Whether you’re going to offer your services as a consultant or hire one, you’ll need a consultant’s fee contract, also known as a consulting agreement. Never fall for that old “My word is my bond” chestnut. If someone’s word is good then they won’t mind putting it on paper, so don’t be embarrassed about asking them to sign a contract. As a consultant, you won’t want to put in a great deal of time and expertise and then discover that your client thinks your bill is too high (and plans to pay you less) or believes you should have done the work faster (and plans to pay you less) or even refuses to pay you a single nickel—all scenarios that many consultants have, very unhappily, experienced. And if you’re the one paying up for a consultant’s services in order to fix a tricky problem or to save money by outsourcing, you don’t want to get stuck with someone flitting around and totally failing to deliver. Be very specific about expectations and delivery. FastDue’s free consulting agreement template can be customized either for a formal proposal or as a final agreement. The entire form is interactive: use the messaging system to help thrash out details and concerns. Work to be performed. The most important component of a consulting contract is the statement of work to be performed or services to be provided. You should describe in detail the job or service and the timeframe in which it will be done. If possible, state what should happen at each stage of the project and set review dates. Also pay attention to after-care—will the consultant be expected to be on call to train employees to use a new system, or to fix minor glitches, after the contract has been completed? Tip: Companies should spend a lot of time nailing down exactly what they need and expect from a consultant prior to hiring one. Changing the project’s goals midstream wastes valuable time—and money. From the consultant’s point of view, a constantly changing goalpost can make him or her look incompetent. Tip: Be sure to give a consultant the access he or she needs to your buildings, computer systems, information and clients. Specify how this will be done in the contract. Also give them access to you—they can’t work effectively in a vacuum. It’s as important to define what a consultant needs in order to complete a job well and on time as it is to define the job he or she is to do. Fees Set out a fee schedule. This should include fees, expenses policy, billing and payment schedule, retainer, hourly fees for additional work that proves necessary after the contract has ended, and any penalties that may result from failure to complete the work as described on time. Tip: Specify who will approve allowable expenses and whether any such expenses will be pre-approved or reimbursed. Use FastDue’s free Expense Report for fast, easy approval and centralized paperwork. Term Clearly state the dates upon which work will begin and end, including provisions for delay in starting or finishing. Set out the circumstances under which either party may terminate the agreement and any notice (anywhere from 24 hours to 30 days) that must be offered, as well as terms of optional renewal. Tip: Companies should be sure they will be ready to utilize the consultant’s services on the very first day of the contract. A surprising number of consultants complain that they have had to sit around for days or even weeks because the client wasn’t ready for them. Confidentiality Add a confidentiality clause. A consultant may well come to know proprietary or confidential information about the company and should agree in writing to neither disclose it nor take advantage of it. A clause about avoiding conflict of interest may also be applicable. Tip: If you need a more extensive confidentiality agreement, go to FastDue’s free Non-Disclosure Agreement. Independent contractor status Specifically state that the consultant is an independent contractor, not an employee of the company. As such he or she is not entitled to employee benefits like health insurance, and for legal purposes you do not want to establish an employer-employee relationship. A consulting agreement should specify that the consultant will be responsible for any and all taxes, social security, and so on, as these will not be withheld. Tip: The IRS can be quite sticky about the difference between employees and independent contractors and in some cases has ordered companies to pay back taxes and penalties. A consultant should have their own place of business, pay for their own training, have discretion about how the consulting work is carried out, and be seen to be actively engaged in attracting other clients. A solid contract specifying a particular project with a specific beginning and ending stop is important. A Note About Electronic Signatures The Electronic Signatures in Global and National Commerce Act, or E-SIGN, was signed into law in 2000 and provides a consistent legal basis for the validity of electronic signatures in all states, including those such as Georgia and Illinois that had not already enacted UETA, or the Uniform Electronic Transactions Act. An electronic signature can be as simple as typing your name into the signature space and preserving the accompanying electronic paper trail. More complex (and therefore more secure) forms include iris or fingerprint scans and encrypted digital signatures that use Public Key Infrastructure (PKI) such as VeriSign. Electronic signatures are valid for a wide range of applications; they are not, however, valid for wills, court orders and other court documents. It is always smart to keep a back-up paper copy. If you have any concerns at all about using an electronic signature, simply use FastDue’s free interactive template and messaging system to thrash out the details of an agreement; then print out the final result and sign it in the traditional fashion. Consult your lawyer for further information.