Discussion: View Thread

Hello Everyone,

        I'm very new to this section, however have read some of the recent posts with regards to "Good, bad and Ugly of consulting". The topics in this section are very interesting and informative. Nice to know that such kind of section exists where people can raise questions and get appropriate answer. The varied background and the experience of the members is very impressive too.

I'm myself a biostatistician and working currently in a Cancer center in Edmonton. I needed some advice from this group as to how to start up your own consulting service. I do not have any background as to how consulting works, but would like to start up my own consulting service. Another question I had was, can I keep working in my current position and also run my consulting services?

I would really appreciate your guidance in this matter as I know this group consists of independent statistician as well as statistician working in academics. 

Thanks in advance,

Sunita 

-------------------------------------------
Sunita Ghosh
Research Scientist
Alberta Health Services Cancer Care
-------------------------------------------

I am not one to advise some one to jump into consulting when the person knows nothing about it.  If you have read my posts i think the best thing to do is to work at a statistical consulting center and get good mentoring.  I have had some success mentoring young graduates who volunteer at my company.

I have a full time job and do part time consulting as a private business.  So it is possible if your employer doesn't object.
-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------

Thanks Michael for responding. I do not wish to jump into consulting but was looking for some advice as to what one needs to do if they wish to start. I completely agree that since I do not have prior knowledge as to how consulting works, hence needed some advice from this experienced group of people.

Thanks once again,
Sunita

-------------------------------------------
Sunita Ghosh
-------------------------------------------







Original Message:
Sent: 05-03-2012 18:30
From: Michael Chernick
Subject: Advice on Consulting


I am not one to advise some one to jump into consulting when the person knows nothing about it.  If you have read my posts i think the best thing to do is to work at a statistical consulting center and get good mentoring.  I have had some success mentoring young graduates who volunteer at my company.

I have a full time job and do part time consulting as a private business.  So it is possible if your employer doesn't object.
-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------

This has been discussed a lot in past messages in this eGroup. Here are a few quick highlights. My apologies for making this U.S.-centric, but you should have no trouble translating into the appropriate Canadian parallels. You do have an IRS equivalent in Canada, don't you?

First, talk to a lawyer about sole proprietorship, limited liability corporation, Subchapter S corporations, etc. The are important advantages and disadvantages to each of these choices.

Second, set up a separate bank account that you use exclusively for income and expenses.

Third, talk to an accountant about how to best track your income and expenses. It's not good enough when the IRS audits you to present 95% confidence intervals.

Fourth, look at insurance needs. The two major types of insurance are liability coverage and errors and omissions coverage.

Fifth, think about how you will bill: per hour or per project. Both have advantages and pitfalls.

Sixth, promote yourself to potential clients. Word of mouth is by far the best approach. Giving talks also helps. I've got a particular interest in using web 2.0 and social media to promote your consulting business, but this is primarily a way to supplement existing promotion methods.

I have a few resources about setting up a consulting career on my website, though I need to add a lot more and it's mixed in with other unrelated material. Start at:
--> http://www.pmean.com/category/HumanSideStatistics.html
and see if you can find something that helps.

I hope this hits the major points. I'm sure others will jump in if I missed anything important.

-------------------------------------------
Stephen Simon
Independent Statistical Consultant
P. Mean Consulting
-------------------------------------------

I think you are giving her good advice for setting up a very serious consulting business.  I personally think that I get along okay as a private consultant and I do none of these things.  Of course I do not depend on consulting for my livelihood and if I did the steps you suggest taking are important. 

But I think Sunita is a long way off from starting a consulting business.  I think Sunita recognizes the imprtance of learning how to do consulting is the first priority and so apprenticeships or volunteering at a university statistical consulting center are ways to take those first necessary steps. After building up confidence and making connections and a good reputation Sunita will be in the position to set up a private business or evne a company with staff.


-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-04-2012 10:31
From: Stephen Simon
Subject: Advice on Consulting

This has been discussed a lot in past messages in this eGroup. Here are a few quick highlights. My apologies for making this U.S.-centric, but you should have no trouble translating into the appropriate Canadian parallels. You do have an IRS equivalent in Canada, don't you?

First, talk to a lawyer about sole proprietorship, limited liability corporation, Subchapter S corporations, etc. The are important advantages and disadvantages to each of these choices.

Second, set up a separate bank account that you use exclusively for income and expenses.

Third, talk to an accountant about how to best track your income and expenses. It's not good enough when the IRS audits you to present 95% confidence intervals.

Fourth, look at insurance needs. The two major types of insurance are liability coverage and errors and omissions coverage.

Fifth, think about how you will bill: per hour or per project. Both have advantages and pitfalls.

Sixth, promote yourself to potential clients. Word of mouth is by far the best approach. Giving talks also helps. I've got a particular interest in using web 2.0 and social media to promote your consulting business, but this is primarily a way to supplement existing promotion methods.

I have a few resources about setting up a consulting career on my website, though I need to add a lot more and it's mixed in with other unrelated material. Start at:
--> http://www.pmean.com/category/HumanSideStatistics.html
and see if you can find something that helps.

I hope this hits the major points. I'm sure others will jump in if I missed anything important.

-------------------------------------------
Stephen Simon
Independent Statistical Consultant
P. Mean Consulting
-------------------------------------------

I've never been accused of running a very serious consulting business before. Whether you do the things I mentioned is not a matter of the seriousness of your business, but rather how risk averse you are. Here's the downside of ignoring these six points.

1. You place your personal assets at risk if you don't think carefully about setting up the proper business entity. Is it a risk you're comfortable with? Maybe, but you should talk to a lawyer for an hour to at least get a sense of what bad things might happen to you as a consultant. Best to accept the risk openly than to just pretend that it doesn't exist.

2. If you don't have a separate bank account, you lose the ability to deduct appropriate business expenses from your taxes. This may or may not be a lot of money, but it costs nothing other than a hour of your time at the beginning and 5 minutes a month thereafter. You're foolish not to do this. You might even get a free toaster!

3. An accounting system might be overkill if you don't plan to deduct business expenses. It does take a lot more time then setting up a separate bank account. Even without accounting software, you still need a way to invoice clients. This can be done with a template form in a word processing package or spreadsheet.

4. This is a risk thing also. Many people ignore the insurance needs, but at a minimum, you should inquire about the cost. Then you can make an intelligent choice about how risk averse you are. To be honest, it does depend a lot on the types of clients you will have.

