5 Steps One Should Follow To Do Consulting Agreement

consulting agreement

Business consulting has grown tremendously in recent years as the expertise required for projects continues to rise. Hence, more and more companies are bringing in consultants to help with new projects and ideas. Since such individuals have very specific skill sets, they work better as consultants than full-time employees. However, this does not mean they should not have a consultant agreement, which acts as a formal business agreement between the two parties. A Consultant Agreement for services helps establish a good working relationship between the consultant and the client and fosters cooperation. In this article, we will take a look at the different aspects of a consultant agreement and why they are so helpful. 

What is consulting?

Consulting is a process of getting the business advice of an expert. Consulting is a process by which third-party individuals or entities help businesses with specific tasks, projects or products for a stipulated period. The process of consulting has gained prominence in recent years, and companies specialising in such services have mushroomed as a result. Such businesses thrive by helping companies across various domains reach their maximum potential and expand to new markets. The process of business consulting primarily involves the following steps:

  1. Entry and contract: The first step involves the client and the consultant meeting and getting to know each other. This step is crucial as it helps both parties gauge the other and determine whether they will be a good fit for them. It also involves understanding the core issues at hand, drafting a consultant agreement, and finalising the relationship.
  2. Discovery and discussion: Following next is the process by which the parties exchange information and get to understand more about each other. The consultant gets access to more intimate documents and starts forming a mental picture of how the company works and what the major problems are. This step involves a lot of research and analysis from the side of the consulting firm, which then leads to discourse and discussion.
  3. Feedback and action: A crucial step in the process, feedback allows both parties to understand the merits and demerits of their suggestion. The client also gains an insight into what needs to change and how to go about doing that. The action part of this step involves the client putting in force these changes and figuring out how to implement them effectively.
  4. Implementation: Next comes the actual implementation wherein both parties work together to make the transition as smooth as possible. The client carries out the suggestions, and the consultant remains involved to offer alterations as and when required.
  5. Extension or closure: Lastly, there is a review that helps both parties understand whether their objectives have been met. If so, the partnership comes to a close, and if not both parties can extend their relationship further if required. In doing so, a new consultant agreement must be drawn up and signed between the parties. 

What to include in a consultant agreement for services?

While consultant agreements will vary depending on the field and nature of work, they do share some standard clauses. Let us now take a quick look at the most commonly used elements in a consultant agreement.

  1. Name of both parties that are the consultant and the client
  2. Define the scope of work and what services it entails
  3. Establish the payment terms
  4. Set a definitive time frame for the relationship
  5. Define the business relationship clearly
  6. Protect the Intellectual Property Rights of the business
  7. Include a confidentiality clause to protect sensitive information

Why is a Consultant Agreement for services critical?

As you can see from above, signing a Consultant Agreement is one of the first steps in the process of business consulting. This document helps establish a formal relationship between two parties and aids in preventing confusion and lack of clarity. Here’s a quick look at five reasons why one needs a consultant agreement.

  1. Helps in outlining the scope of the work, and the duties, responsibilities, and powers of both parties.
  2. Having such an agreement in place helps with dispute resolution, leading to a better relationship between both parties.
  3. Since it outlines what is expected of both parties, a consultant agreement helps provide more clarity to the relationship and prevent any miscommunication and misunderstanding.
  4. It is a legally binding document that can help secure the best interests of both parties and holds good in a court of law if need be.
  5. A consultant agreement makes it easier to work together as it dispels all ambiguity, and brings a lot of security and safety to both parties. 

In today’s dynamic and fast-paced business world, no company has the expertise to perform all its functions correctly. Hence, we all need help from experts at some point in time. However, entering into verbal agreements with such experts will not help in defining your relationship or giving it any tangible protection. As a result, you should draft a formal consultant agreement in such cases to prevent confusion and chaos later. So, the next time you decide to hire a consultant, make sure you bring them on-board legally and in the right manner by using a consultant agreement!