work
does not proceed. Specifically defined payment arrangements ensure that your
client understands when payment is due and ensure that you, the consultant,
are paid for your work in a timely manner.
...Helps Avoid Costly Litigation
Include a clause addressing how any future disputes should be handled,
saving you and your client lawyers' fees and court costs.
...Clarifies Ownership of Intellectual Property
You may be entitled to ownership of copyrights and patents for your efforts.
As an employee, the ownership of any copyrights or patents on work that you
create usually belongs to your employer. Not so as a consultant; the
consultant usually retains the ownership of intellectual property for work
that the consultant develops. This is good news. For example, if you
developed software, you can use it again and charge more for less work,
because you have already developed the tool that you own. A written
agreement is essential in clarifying your rights to intellectual property.
Finally, have the agreement reviewed by a lawyer before you use it. If you
seriously want to engage in consulting work, a well-drafted written
agreement is a worthwhile expense. There are many free forms on the Internet
that can help you create a first draft. Once you have a written draft, bring
it to a business lawyer to review and finalize the document. The best part?
You can use your form agreement many times in the future.
Here are some links on the Internet to create consulting agreements that
will help you:
From the 'Lectric Law Library:
From Home Business Online:
