Six Tips for Consulting Contracts

Contracts Associations Now Fall 2019 Issue By: Dawn Crowell Murphy

Get your consultant relationship on firm legal footing with the right contract terms and a clear scope of work.

Consultants are often a key resource for achieving your association’s mission. When you hire a consultant, it’s important not only to find the right one, but also to make sure you enter into a contract that clearly defines the terms of the relationship and the scope of work for the project. Here are six important considerations for drafting or reviewing consulting contracts.

1. Relationship of the parties. The contract should provide that the consultant is an independent contractor and disclaim attributes of employment, particularly if the consultant is a sole practitioner. Merely stating this in writing doesn’t make it so. If there is any uncertainty about the consultant’s proper classification as an independent contractor, consult with an attorney, as penalties for misclassification can be steep. Making expectations clear in the contract is a good place to start and is one of the factors bearing on independent con-tractor status.

2. Scope of work (SOW). To avoid confusion and potential disagreement down the road, a consulting contract should include as much detail as possible regarding what services or deliverables are to be performed or produced and by whom. This often.includes a timeline or, at the least, a final deadline, and it may include technical specifications or service levels to be met. Ideally, the SOW will name who will perform each task.

3. Deficiencies. What happens if the services or deliverables do not meet expectations? Consider including in the contract a process that enables you to review and accept the work or ask for corrections (this is where having detailed specifications to compare against comes in handy). Provide for consequences if the work does not live up to what’s required by the contract, whether that means the work must be repeated or replaced or a credit or refund given—possibly after termination of the relationship for breach.

4. Ownership. Specify who owns materials related to the work and how the other party may use them. Often, your association will own any deliverables or work product produced under the contract, but the consultant may bring preexisting materials to the table, which it continues to own or license. Your association may also be contributing your intellectual property or other materials, in which you reserve ownership rights. The contract might include restrictions on how each party may use the other’s owned or licensed materials.

5. Confidentiality. Consultants may be exposed to confidential or proprietary information of your association and its members, so include in the contract assurance that the consultant—including any of its employees or subcontractors—will keep that information confidential and not disclose it without your permission or as otherwise required or permitted by law.

6. Term and termination. Determine the timeframe for the work and whether it makes sense for the contract to end as of a project deadline or to continue for a longer term, covering additional SOWs. Spell out any terms for renewal and early termination. Can you terminate for convenience at any time, so long as you pay for the work done up to that point? Or can you get out of the contract before it’s completed only for specified causes, such as a default or breach by the other party?Addressing these key items in consulting contracts should help your consultant relationships—and the programs and work of your association—run more smoothly.

Dawn Crowell Murphy

Dawn Crowell Murphy is counsel with Pillsbury Winthrop Shaw Pittman LLP’s Nonprofit Organizations Practice in Washington, DC