How to Draft a Consulting Agreement

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

Forming a professional relationship between a consultant and their client requires a comprehensive consulting agreement, yet many people don’t fully understand why this legal document is so important. A poor-quality agreement can lead to misunderstandings, disagreements and even costly lawsuits.
Genie AI, the world’s largest open source legal template library, provides millions of datapoints to explain the true value of a well-crafted consulting agreement. Here we explore why this document is essential for protecting both the consultant and the client in any professional arrangement.
The most significant benefit of having an airtight consulting agreement is that it clearly sets out the terms and conditions of both parties’ involvement in the project. The essential details such as scope of work, fees, payment terms, duration and any other relevant information should all be stipulated in writing within an agreement to avoid potential disputes or misunderstandings further on down the line.
Agreements also lay out protection for aides used by consultants when carrying out their work - intellectual property created through custom processes or systems must not be used without permission from its originator. This clause should be included in any contract to protect against potential theft or misuse of ideas created by either party during their collaboration.
Additionally, this legal document helps limit liability for both parties involved; consultants should outline their responsibilities with clear language that outlines how they are expected to conduct themselves while working with clients while also limiting their own liability in case anything goes wrong along the way. From a client point of view, analytics agree that an airtight consulting agreement works as insurance; it lays out expectations for quality and timeline for delivery so clients know exactly what they’re paying for - and when they can expect it by - when engaging with a consultant’s services.
In conclusion: whatever your role may be within a professional relationship involving consultation services (be it consultant or customer), having your expectations set forth clearly within a legally binding document helps ensure mutual satisfaction from each parties’ perspective upon completion – all without risking significant financial strain if unexpected issues arise along the way! To help you get started drafting your own comprehensive contract today Genie AI provides free access to its library full of market-standard templates – read on below today!

Definitions (feel free to skip)

Parties - People or groups involved in an agreement.
Scope of Work - The specific tasks, results, and timeline that a consultant must adhere to in an agreement.
Deliverables - The products, documents, or other items that are to be created or provided by a consultant.
Timeline - A plan or schedule for completing tasks or deliverables.
Obligations - The things that a person or group must do or be responsible for in an agreement.
Limitations - Restrictions on the rights and responsibilities of a person or group.
Fees - The amount of money paid for services or goods.
Payment Schedule - A plan for making payments at specific times or in specific amounts.
Non-disclosure Agreement - A contract that prevents one party from disclosing confidential information to another.
Intellectual Property Rights - Rights that are associated with creative works, such as copyrights, patents, and trademarks.
Distribution of Ownership - The allocation of rights or profits between the parties involved in an agreement.
Termination - The end of an agreement.
Mediation - A process in which a third party helps two or more parties resolve a dispute.
Arbitration - The process of resolving a dispute through the decision of an impartial third party.
Indemnification - A legal agreement that requires one party to cover any losses or damages caused by another.
Force Majeure - An event outside of a person’s or group’s control that prevents them from fulfilling an agreement.

Contents

• Introduction
• Parties’ names and contact information
• Defining the Scope of Work
• Description of services to be provided
• Deliverables
• Timeline
• Outlining the Parties’ Rights and Responsibilities
• Obligations of each party
• Limitations on each party
• Payment Terms and Conditions
• Fees and payment schedule
• Late payment policy
• Confidentiality
• Non-disclosure agreement
• Ownership of Work Product
• Intellectual property rights
• Distribution of ownership
• Termination
• Conditions for early termination
• Rights and obligations upon termination
• Dispute Resolution
• Mediation
• Arbitration
• Miscellaneous Provisions
• Indemnification
• Force Majeure
• Signing the Agreement
• Required signatures
• Place and date of signing

Get started

Introduction

• Understand the purpose of the consulting agreement
• Determine the jurisdiction in which the agreement will be governed
• Understand what services will be provided by the consultant
• Understand the payment terms for the services
• Determine who will be responsible for paying taxes

When you have a clear understanding of the purpose of the agreement, the jurisdiction in which it will be governed, the services to be provided, the payment terms, and the taxation responsibilities, you can move on to the next step.

Parties’ names and contact information

• Get the names and contact information of each party involved in the consulting agreement
• Make sure to include full legal names, mailing addresses, and email addresses
• If any party is a business, make sure to include the legal name of the business and the names of any relevant officers
• Once you have all of the necessary information, you can move on to the next step of defining the scope of work for the consulting agreement.

Defining the Scope of Work

• Outline the scope of the project in detail, including the services, deliverables, timeline, and budget
• Clearly define what is included in the scope of work and separate out any other services that are not included
• Indicate any specific objectives, goals, or milestones that need to be achieved
• When you are satisfied that the scope of work is clearly defined, add it to the agreement and have both parties sign off on it
• Once both parties have agreed to the scope of work, you can move on to the next step of the guide.

Description of services to be provided

• Clearly define the scope of work that the consultant will be providing, such as the hours they will work, the tasks they will complete, and the outcomes they will deliver
• Include any specific qualifications that the consultant must have in order to complete the work
• Specify any additional services the consultant may provide, such as training, additional meetings with stakeholders, or additional research
• Make sure the scope of services and any additional services are clearly outlined in the agreement
• When the scope of services is clearly outlined and agreed upon, you can check this off your list and move onto the next step.

Deliverables

• Identify the specific services to be provided by the consultant
• Set out any deliverables the consultant must provide, such as reports or presentations
• Specify the format and timeline for the delivery of the deliverables
• Include any other requirements or conditions that need to be met
• Once all of these details are outlined in the agreement, it can be signed and finalized
• You can then move on to the next step: outlining the timeline for the delivery of services and deliverables

Timeline

• Determine the timeline for when the project will be completed (i.e. when the deliverables are due).
• Establish a start date and end date for the project.
• Include provisions for possible delays and the effects of such delays.
• Specify any milestones in the project timeline.
• Once all of this has been determined, move on to the next step: Outlining the Parties’ Rights and Responsibilities.

Outlining the Parties’ Rights and Responsibilities

• Identify the scope of the consulting services and the results the consultant is expected to deliver.
• Include a timeline for the completion of the services and any milestones along the way.
• Establish the payment terms and what expenses will be covered by the client.
• Outline how confidential information will be handled and any other privacy considerations.
• Detail the responsibilities of each party and any potential liabilities.
• Specify any intellectual property rights.
• Outline any termination and dispute resolution procedures.

When you can check this off your list and move on to the next step: When you have included all of the points mentioned above in your agreement.

Obligations of each party

• Identify what each party is obligated to do under the terms of the agreement
• Describe each party’s obligations in detail
• Outline any conditions that must be met before each party has to fulfill its obligations
• Specify any deadlines for fulfilling the obligations
• Make sure both parties fully understand their obligations before signing the agreement

You can check this step off your list when you have listed out each party’s obligations with details, conditions, deadlines, etc. and both parties have a full understanding of their obligations.

Limitations on each party

• Consider the type of services being provided and any specific restrictions that should be included in the consulting agreement
• For example, if the consultant is not an employee, then the agreement should specify that the consultant is an independent contractor
• Specify in the agreement that the consultant does not have the authority to make any contracts or commitments on behalf of the company
• Include any additional limitations on the consultant that may be necessary, such as the consultant not being able to reveal the company’s confidential information
• Once the limitations on each party have been established, the agreement is ready to move on to the next step.

Payment Terms and Conditions

• State the payment terms and conditions in the agreement
• This should include the due date for payment, the accepted payment methods, currency to be used, and any other details related to payment
• Be sure to include any penalties for late payments, refunds, and/or returns
• Include language specifying who is responsible for any taxes and/or fees related to the agreement
• Once all payment terms and conditions are included in the agreement, you can move on to the next step
• You will know you have completed this step when all payment terms and conditions are included in the agreement and you are ready to move on to the next step.

Fees and payment schedule

• Decide how the consulting fees will be calculated - hourly rate, fixed rate, or a combination of both
• Determine the payment schedule - when the consultant will be paid, how frequently, and how much
• Include the payment terms in the agreement - the method of payment, any deposits or retainer fees, and other payment-related details
• Check the agreement to make sure all the payment information is accurate and correct
• Once all the payment information is correct and complete, you have finished the Fees and Payment Schedule step of the consulting agreement and can move on to the Late Payment Policy step.