5. Surely billing applies to any consulting business, serious or not, unless you do all your work pro bono.

6. Most of us are not lucky enough to more clients than spare time. But if you start part-time, promotion is not as critical. It will slow your growth and delay your eventual transition to a full consulting job. If you plan to be part-time for the rest of your career, maybe you don't need to think about promotion issues. On the other hand, there are some methods of promotion, such as listing yourself on the ASA consultants list, that cost nothing and take a trivial amount of time.

The other thing I did not mention is business contracts. You should think about whether you want a contract or not for each consulting assignment and even if you don't want one, the client might insist. It's a measure of how risk averse you are whether you consult without a contract in place and whether you sign someone else's consulting contact without consulting with a lawyer first.

So feel free to ignore all of my advice. Successful people like Michael Chernick do. But at a minimum, you should think about these issues and possibly discuss them with a lawyer and/or an accountant before dismissing them.

-------------------------------------------
Stephen Simon
Independent Statistical Consultant
P. Mean Consulting
-------------------------------------------







Original Message:
Sent: 05-04-2012 12:39
From: Michael Chernick
Subject: Advice on Consulting

I think you are giving her good advice for setting up a very serious consulting business.  I personally think that I get along okay as a private consultant and I do none of these things.  Of course I do not depend on consulting for my livelihood and if I did the steps you suggest taking are important. 

But I think Sunita is a long way off from starting a consulting business.  I think Sunita recognizes the imprtance of learning how to do consulting is the first priority and so apprenticeships or volunteering at a university statistical consulting center are ways to take those first necessary steps. After building up confidence and making connections and a good reputation Sunita will be in the position to set up a private business or evne a company with staff.


-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------

I guess I did not look closely at all the things on your list.  So i was incorrect to say that i do none of them.  But I have been doing consulting for a long time.  Aside from occasionally being stiffed by a client I have not had any serious problems.  A separate bank account might be a good But I have invoices to keep track of all my earnings and my clients submit 1099s.  The annoying part is that some of my clients have their businesses located in California.  So I have to pay California state income tax on that income even though I work remotely from Penssylvania.  Rightly or wrongly I have never worried about liability issues.  No problems of that sort have ever arisen.  H&R Block helps me figure out any business expenses that I can deduct.  I keep some records and receipts but don't think I need a formal accounting system.
I use invoices for billing using a spreadsheet.  For some clients I use ones that I make up myself and others have their own standard forms that they want me to use.  I am listed at statistics.com for consulting and iIthink I get a lot of exposure from various ASA eGroups including this one.  One client contacted me because he saw my reviews on amazon and we have had an excellent long standing relationship since then.  Most of my clients are people I know well or have work with at previous companies.
You give good advice and you have a lot of experience to base it on.  It is just that most of these things don't appear to be necessary for me.  It is not because I am successful but rather because of the type of clients that I choose to take on or who choose me.  Like everyone else my consulting work is sporadic and I feel lucky that I have a full time job and can do consulting as a side business.
-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-04-2012 14:58
From: Stephen Simon
Subject: Advice on Consulting

I've never been accused of running a very serious consulting business before. Whether you do the things I mentioned is not a matter of the seriousness of your business, but rather how risk averse you are. Here's the downside of ignoring these six points.

1. You place your personal assets at risk if you don't think carefully about setting up the proper business entity. Is it a risk you're comfortable with? Maybe, but you should talk to a lawyer for an hour to at least get a sense of what bad things might happen to you as a consultant. Best to accept the risk openly than to just pretend that it doesn't exist.

2. If you don't have a separate bank account, you lose the ability to deduct appropriate business expenses from your taxes. This may or may not be a lot of money, but it costs nothing other than a hour of your time at the beginning and 5 minutes a month thereafter. You're foolish not to do this. You might even get a free toaster!

3. An accounting system might be overkill if you don't plan to deduct business expenses. It does take a lot more time then setting up a separate bank account. Even without accounting software, you still need a way to invoice clients. This can be done with a template form in a word processing package or spreadsheet.

4. This is a risk thing also. Many people ignore the insurance needs, but at a minimum, you should inquire about the cost. Then you can make an intelligent choice about how risk averse you are. To be honest, it does depend a lot on the types of clients you will have.

5. Surely billing applies to any consulting business, serious or not, unless you do all your work pro bono.

6. Most of us are not lucky enough to more clients than spare time. But if you start part-time, promotion is not as critical. It will slow your growth and delay your eventual transition to a full consulting job. If you plan to be part-time for the rest of your career, maybe you don't need to think about promotion issues. On the other hand, there are some methods of promotion, such as listing yourself on the ASA consultants list, that cost nothing and take a trivial amount of time.

The other thing I did not mention is business contracts. You should think about whether you want a contract or not for each consulting assignment and even if you don't want one, the client might insist. It's a measure of how risk averse you are whether you consult without a contract in place and whether you sign someone else's consulting contact without consulting with a lawyer first.

So feel free to ignore all of my advice. Successful people like Michael Chernick do. But at a minimum, you should think about these issues and possibly discuss them with a lawyer and/or an accountant before dismissing them.

-------------------------------------------
Stephen Simon
Independent Statistical Consultant
P. Mean Consulting
-------------------------------------------







Original Message:
Sent: 05-04-2012 12:39
From: Michael Chernick
Subject: Advice on Consulting

I think you are giving her good advice for setting up a very serious consulting business.  I personally think that I get along okay as a private consultant and I do none of these things.  Of course I do not depend on consulting for my livelihood and if I did the steps you suggest taking are important. 

But I think Sunita is a long way off from starting a consulting business.  I think Sunita recognizes the imprtance of learning how to do consulting is the first priority and so apprenticeships or volunteering at a university statistical consulting center are ways to take those first necessary steps. After building up confidence and making connections and a good reputation Sunita will be in the position to set up a private business or evne a company with staff.


-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------

We have a lively discussion at last years JSM around the issue of liability insurance and setting up LLC's etc.
Michael is correct about the need to have liability coverage.  It depends on the nature of your consulting.  I also do part-time consulting but the vast bulk of it is with health care organizations and also do some DoD work and some medical device developers.  Because of the nature of those businesses they often require some proof of liability coverage (in addition to NDA's).  I get $1m/$1m coverage for about $1200 per year.  Also, again because of the nature of what I do, I have an LLC as some clients perfer to pay to an entity rather than to an individual.  This also helps me as it is clear that the work is through the LLC.

