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F E A T U R E

IT, Dotted and Crossed: Contracting with Consultants

July 22, 2002
By Sean Doherty

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	In this article
	Introduction
	Removing the Devil from the Details
	E-Poll Results

Like it or not, a consultant is not an employee. You can define the scope and duration of work, but you have little say over how, when or where it is accomplished. The contract you negotiate will reinforce this fact.

You've probably looked at such agreements and may have dismissed much of the language as legalese. But before you hire a consultant, make sure you understand the terms, as the contract law that governs these documents will be the last word in settling any disputes that arise.

In the Beginning: Titles and Preambles

Any independent contractor agreement should begin with a title that identifies it as such. Don't get literary; "Independent Contractor Agreement" works just fine. The opening clause should make clear that the parties are clients and consultants. It should include an effective date so the groups know when their obligations begin. Also, the parties to the agreement should be identified by their legal entities first--for Network Computing, that would be parent company CMP Media LLC, for example.


		Hire Authorities Meet the Consultants: Comparison of Company Specs IT, Dotted and Crossed: Contracting with Consultants

A preamble generally sets the tone. It should be designed so a court or arbitrator can glean both parties' intent. The preamble should include the scope of the work and refer to any proposal submitted by the consultant.

Once your intentions are clear, define the terms and conditions of the relationship. This section will include a full description of the work to be performed and a schedule for the consultant's performance. It should detail the length of the relationship and document when work will commence. It should also include organizational matters, such as staffing and reporting.

The terms and conditions should also estimate the costs of professional services and forecast the consultant's expenses. Do not build in reimbursement for the consultant's travel and meals, which should be covered by the set fees. The consultant should periodically invoice the client for the time spent in performing services. Deduct from the payment a retainer withholding--that is, an amount of money held back until the project is complete.

If set at the right level, a retainer provides a measure of security for the consultant's continuing performance. A low retainer will not give you much leverage in a dispute, while a high retainer can squeeze the consultant's cash flow, which can hurt performance. The amount of the retainer is negotiable, though it's commonly set as a percentage of the billed amount.

Warranties provide another option to guarantee performance levels. Beyond simply promising the work will be done satisfactorily and on time, this section ensures that the consultant's work is original and doesn't infringe on anybody else's copyrights or trademarks. You'll want a warranty both as a guarantee that the consultant will deliver and as an assurance that you won't be held responsible for any such infringements.