Late payment policy

• Insert a clause that outlines the payment due date and any associated late fees
• Specify the maximum late fee chargeable and any other related fees
• Decide on the acceptable payment methods
• Include a penalty for non-payment
• Outline the consequences for late payment
• Specify the procedure for making payment
• Check that the late payment policy complies with local laws

You can check this off your list and move on to the next step when you have included all the above information in the late payment policy section of the consulting agreement.

Confidentiality

• Establish the scope of the confidential information that will be shared
• Include a clear definition of confidential information
• Identify the duration of confidentiality obligations
• Consider if any information can be excluded from the agreement
• Identify who will have access to the confidential information
• Specify what the parties can do with the confidential information
• Determine how confidential information should be stored and protected
• Include a clause on how to handle confidential information in case of a dispute
• Determine how confidential information can be returned upon the completion of the agreement

You can check this off your list and move on to the next step when you have included all of the necessary clauses related to confidentiality and have agreed on how to handle confidential information in the agreement.

Non-disclosure agreement

• Draft the non-disclosure agreement to ensure each party is aware of and agrees to maintain the confidentiality of any confidential information shared between them.
• Include a definition of what is considered confidential information, who may have access to this information, and how long the agreement will remain in effect.
• Make sure to include provisions to protect the rights and interests of both parties.
• When finished, have each party sign the agreement.
• You will know when you can move on to the next step when all parties have signed the non-disclosure agreement.

Ownership of Work Product

• Determine which party will own the work product created during the consulting agreement.
• Specify the rights and obligations of each party with respect to ownership of the work product.
• Identify any exclusions to the ownership of the work product.
• Ensure the agreement clearly outlines the ownership rights and obligations of both parties.

When you’ve finished this step, you should have a clear understanding of who owns the work product created during the consulting agreement and what rights and obligations each party has with respect to that work product.

Intellectual property rights

• Identify the intellectual property rights to be included in the agreement
• Confirm that the consultant owns the rights to the intellectual property
• Establish how the rights will be shared between the consultant and the company
• Specify who has the right to use the intellectual property
• Define how long the intellectual property rights will remain in effect
• Describe how the intellectual property rights can be transferred

Once you have established the intellectual property rights, you can move on to the next step, which is to determine the distribution of ownership.

Distribution of ownership

• Establish who will own the intellectual property (IP) rights resulting from the work performed under the consulting agreement.
• Specify the IP rights each party will have and the extent of these rights.
• Outline the ownership of any existing IP rights that are necessary for the performance of the consulting agreement.
• Include a clause that the consultant is not allowed to use the client’s IP for any other purpose than the consulting agreement.
• Include a clause that the client is not allowed to use the consultant’s IP for any other purpose than the consulting agreement.
• Outline the ownership of any IP rights that are created as part of the consulting services.

Once you have agreed upon and written down the terms of the IP rights and ownership of IP, you can move on to the next step.

Termination

• Include a clause that outlines the conditions for terminating the agreement
• Specify the date when the agreement will end, if applicable
• Outline the consequences for either party if the agreement is terminated
• Specify any fees associated with terminating the agreement
• Include a provision that outlines what will happen to any confidential information that has been shared
• Include a clause that states how disputes will be resolved if the agreement is terminated

You can check this off your list when you have included all of the above elements in your termination clause.

Conditions for early termination

• Identify the conditions under which either party may terminate the agreement early
• Set out what will happen if either party terminates the agreement early
• Outline any penalties that may be applied if either party terminates the agreement early
• Specify any advance notice that must be provided if either party terminates the agreement early
• Include a clause that requires the parties to act in good faith when terminating the agreement
• Once all the above points have been covered in the agreement, you can move on to the next step.

Rights and obligations upon termination

• Identify the rights and obligations of the parties if the consulting agreement is terminated before the full performance of the contract
• Consider if any compensation is necessary for the consultant if the contract is terminated early
• Specify any payment of fees, costs, or other obligations owed upon termination
• Set out any termination fees that would be payable under the consulting agreement
• When you have identified the rights and obligations of the parties upon termination, you can check this step off your list and move on to the next step.