Hummm.  "Clients who stiffed me"  Sounds like a great title for a Willie Nelson song.

-------------------------------------------
William Grant
Professor, Emergency Medicine
SUNY Upstate Medical University
-------------------------------------------







Original Message:
Sent: 05-04-2012 15:25
From: Michael Chernick
Subject: Advice on Consulting


I guess I did not look closely at all the things on your list.  So i was incorrect to say that i do none of them.  But I have been doing consulting for a long time.  Aside from occasionally being stiffed by a client I have not had any serious problems.  A separate bank account might be a good But I have invoices to keep track of all my earnings and my clients submit 1099s.  The annoying part is that some of my clients have their businesses located in California.  So I have to pay California state income tax on that income even though I work remotely from Penssylvania.  Rightly or wrongly I have never worried about liability issues.  No problems of that sort have ever arisen.  H&R Block helps me figure out any business expenses that I can deduct.  I keep some records and receipts but don't think I need a formal accounting system.
I use invoices for billing using a spreadsheet.  For some clients I use ones that I make up myself and others have their own standard forms that they want me to use.  I am listed at statistics.com for consulting and iIthink I get a lot of exposure from various ASA eGroups including this one.  One client contacted me because he saw my reviews on amazon and we have had an excellent long standing relationship since then.  Most of my clients are people I know well or have work with at previous companies.
You give good advice and you have a lot of experience to base it on.  It is just that most of these things don't appear to be necessary for me.  It is not because I am successful but rather because of the type of clients that I choose to take on or who choose me.  Like everyone else my consulting work is sporadic and I feel lucky that I have a full time job and can do consulting as a side business.
-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-04-2012 14:58
From: Stephen Simon
Subject: Advice on Consulting

I've never been accused of running a very serious consulting business before. Whether you do the things I mentioned is not a matter of the seriousness of your business, but rather how risk averse you are. Here's the downside of ignoring these six points.

1. You place your personal assets at risk if you don't think carefully about setting up the proper business entity. Is it a risk you're comfortable with? Maybe, but you should talk to a lawyer for an hour to at least get a sense of what bad things might happen to you as a consultant. Best to accept the risk openly than to just pretend that it doesn't exist.

2. If you don't have a separate bank account, you lose the ability to deduct appropriate business expenses from your taxes. This may or may not be a lot of money, but it costs nothing other than a hour of your time at the beginning and 5 minutes a month thereafter. You're foolish not to do this. You might even get a free toaster!

3. An accounting system might be overkill if you don't plan to deduct business expenses. It does take a lot more time then setting up a separate bank account. Even without accounting software, you still need a way to invoice clients. This can be done with a template form in a word processing package or spreadsheet.

4. This is a risk thing also. Many people ignore the insurance needs, but at a minimum, you should inquire about the cost. Then you can make an intelligent choice about how risk averse you are. To be honest, it does depend a lot on the types of clients you will have.

5. Surely billing applies to any consulting business, serious or not, unless you do all your work pro bono.

6. Most of us are not lucky enough to more clients than spare time. But if you start part-time, promotion is not as critical. It will slow your growth and delay your eventual transition to a full consulting job. If you plan to be part-time for the rest of your career, maybe you don't need to think about promotion issues. On the other hand, there are some methods of promotion, such as listing yourself on the ASA consultants list, that cost nothing and take a trivial amount of time.

The other thing I did not mention is business contracts. You should think about whether you want a contract or not for each consulting assignment and even if you don't want one, the client might insist. It's a measure of how risk averse you are whether you consult without a contract in place and whether you sign someone else's consulting contact without consulting with a lawyer first.

So feel free to ignore all of my advice. Successful people like Michael Chernick do. But at a minimum, you should think about these issues and possibly discuss them with a lawyer and/or an accountant before dismissing them.

-------------------------------------------
Stephen Simon
Independent Statistical Consultant
P. Mean Consulting
-------------------------------------------

I have been consulting 13 years now, and it is a full-time gig.  We now have 9 full-time employees doing Bayesian consulting.  

Initially I created a limited liability company.  It took me a day or so to file the forms and was maybe $500.  It is pretty straightforward and has the huge advantage that it allows you to separate your personal assets from your business ones.  This is good for liability should something happen and you get sued, or financial issues happen.  We've never needed it, nor even needed our insurance, but we always knew it was a low likelihood event.  If it is more than an occasional gig, I suggest this.  One bad situation -- even a very unlikley one -- could be awful.

We do carry insurance, but we have to for a number of contracts we now have.  We carry $2M omission and errors/$2M general liability.  I think we pay $8K/yr, but this is a function of size of contracts.  We didnt have insurance for the first 5 years.

Almost all jobs are contracts -- dictated by the client.  Pharma is becoming very regulated with conflict of interest and payouts that everything needs a contract.  It is important to protect your IP in these contracts-- the default contract assigns the "air you breathe" to the client -- we always insert a clause protecting our IP.  We also dont sign noncompetes.

We had advantages starting out with a customer base, so that's hard to help with (be born with a famous father).  But, my biggest suggestion is when you are starting (and even when you are 13 years in) go above and beyond -- for less.  Do great work, deliver on time, and you will build a customer base... 

--Scott

-------------------------------------------
Scott Berry
Berry Consultants
-------------------------------------------







Original Message:
Sent: 05-04-2012 14:58
From: Stephen Simon
Subject: Advice on Consulting

I've never been accused of running a very serious consulting business before. Whether you do the things I mentioned is not a matter of the seriousness of your business, but rather how risk averse you are. Here's the downside of ignoring these six points.

1. You place your personal assets at risk if you don't think carefully about setting up the proper business entity. Is it a risk you're comfortable with? Maybe, but you should talk to a lawyer for an hour to at least get a sense of what bad things might happen to you as a consultant. Best to accept the risk openly than to just pretend that it doesn't exist.

2. If you don't have a separate bank account, you lose the ability to deduct appropriate business expenses from your taxes. This may or may not be a lot of money, but it costs nothing other than a hour of your time at the beginning and 5 minutes a month thereafter. You're foolish not to do this. You might even get a free toaster!

3. An accounting system might be overkill if you don't plan to deduct business expenses. It does take a lot more time then setting up a separate bank account. Even without accounting software, you still need a way to invoice clients. This can be done with a template form in a word processing package or spreadsheet.

