Running a company single handedly can get difficult at times. You might need a partner or an investor to help you organize the various aspects and sides of your business. But, in a few situations, favors are not really what you seek for as an entrepreneur. You might be in the lookout for a wise consultant or an advisor who would help you understand the market that you are catering to with your services or your products better. Whenever any consultant enters the picture of a business, consultancy agreement comes in handy. Paperworks are actually the foundation of any authentic & honest business and there are some or the other documents to be made for every purpose. Just like that a consultancy agreement is devised as a contract between the company and its consultant or advisor. In this article, we will look at the functioning of a consultancy agreement in detail.

What is a Consultancy Agreement?

Consultancy agreement generally talks about the terms of services between the consultant and the client or the company in this case.Consultancy agreement is devised when a consultant is hired for sharing his expertise with any individual or business organization. It states the demands and needs of both the parties to the agreement, that is intended to protect the interest of parties and ensure that all the terms of the agreement are maintained till the exhaustion of the same.

Having clients and companies sign on a consultancy agreement can help the entrepreneur in avoiding litigation since both sides have a written document that they can refer to whenever trials are held. In any unfortunate turn of events, if the client decides to sue the consulting business in question, the consultancy agreement can help the consultant and his or her lawyer prove that they fulfilled their obligations and cannot be held liable for any damages.  On the contrary, the client or the company can sue the consultant in case he or she fails to provide all the recommendations enumerated in the Agreement. This makes it very important to include all the terms of the services minutely while drafting the consultancy agreement.

Key elements of a Consultancy Agreement:

• Modus Operandi: The consultancy agreement is designed to primarily discuss the duties, obligations, and services to be performed by the consultant for the client in a clear legal document. The methods of work are usually not stated. The consultant can practise their sole discretion in performing such work.
• Term of the consultancy agreement: The time period for which the services of the consultant is provided to the company is also mentioned in the contract in clear and bold terms.
• Payment terms: The payment terms talk about the amount of remuneration to be paid to the consultant, when to pay as in the tenure or installment timings (monthly, quarterly, etc.) and the mode of payment. Also, if any out of pocket expenses are allowed to the consultant then that will also be mentioned in the consultancy agreement.
• Confidentiality: The consultant is expected to keep company information strictly confidential and the arrangement discreet except the information already accessible to the public.
• Termination: The consultancy agreement also clearly mentions the right of either of the parties involved to terminate the contract and notice period if necessary.

Consultancy agreement helps both the entrepreneur and the consultant. It talks about all the key elements related to the tasks to be performed within the mentioned deadline. Consultancy agreement also helps in avoiding misunderstandings on the part of both the consultant and the company involved in the contract. It also serves as a legal document that shall be produced in the court if there’s a dispute between the consultant and the company.

Services provided by the consultants:

Types of consultancy services cannot be limited to any specific aspect. On the contrary, the consultancy agencies tend to create the most versatile market amongst the professional services industry. One of the prime reasons to claim that is because of the abundance of consultants present in the industry.  Being a consultant is not like any other professional title such as strategy, management, business, finance, HR or IT consultant therefore widening this industry gradually. Although,  different consultants have different fields of expertise and one can avail their services as per their requirements and needs.

FAQs:

How to write a consultancy agreement?

Add the following points in your consultancy agreement:

1. Full names and titles of the people with whom you’re doing business. Be sure they’re all spelled correctly.
2. Project objectives.
3. Detailed description of the project.
4. List of responsibilities.
5. Fees.
6. Timeline.
7. Page numbers.

What is the limitation of liability of a consultancy agreement?

A Limitation of Liability restricts what an unsatisfied client can get from you if there is a breach or repudiation of the consulting contract. In other words, you can put a cap on the amount of money that the unsatisfied client is entitled to receive in the event of a problem.

How do you structure a consultancy service package?

1. List your services.
2. Study your market and your clients.
3. Determine the consulting service to the package.
4. Draw out the plan of action.
5. Calculate your charges and time.
6. Decide pricing for your consulting package.
7. Jot down your sales copy.
8. Design your package landing page.

How long can a consultancy agreement be?

The maximum effective time period of any consulting agreement should be twelve months from the start date. It’s best to include a clause in the agreement that specifies when the agreement begins, such as when the agreement is signed by both parties to the agreement.

How do I review a consultancy agreement?

Cross-check the following points to get your consultancy agreement right

1) Does the agreement include a detailed description of the services the consultant will be expected to provide?

2) Does the agreement identify the frequency of events and length of each event?

3) Does the description of services support bona fide education and product development efforts?

How do you negotiate a consultancy agreement?

Following points can be a place to strike negotiations between both parties:

1. Defining  details, deliverables, and deadlines.
2. Knowing your bill rate and sticking to it.
3. Being aware of Confidentiality or Non-compete Clauses.
4. Recognizing when to walk away from a contract.
5. Involving a legal professional.