Dispute Resolution

• Decide on a dispute resolution process that is agreeable to both parties (i.e. arbitration, litigation, or mediation).
• Include the details of the process, including how it will be initiated, how the dispute will be resolved, and how any costs associated with the process will be paid.
• Specify any laws that will govern the dispute resolution process.
• Include a clause that specifies that the dispute resolution process is the final recourse and that the decision made by the process is binding.
• Once all of the details outlined above have been included in the consulting agreement, the dispute resolution step is complete and you can move onto the next step.

Mediation

• Have the parties involved both agree to use mediation to try and resolve their dispute
• Choose a mediator who is impartial and qualified to mediate the dispute
• The mediator will work with both parties to try and come to an agreement
• Provide information and documents to the mediator to help them understand the dispute
• Attend mediation sessions with the other party and the mediator
• Reach an agreement and have the mediator draft a mediation agreement
• Both parties will sign the agreement and the dispute should be resolved

You will know when you can check off this step when both parties agree to use mediation and sign the mediation agreement.

Arbitration

• Decide which arbitration rules will apply to the agreement. Consider the American Arbitration Association (AAA) rules, the International Chamber of Commerce (ICC) Rules, or other international arbitration rules.
• Agree to a venue for the arbitration and the language of the arbitration.
• Include a clause in the agreement that states the parties involved will abide by the arbitrator’s decision.
• Make sure all parties agree to the terms of the arbitration and sign off on the agreement.

Once all parties have agreed to the arbitration terms and signed the agreement, the arbitration step can be checked off and the next step can be addressed.

Miscellaneous Provisions

• Include any other provisions or clauses that you or the other party need to include in the agreement
• Consider including language for termination of the agreement, confidentiality, trademarks, non-disclosure, non-compete, and non-solicitation
• Make sure to include language for governing law, as well as any other relevant state and/or federal laws
• Once you have added all of the necessary provisions, you can move on to the next step of drafting the consulting agreement.

Indemnification

• Define the indemnity provision, which should state that one party (the “indemnitor”) will indemnify the other party (the “indemnitee”) against any claims, losses, damages, liabilities, costs, and expenses incurred as a result of the indemnitor’s breach of the consulting agreement.
• Consider including any other related clauses, such as a provision that requires the indemnitor to defend the indemnitee against any claims, and a clause that requires the indemnitee to notify the indemnitor of any claims made against it.
• Make sure to include the limitation of liabilities of the indemnitor, either through a specific dollar amount or percentage of the consulting fees.
• When you have finalized the indemnification clause, you can move on to the next step.

Force Majeure

• Outline the circumstances that would be considered Force Majeure events.
• Include any other clauses that need to be included in the Force Majeure provisions.
• If applicable, discuss how to handle any costs or expenses incurred by one or both parties in the event of a Force Majeure event.
• Clarify the obligations of each party in the event of a Force Majeure event.
• Specify the time period for which the Force Majeure provisions will apply.

You can check this off your list when you have included all the necessary clauses and have all the details agreed upon by both parties.

Signing the Agreement

• Make sure all parties involved have signed the agreement.
• Confirm that all parties have read and understood the agreement.
• Ensure that each party has a copy of the agreement.
• You can check this off your list when all parties have signed and confirmed understanding of the agreement.

Required signatures

• Gather contact information from each party signing the agreement
• Collect signatures from both parties
• Once the signatures have been obtained, the agreement is ready to be signed in the next step
• Check off this step when the signatures have been collected from both parties

Place and date of signing

• Include a ““place”” and ““date”” field at the end of the agreement for both parties to sign
• Ensure that both parties to the agreement sign and date in the ““place”” and ““date”” fields
• The ““place”” and ““date”” fields must be completed prior to any other signatures
• When the ““place”” and ““date”” fields are both completed, you can check this off your list and move on to the next step.

FAQ:

Q: What is the legal definition of a ‘consulting agreement’?

Asked by Luke on 12th November 2022.
A: A consulting agreement is a legally binding contract between a consultant and a client detailing the services that the consultant will provide and the terms of payment for those services. It can also include other terms such as confidentiality, intellectual property rights, and dispute resolution. This type of agreement is often used in professional services industries such as legal, financial, or IT consulting.

Q: Is there a difference between UK and US laws when it comes to drafting a consulting agreement?