4. This is a risk thing also. Many people ignore the insurance needs, but at a minimum, you should inquire about the cost. Then you can make an intelligent choice about how risk averse you are. To be honest, it does depend a lot on the types of clients you will have.

5. Surely billing applies to any consulting business, serious or not, unless you do all your work pro bono.

6. Most of us are not lucky enough to more clients than spare time. But if you start part-time, promotion is not as critical. It will slow your growth and delay your eventual transition to a full consulting job. If you plan to be part-time for the rest of your career, maybe you don't need to think about promotion issues. On the other hand, there are some methods of promotion, such as listing yourself on the ASA consultants list, that cost nothing and take a trivial amount of time.

The other thing I did not mention is business contracts. You should think about whether you want a contract or not for each consulting assignment and even if you don't want one, the client might insist. It's a measure of how risk averse you are whether you consult without a contract in place and whether you sign someone else's consulting contact without consulting with a lawyer first.

So feel free to ignore all of my advice. Successful people like Michael Chernick do. But at a minimum, you should think about these issues and possibly discuss them with a lawyer and/or an accountant before dismissing them.

-------------------------------------------
Stephen Simon
Independent Statistical Consultant
P. Mean Consulting
-------------------------------------------







Original Message:
Sent: 05-04-2012 12:39
From: Michael Chernick
Subject: Advice on Consulting

I think you are giving her good advice for setting up a very serious consulting business.  I personally think that I get along okay as a private consultant and I do none of these things.  Of course I do not depend on consulting for my livelihood and if I did the steps you suggest taking are important. 

But I think Sunita is a long way off from starting a consulting business.  I think Sunita recognizes the imprtance of learning how to do consulting is the first priority and so apprenticeships or volunteering at a university statistical consulting center are ways to take those first necessary steps. After building up confidence and making connections and a good reputation Sunita will be in the position to set up a private business or evne a company with staff.


-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------

I understand and respect Scott's advice.  I also understand why even for a low probability event you might get liability insurance because the consequence is so severe. But low probability to me is 1 in 1000.  This eGroup has over 1400 subscribers but can we even find one of us that was sued for consulting work we did and either was saved by insurance or paid a steep price for not being insurance.  Is there even one from the 1400 of us?

-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-04-2012 18:17
From: Scott Berry
Subject: Advice on Consulting


I have been consulting 13 years now, and it is a full-time gig.  We now have 9 full-time employees doing Bayesian consulting.  

Initially I created a limited liability company.  It took me a day or so to file the forms and was maybe $500.  It is pretty straightforward and has the huge advantage that it allows you to separate your personal assets from your business ones.  This is good for liability should something happen and you get sued, or financial issues happen.  We've never needed it, nor even needed our insurance, but we always knew it was a low likelihood event.  If it is more than an occasional gig, I suggest this.  One bad situation -- even a very unlikley one -- could be awful.

We do carry insurance, but we have to for a number of contracts we now have.  We carry $2M omission and errors/$2M general liability.  I think we pay $8K/yr, but this is a function of size of contracts.  We didnt have insurance for the first 5 years.

Almost all jobs are contracts -- dictated by the client.  Pharma is becoming very regulated with conflict of interest and payouts that everything needs a contract.  It is important to protect your IP in these contracts-- the default contract assigns the "air you breathe" to the client -- we always insert a clause protecting our IP.  We also dont sign noncompetes.

We had advantages starting out with a customer base, so that's hard to help with (be born with a famous father).  But, my biggest suggestion is when you are starting (and even when you are 13 years in) go above and beyond -- for less.  Do great work, deliver on time, and you will build a customer base... 

--Scott

-------------------------------------------
Scott Berry
Berry Consultants
-------------------------------------------







Original Message:
Sent: 05-04-2012 14:58
From: Stephen Simon
Subject: Advice on Consulting

I've never been accused of running a very serious consulting business before. Whether you do the things I mentioned is not a matter of the seriousness of your business, but rather how risk averse you are. Here's the downside of ignoring these six points.

1. You place your personal assets at risk if you don't think carefully about setting up the proper business entity. Is it a risk you're comfortable with? Maybe, but you should talk to a lawyer for an hour to at least get a sense of what bad things might happen to you as a consultant. Best to accept the risk openly than to just pretend that it doesn't exist.

2. If you don't have a separate bank account, you lose the ability to deduct appropriate business expenses from your taxes. This may or may not be a lot of money, but it costs nothing other than a hour of your time at the beginning and 5 minutes a month thereafter. You're foolish not to do this. You might even get a free toaster!

3. An accounting system might be overkill if you don't plan to deduct business expenses. It does take a lot more time then setting up a separate bank account. Even without accounting software, you still need a way to invoice clients. This can be done with a template form in a word processing package or spreadsheet.

4. This is a risk thing also. Many people ignore the insurance needs, but at a minimum, you should inquire about the cost. Then you can make an intelligent choice about how risk averse you are. To be honest, it does depend a lot on the types of clients you will have.

5. Surely billing applies to any consulting business, serious or not, unless you do all your work pro bono.

6. Most of us are not lucky enough to more clients than spare time. But if you start part-time, promotion is not as critical. It will slow your growth and delay your eventual transition to a full consulting job. If you plan to be part-time for the rest of your career, maybe you don't need to think about promotion issues. On the other hand, there are some methods of promotion, such as listing yourself on the ASA consultants list, that cost nothing and take a trivial amount of time.

The other thing I did not mention is business contracts. You should think about whether you want a contract or not for each consulting assignment and even if you don't want one, the client might insist. It's a measure of how risk averse you are whether you consult without a contract in place and whether you sign someone else's consulting contact without consulting with a lawyer first.

So feel free to ignore all of my advice. Successful people like Michael Chernick do. But at a minimum, you should think about these issues and possibly discuss them with a lawyer and/or an accountant before dismissing them.

-------------------------------------------
Stephen Simon
Independent Statistical Consultant
P. Mean Consulting
-------------------------------------------

I agree with Michael.  I'm not sure of the advantage of having liability insurance for a small consulting firm.  We looked into it and we were not able to justify the cost.   

