What is a Consultancy Agreement?
Consultancy agreements are where a person or company is contracted by another entity, for example a government department, a non-government organisation or a company to complete work, provide advice or service.
They are similar to independent contractor agreements. The main difference between a consultant and an independent contractor is that consultants offer professional, managerial or technical expertise that an organisation does not have or does not want to employ in-house. Consultants and consultancy firms span a wide range of industries such as accounting, auditing, information technology, public relations, scientific advice and business advice. And that is just a few examples!
Because consultants are independent to the company or business they have been contracted to help (i.e. they are not employees) they can be useful in solving systemic or structural issues. They are often used to help entities design and implement substantial changes in areas such as policy, performance, business plans and business direction.
What should be in a Consultancy Agreement?
Here are some of the terms you should include:
- Parties – the business and contact details of both parties to the agreement
- Services – the specific services and project outcomes that the consultancy firm will deliver. Include the limitations of the service.
- Term – what is the duration of the agreement? Does the agreement relate to a particular project that will be completed over a certain timeframe or will the consultant provide an ongoing service?
- Are there any progress and milestone reporting requirements? How and when should a consultancy report their progress to the principal?
- Whether the principal (i.e. the party that has engaged the consultant) will provide any assistance to the consultant (e.g. access to offices, access and use of desk space, access to IT etc).
- Whether the consultant is able to sub-contract.
- The fee for the work and how when the consultant will be paid. The rate could be paid after certain milestones are met or be paid in increments on a regular basis. Alternatively, the consultant could be contracted on a retainer, which is where the principal pays an ongoing amount to the consultant in order to secure the availability of their services as needed.
- Who is responsible for paying for insurance and what workplace health and safety policies will apply.
- Who is responsible for paying project expenses.
- Whether the consultancy provides any warranties or guarantees as to the quality of their work.
- The agreement should include a comprehensive confidentiality clause.
- Who will own any intellectual property that is developed in the course of the project?
- Finally, the agreement needs to include a process for resolving disputes and for terminating the agreement if either party does not meet their obligations or there are irreconcilable differences.
Engaging consultants can be relatively straightforward if you have a decent consultancy agreement and it has been properly drafted to reflect the deal. We know… we’ve done hundreds of them!