Asked by Jimmy on 6th October 2022.
A: Yes, there are some key differences between UK and US laws when it comes to drafting consulting agreements. Generally speaking, US law has more detailed provisions regarding the scope of services provided and payment terms than UK law. Additionally, US law typically requires that the agreement include certain provisions related to intellectual property rights and confidentiality, which are not required under UK law. It is important to understand both sets of laws when drafting a consulting agreement.

Q: Is there any difference between a consulting agreement and an employment contract?

Asked by Amelia on 3rd February 2022.
A: Yes, there is a big difference between a consulting agreement and an employment contract. An employment contract typically outlines an employee’s rights and obligations in relation to their job, whereas a consulting agreement outlines the services that the consultant will provide for the client and the payment terms for those services. Additionally, an employment contract may include clauses related to termination of employment or confidentiality which are not typically included in a consulting agreement.

Q: What should be included in a consulting agreement?

Asked by William on 11th December 2022.
A: A consulting agreement should include details regarding the scope of services the consultant will provide, any applicable payment terms or conditions, any confidentiality or non-disclosure provisions, and any intellectual property rights related to the work performed by the consultant. Additionally, it should include information about dispute resolution procedures and any applicable governing law or jurisdiction related to disputes arising from the contract.

Q: What happens if there is a dispute between myself and my client regarding our consulting agreement?

Asked by Isabella on 27th August 2022.
A: If there is a dispute between yourself and your client regarding your consulting agreement, it is important to refer to any dispute resolution provisions outlined in the agreement first in order to try and resolve the issue without further legal action. If this does not resolve the dispute, then either party may take legal action in accordance with any governing law or jurisdiction outlined in the contract.

Q: What happens if my client does not pay for my services?

Asked by Noah on 19th April 2022.
A: If your client does not pay for your services as outlined in your consulting agreement, then you may take legal action to enforce your rights under the contract. Depending on the governing law or jurisdiction outlined in your consulting agreement, this may involve taking court action against your client or engaging in alternative forms of dispute resolution such as arbitration or mediation.

Q: Can I update my consulting agreement if my needs change?

Asked by Emma on 29th June 2022.
A: Yes, you can update your consulting agreement if your needs change provided both yourself and your client agree to amend it accordingly. It is important that any changes are recorded in writing and signed by both parties before they take effect; this helps to ensure that all parties are aware of their respective rights and obligations under the updated agreement.

Q: Can I use my own template when drafting a consulting agreement?

Asked by Michael on 15th March 2022.
A: Yes, you can use your own template when drafting a consulting agreement; however it is important to ensure that all essential elements are included in the template (such as scope of services provided, payment terms etc). Additionally it is important to ensure that any clauses included are compliant with applicable laws in order for them to be enforceable should they need to be invoked at some point down the line.

Q: Should I seek legal advice before entering into a consulting agreement?

Asked by Avery on 17th July 2022.
A: Yes, it is recommended that you seek legal advice before entering into a consulting agreement; this helps to ensure that you understand all of your rights and obligations under the contract before signing it off so you can make an informed decision about whether or not it is suitable for your needs. Additionally it could be beneficial to have an experienced lawyer review any templates you have created prior to using them so they can advise you on whether any changes are necessary in order for them to be compliant with applicable laws which may differ depending on jurisdiction or industry sector etc.

Example dispute

Suing a Company for Breach of Consulting Agreement

• A plaintiff may raise a lawsuit against a company if they believe the company has breached a consulting agreement.
• The plaintiff must provide evidence that the consulting agreement was broken in order to be successful in the lawsuit.
• This could include evidence such as a breach of contract, failure to deliver services, or failure to pay fees in a timely manner.
• The plaintiff may seek damages in the form of monetary compensation for the breach.
• Settlement of the dispute may be reached through negotiation or mediation.
• Damages may be calculated by considering the cost of services, lost wages, and legal fees associated with the lawsuit.

Templates available (free to use)

Executive Consulting Agreement
Form Of Consulting Agreement
Investor Relations Consulting Agreement
Marketing Consulting Agreement
Real Estate Consulting Agreement
Sales Consulting Agreement
Short Form Consulting Agreement
Software Consulting Agreement

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