-------------------------------------------
Rocco Brunelle
Senior Statistician
Bowsher Brunelle Smith LLC
-------------------------------------------







Original Message:
Sent: 05-04-2012 20:15
From: Michael Chernick
Subject: Advice on Consulting

I understand and respect Scott's advice.  I also understand why even for a low probability event you might get liability insurance because the consequence is so severe. But low probability to me is 1 in 1000.  This eGroup has over 1400 subscribers but can we even find one of us that was sued for consulting work we did and either was saved by insurance or paid a steep price for not being insurance.  Is there even one from the 1400 of us?

-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-04-2012 18:17
From: Scott Berry
Subject: Advice on Consulting


I have been consulting 13 years now, and it is a full-time gig.  We now have 9 full-time employees doing Bayesian consulting.  

Initially I created a limited liability company.  It took me a day or so to file the forms and was maybe $500.  It is pretty straightforward and has the huge advantage that it allows you to separate your personal assets from your business ones.  This is good for liability should something happen and you get sued, or financial issues happen.  We've never needed it, nor even needed our insurance, but we always knew it was a low likelihood event.  If it is more than an occasional gig, I suggest this.  One bad situation -- even a very unlikley one -- could be awful.

We do carry insurance, but we have to for a number of contracts we now have.  We carry $2M omission and errors/$2M general liability.  I think we pay $8K/yr, but this is a function of size of contracts.  We didnt have insurance for the first 5 years.

Almost all jobs are contracts -- dictated by the client.  Pharma is becoming very regulated with conflict of interest and payouts that everything needs a contract.  It is important to protect your IP in these contracts-- the default contract assigns the "air you breathe" to the client -- we always insert a clause protecting our IP.  We also dont sign noncompetes.

We had advantages starting out with a customer base, so that's hard to help with (be born with a famous father).  But, my biggest suggestion is when you are starting (and even when you are 13 years in) go above and beyond -- for less.  Do great work, deliver on time, and you will build a customer base... 

--Scott

-------------------------------------------
Scott Berry
Berry Consultants
-------------------------------------------







Original Message:
Sent: 05-04-2012 14:58
From: Stephen Simon
Subject: Advice on Consulting

I've never been accused of running a very serious consulting business before. Whether you do the things I mentioned is not a matter of the seriousness of your business, but rather how risk averse you are. Here's the downside of ignoring these six points.

1. You place your personal assets at risk if you don't think carefully about setting up the proper business entity. Is it a risk you're comfortable with? Maybe, but you should talk to a lawyer for an hour to at least get a sense of what bad things might happen to you as a consultant. Best to accept the risk openly than to just pretend that it doesn't exist.

2. If you don't have a separate bank account, you lose the ability to deduct appropriate business expenses from your taxes. This may or may not be a lot of money, but it costs nothing other than a hour of your time at the beginning and 5 minutes a month thereafter. You're foolish not to do this. You might even get a free toaster!

3. An accounting system might be overkill if you don't plan to deduct business expenses. It does take a lot more time then setting up a separate bank account. Even without accounting software, you still need a way to invoice clients. This can be done with a template form in a word processing package or spreadsheet.

4. This is a risk thing also. Many people ignore the insurance needs, but at a minimum, you should inquire about the cost. Then you can make an intelligent choice about how risk averse you are. To be honest, it does depend a lot on the types of clients you will have.

5. Surely billing applies to any consulting business, serious or not, unless you do all your work pro bono.

6. Most of us are not lucky enough to more clients than spare time. But if you start part-time, promotion is not as critical. It will slow your growth and delay your eventual transition to a full consulting job. If you plan to be part-time for the rest of your career, maybe you don't need to think about promotion issues. On the other hand, there are some methods of promotion, such as listing yourself on the ASA consultants list, that cost nothing and take a trivial amount of time.

The other thing I did not mention is business contracts. You should think about whether you want a contract or not for each consulting assignment and even if you don't want one, the client might insist. It's a measure of how risk averse you are whether you consult without a contract in place and whether you sign someone else's consulting contact without consulting with a lawyer first.

So feel free to ignore all of my advice. Successful people like Michael Chernick do. But at a minimum, you should think about these issues and possibly discuss them with a lawyer and/or an accountant before dismissing them.

-------------------------------------------
Stephen Simon
Independent Statistical Consultant
P. Mean Consulting
-------------------------------------------

I don't have insurance, either. A few clients have originally sent contracts that had a requirement for insurance, but in every case they have removed it when I asked.

But my clients are researchers and students; it may be different if your clients are businesses.

-------------------------------------------
Peter Flom
-------------------------------------------







Original Message:
Sent: 05-05-2012 08:10
From: Rocco Brunelle
Subject: Advice on Consulting

I agree with Michael.  I'm not sure of the advantage of having liability insurance for a small consulting firm.  We looked into it and we were not able to justify the cost.   

-------------------------------------------
Rocco Brunelle
Senior Statistician
Bowsher Brunelle Smith LLC
-------------------------------------------







Original Message:
Sent: 05-04-2012 20:15
From: Michael Chernick
Subject: Advice on Consulting

I understand and respect Scott's advice.  I also understand why even for a low probability event you might get liability insurance because the consequence is so severe. But low probability to me is 1 in 1000.  This eGroup has over 1400 subscribers but can we even find one of us that was sued for consulting work we did and either was saved by insurance or paid a steep price for not being insurance.  Is there even one from the 1400 of us?

-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-04-2012 18:17
From: Scott Berry
Subject: Advice on Consulting


I have been consulting 13 years now, and it is a full-time gig.  We now have 9 full-time employees doing Bayesian consulting.  

Initially I created a limited liability company.  It took me a day or so to file the forms and was maybe $500.  It is pretty straightforward and has the huge advantage that it allows you to separate your personal assets from your business ones.  This is good for liability should something happen and you get sued, or financial issues happen.  We've never needed it, nor even needed our insurance, but we always knew it was a low likelihood event.  If it is more than an occasional gig, I suggest this.  One bad situation -- even a very unlikley one -- could be awful.

We do carry insurance, but we have to for a number of contracts we now have.  We carry $2M omission and errors/$2M general liability.  I think we pay $8K/yr, but this is a function of size of contracts.  We didnt have insurance for the first 5 years.

Almost all jobs are contracts -- dictated by the client.  Pharma is becoming very regulated with conflict of interest and payouts that everything needs a contract.  It is important to protect your IP in these contracts-- the default contract assigns the "air you breathe" to the client -- we always insert a clause protecting our IP.  We also dont sign noncompetes.

We had advantages starting out with a customer base, so that's hard to help with (be born with a famous father).  But, my biggest suggestion is when you are starting (and even when you are 13 years in) go above and beyond -- for less.  Do great work, deliver on time, and you will build a customer base... 

--Scott

-------------------------------------------
Scott Berry
Berry Consultants
-------------------------------------------

I was unclear when I said: "if it is more than an occasional gig, I suggest it"...  The 'it' I mean is the "LLC" component.  I suggest creating an LLC if you consult more than occasionally.  Separating your personal world from your business dealings is valuable.  It's easy and straightforward to create an LLC.  I wasn't 'suggesting' insurance (in fact creating an LLC mitigates some needs for insurance).

I don't think there is a right/wrong to the insurance.  We functioned without insurance for 5 years with little worry.  We pushed back when this requirement was in contracts and it wasn't a big deal.  When we picked up employees and it became a stronger demand too often, and eventually a requirement, it was a natural choice to get insurance for us.  I suspect getting insurance does nothing but increase the likelihood of getting sued.  

It certainly depends on who you work with, how much you consult, to whom you consult with, etc.  Is it a contract with a CRO?  Is it with Pharma? Is it a DSMB? Is it engineering, financial, government, ... do you license code to them, etc.

I wasnt trying to convince anyone to buy insurance -- just stating what I (we) do....


-------------------------------------------
Scott Berry
Berry Consultants
-------------------------------------------







Original Message:
Sent: 05-04-2012 20:15
From: Michael Chernick
Subject: Advice on Consulting

I understand and respect Scott's advice.  I also understand why even for a low probability event you might get liability insurance because the consequence is so severe. But low probability to me is 1 in 1000.  This eGroup has over 1400 subscribers but can we even find one of us that was sued for consulting work we did and either was saved by insurance or paid a steep price for not being insurance.  Is there even one from the 1400 of us?

-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-04-2012 18:17
From: Scott Berry
Subject: Advice on Consulting


I have been consulting 13 years now, and it is a full-time gig.  We now have 9 full-time employees doing Bayesian consulting.  

Initially I created a limited liability company.  It took me a day or so to file the forms and was maybe $500.  It is pretty straightforward and has the huge advantage that it allows you to separate your personal assets from your business ones.  This is good for liability should something happen and you get sued, or financial issues happen.  We've never needed it, nor even needed our insurance, but we always knew it was a low likelihood event.  If it is more than an occasional gig, I suggest this.  One bad situation -- even a very unlikley one -- could be awful.

We do carry insurance, but we have to for a number of contracts we now have.  We carry $2M omission and errors/$2M general liability.  I think we pay $8K/yr, but this is a function of size of contracts.  We didnt have insurance for the first 5 years.

Almost all jobs are contracts -- dictated by the client.  Pharma is becoming very regulated with conflict of interest and payouts that everything needs a contract.  It is important to protect your IP in these contracts-- the default contract assigns the "air you breathe" to the client -- we always insert a clause protecting our IP.  We also dont sign noncompetes.

We had advantages starting out with a customer base, so that's hard to help with (be born with a famous father).  But, my biggest suggestion is when you are starting (and even when you are 13 years in) go above and beyond -- for less.  Do great work, deliver on time, and you will build a customer base... 

--Scott

-------------------------------------------
Scott Berry
Berry Consultants
-------------------------------------------







Original Message:
Sent: 05-04-2012 14:58
From: Stephen Simon
Subject: Advice on Consulting

I've never been accused of running a very serious consulting business before. Whether you do the things I mentioned is not a matter of the seriousness of your business, but rather how risk averse you are. Here's the downside of ignoring these six points.

1. You place your personal assets at risk if you don't think carefully about setting up the proper business entity. Is it a risk you're comfortable with? Maybe, but you should talk to a lawyer for an hour to at least get a sense of what bad things might happen to you as a consultant. Best to accept the risk openly than to just pretend that it doesn't exist.

2. If you don't have a separate bank account, you lose the ability to deduct appropriate business expenses from your taxes. This may or may not be a lot of money, but it costs nothing other than a hour of your time at the beginning and 5 minutes a month thereafter. You're foolish not to do this. You might even get a free toaster!

3. An accounting system might be overkill if you don't plan to deduct business expenses. It does take a lot more time then setting up a separate bank account. Even without accounting software, you still need a way to invoice clients. This can be done with a template form in a word processing package or spreadsheet.

4. This is a risk thing also. Many people ignore the insurance needs, but at a minimum, you should inquire about the cost. Then you can make an intelligent choice about how risk averse you are. To be honest, it does depend a lot on the types of clients you will have.

5. Surely billing applies to any consulting business, serious or not, unless you do all your work pro bono.

6. Most of us are not lucky enough to more clients than spare time. But if you start part-time, promotion is not as critical. It will slow your growth and delay your eventual transition to a full consulting job. If you plan to be part-time for the rest of your career, maybe you don't need to think about promotion issues. On the other hand, there are some methods of promotion, such as listing yourself on the ASA consultants list, that cost nothing and take a trivial amount of time.

The other thing I did not mention is business contracts. You should think about whether you want a contract or not for each consulting assignment and even if you don't want one, the client might insist. It's a measure of how risk averse you are whether you consult without a contract in place and whether you sign someone else's consulting contact without consulting with a lawyer first.

So feel free to ignore all of my advice. Successful people like Michael Chernick do. But at a minimum, you should think about these issues and possibly discuss them with a lawyer and/or an accountant before dismissing them.

-------------------------------------------
Stephen Simon
Independent Statistical Consultant
P. Mean Consulting
-------------------------------------------

I don't disagree with anyone.  But if anyone has had a case of being sued I would like to hear and if you didn't have insurance did you regret not getting It?

-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-05-2012 10:54
From: Scott Berry
Subject: Advice on Consulting


I was unclear when I said: "if it is more than an occasional gig, I suggest it"...  The 'it' I mean is the "LLC" component.  I suggest creating an LLC if you consult more than occasionally.  Separating your personal world from your business dealings is valuable.  It's easy and straightforward to create an LLC.  I wasn't 'suggesting' insurance (in fact creating an LLC mitigates some needs for insurance).

I don't think there is a right/wrong to the insurance.  We functioned without insurance for 5 years with little worry.  We pushed back when this requirement was in contracts and it wasn't a big deal.  When we picked up employees and it became a stronger demand too often, and eventually a requirement, it was a natural choice to get insurance for us.  I suspect getting insurance does nothing but increase the likelihood of getting sued.  

It certainly depends on who you work with, how much you consult, to whom you consult with, etc.  Is it a contract with a CRO?  Is it with Pharma? Is it a DSMB? Is it engineering, financial, government, ... do you license code to them, etc.

I wasnt trying to convince anyone to buy insurance -- just stating what I (we) do....


-------------------------------------------
Scott Berry
Berry Consultants
-------------------------------------------







Original Message:
Sent: 05-04-2012 20:15
From: Michael Chernick
Subject: Advice on Consulting

I understand and respect Scott's advice.  I also understand why even for a low probability event you might get liability insurance because the consequence is so severe. But low probability to me is 1 in 1000.  This eGroup has over 1400 subscribers but can we even find one of us that was sued for consulting work we did and either was saved by insurance or paid a steep price for not being insurance.  Is there even one from the 1400 of us?

-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-04-2012 18:17
From: Scott Berry
Subject: Advice on Consulting


I have been consulting 13 years now, and it is a full-time gig.  We now have 9 full-time employees doing Bayesian consulting.  

Initially I created a limited liability company.  It took me a day or so to file the forms and was maybe $500.  It is pretty straightforward and has the huge advantage that it allows you to separate your personal assets from your business ones.  This is good for liability should something happen and you get sued, or financial issues happen.  We've never needed it, nor even needed our insurance, but we always knew it was a low likelihood event.  If it is more than an occasional gig, I suggest this.  One bad situation -- even a very unlikley one -- could be awful.

We do carry insurance, but we have to for a number of contracts we now have.  We carry $2M omission and errors/$2M general liability.  I think we pay $8K/yr, but this is a function of size of contracts.  We didnt have insurance for the first 5 years.

Almost all jobs are contracts -- dictated by the client.  Pharma is becoming very regulated with conflict of interest and payouts that everything needs a contract.  It is important to protect your IP in these contracts-- the default contract assigns the "air you breathe" to the client -- we always insert a clause protecting our IP.  We also dont sign noncompetes.

We had advantages starting out with a customer base, so that's hard to help with (be born with a famous father).  But, my biggest suggestion is when you are starting (and even when you are 13 years in) go above and beyond -- for less.  Do great work, deliver on time, and you will build a customer base... 

--Scott

-------------------------------------------
Scott Berry
Berry Consultants
-------------------------------------------

I do have insurance, as it is required by most of my clients in their contracts.  I have not been sued.  But I wonder whether if someone had been, would they have been put out of business and so now working at Walmart rather than on this discussion group?  I doubt that response here is a valid survey, in other words.

-------------------------------------------
Dennis Helsel
Practical Stats
-------------------------------------------







Original Message:
Sent: 05-05-2012 12:43
From: Michael Chernick
Subject: Advice on Consulting

I don't disagree with anyone.  But if anyone has had a case of being sued I would like to hear and if you didn't have insurance did you regret not getting It?

-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-05-2012 10:54
From: Scott Berry
Subject: Advice on Consulting


I was unclear when I said: "if it is more than an occasional gig, I suggest it"...  The 'it' I mean is the "LLC" component.  I suggest creating an LLC if you consult more than occasionally.  Separating your personal world from your business dealings is valuable.  It's easy and straightforward to create an LLC.  I wasn't 'suggesting' insurance (in fact creating an LLC mitigates some needs for insurance).

I don't think there is a right/wrong to the insurance.  We functioned without insurance for 5 years with little worry.  We pushed back when this requirement was in contracts and it wasn't a big deal.  When we picked up employees and it became a stronger demand too often, and eventually a requirement, it was a natural choice to get insurance for us.  I suspect getting insurance does nothing but increase the likelihood of getting sued.  

It certainly depends on who you work with, how much you consult, to whom you consult with, etc.  Is it a contract with a CRO?  Is it with Pharma? Is it a DSMB? Is it engineering, financial, government, ... do you license code to them, etc.

I wasnt trying to convince anyone to buy insurance -- just stating what I (we) do....


-------------------------------------------
Scott Berry
Berry Consultants
-------------------------------------------







Original Message:
Sent: 05-04-2012 20:15
From: Michael Chernick
Subject: Advice on Consulting

I understand and respect Scott's advice.  I also understand why even for a low probability event you might get liability insurance because the consequence is so severe. But low probability to me is 1 in 1000.  This eGroup has over 1400 subscribers but can we even find one of us that was sued for consulting work we did and either was saved by insurance or paid a steep price for not being insurance.  Is there even one from the 1400 of us?

-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-04-2012 18:17
From: Scott Berry
Subject: Advice on Consulting


I have been consulting 13 years now, and it is a full-time gig.  We now have 9 full-time employees doing Bayesian consulting.  

Initially I created a limited liability company.  It took me a day or so to file the forms and was maybe $500.  It is pretty straightforward and has the huge advantage that it allows you to separate your personal assets from your business ones.  This is good for liability should something happen and you get sued, or financial issues happen.  We've never needed it, nor even needed our insurance, but we always knew it was a low likelihood event.  If it is more than an occasional gig, I suggest this.  One bad situation -- even a very unlikley one -- could be awful.

We do carry insurance, but we have to for a number of contracts we now have.  We carry $2M omission and errors/$2M general liability.  I think we pay $8K/yr, but this is a function of size of contracts.  We didnt have insurance for the first 5 years.

Almost all jobs are contracts -- dictated by the client.  Pharma is becoming very regulated with conflict of interest and payouts that everything needs a contract.  It is important to protect your IP in these contracts-- the default contract assigns the "air you breathe" to the client -- we always insert a clause protecting our IP.  We also dont sign noncompetes.

We had advantages starting out with a customer base, so that's hard to help with (be born with a famous father).  But, my biggest suggestion is when you are starting (and even when you are 13 years in) go above and beyond -- for less.  Do great work, deliver on time, and you will build a customer base... 

--Scott

-------------------------------------------
Scott Berry
Berry Consultants
-------------------------------------------

I would not claim that our group would be a representative sample of statistical consultants but it is a large list of consultants and people interested in consulting.  Those who have never consulted should be eliminated from the count since they have never consulted and did not have the opportunity to be sued.  This may be the best large list to look at.  Another problem is that some that did get sued may not want to respond.  I ask because it is interesting to know and may shed light on how rare this is even though I would not want to use it to estimate the rate.   I do think that it is quite possible that some one could have been sued and put out of business and still be members of this group.
-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-05-2012 13:03
From: Dennis Helsel
Subject: Advice on Consulting

I do have insurance, as it is required by most of my clients in their contracts.  I have not been sued.  But I wonder whether if someone had been, would they have been put out of business and so now working at Walmart rather than on this discussion group?  I doubt that response here is a valid survey, in other words.

-------------------------------------------
Dennis Helsel
Practical Stats
-------------------------------------------







Original Message:
Sent: 05-05-2012 12:43
From: Michael Chernick
Subject: Advice on Consulting

I don't disagree with anyone.  But if anyone has had a case of being sued I would like to hear and if you didn't have insurance did you regret not getting It?

-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-05-2012 10:54
From: Scott Berry
Subject: Advice on Consulting


I was unclear when I said: "if it is more than an occasional gig, I suggest it"...  The 'it' I mean is the "LLC" component.  I suggest creating an LLC if you consult more than occasionally.  Separating your personal world from your business dealings is valuable.  It's easy and straightforward to create an LLC.  I wasn't 'suggesting' insurance (in fact creating an LLC mitigates some needs for insurance).

I don't think there is a right/wrong to the insurance.  We functioned without insurance for 5 years with little worry.  We pushed back when this requirement was in contracts and it wasn't a big deal.  When we picked up employees and it became a stronger demand too often, and eventually a requirement, it was a natural choice to get insurance for us.  I suspect getting insurance does nothing but increase the likelihood of getting sued.  

It certainly depends on who you work with, how much you consult, to whom you consult with, etc.  Is it a contract with a CRO?  Is it with Pharma? Is it a DSMB? Is it engineering, financial, government, ... do you license code to them, etc.

I wasnt trying to convince anyone to buy insurance -- just stating what I (we) do....


-------------------------------------------
Scott Berry
Berry Consultants
-------------------------------------------







Original Message:
Sent: 05-04-2012 20:15
From: Michael Chernick
Subject: Advice on Consulting

I understand and respect Scott's advice.  I also understand why even for a low probability event you might get liability insurance because the consequence is so severe. But low probability to me is 1 in 1000.  This eGroup has over 1400 subscribers but can we even find one of us that was sued for consulting work we did and either was saved by insurance or paid a steep price for not being insurance.  Is there even one from the 1400 of us?

-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------

This is an interesting point - if no one ever gets sued then the rate should be close to zero.  But it seems relatively expensive.  I wonder if an insurance company would share this type of information.

-------------------------------------------
Rocco Brunelle
Senior Statistician
Bowsher Brunelle Smith LLC
-------------------------------------------







Original Message:
Sent: 05-05-2012 14:24
From: Michael Chernick
Subject: Advice on Consulting


I would not claim that our group would be a representative sample of statistical consultants but it is a large list of consultants and people interested in consulting.  Those who have never consulted should be eliminated from the count since they have never consulted and did not have the opportunity to be sued.  This may be the best large list to look at.  Another problem is that some that did get sued may not want to respond.  I ask because it is interesting to know and may shed light on how rare this is even though I would not want to use it to estimate the rate.   I do think that it is quite possible that some one could have been sued and put out of business and still be members of this group.
-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-05-2012 13:03
From: Dennis Helsel
Subject: Advice on Consulting

I do have insurance, as it is required by most of my clients in their contracts.  I have not been sued.  But I wonder whether if someone had been, would they have been put out of business and so now working at Walmart rather than on this discussion group?  I doubt that response here is a valid survey, in other words.

-------------------------------------------
Dennis Helsel
Practical Stats
-------------------------------------------







Original Message:
Sent: 05-05-2012 12:43
From: Michael Chernick
Subject: Advice on Consulting

I don't disagree with anyone.  But if anyone has had a case of being sued I would like to hear and if you didn't have insurance did you regret not getting It?

-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-05-2012 10:54
From: Scott Berry
Subject: Advice on Consulting


I was unclear when I said: "if it is more than an occasional gig, I suggest it"...  The 'it' I mean is the "LLC" component.  I suggest creating an LLC if you consult more than occasionally.  Separating your personal world from your business dealings is valuable.  It's easy and straightforward to create an LLC.  I wasn't 'suggesting' insurance (in fact creating an LLC mitigates some needs for insurance).

I don't think there is a right/wrong to the insurance.  We functioned without insurance for 5 years with little worry.  We pushed back when this requirement was in contracts and it wasn't a big deal.  When we picked up employees and it became a stronger demand too often, and eventually a requirement, it was a natural choice to get insurance for us.  I suspect getting insurance does nothing but increase the likelihood of getting sued.  

It certainly depends on who you work with, how much you consult, to whom you consult with, etc.  Is it a contract with a CRO?  Is it with Pharma? Is it a DSMB? Is it engineering, financial, government, ... do you license code to them, etc.

I wasnt trying to convince anyone to buy insurance -- just stating what I (we) do....


-------------------------------------------
Scott Berry
Berry Consultants
-------------------------------------------







Original Message:
Sent: 05-04-2012 20:15
From: Michael Chernick
Subject: Advice on Consulting

I understand and respect Scott's advice.  I also understand why even for a low probability event you might get liability insurance because the consequence is so severe. But low probability to me is 1 in 1000.  This eGroup has over 1400 subscribers but can we even find one of us that was sued for consulting work we did and either was saved by insurance or paid a steep price for not being insurance.  Is there even one from the 1400 of us?

-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------

My work may be different than most who've responded since I do not provide statistical advice. Instead, I provide complex SAS programming solutions to academic, government, and corporate clients. My contracts may be longer in length than the typical statistical contract. One of the best things that happened was when I started out in 1988, my first corporate client would contract only with corporations. So to get the work, which lasted for many years, I formed an S corp. That kind of entity automatically gave me a shield. It also helps with contracts because the client has less burden in justifying to the IRS that I was not essentially an employee. My company has had E&O insurance for many years because of requirements in my contracts. It is expensive, and I doubt I would ever get sued by any of my clients, but then it's insurance. And the client could get sued. Depending on the parties involved, that could trickle down to the level of the contractors who provided parts of the product. Because some of my work has been with medical data, I feel I need the protection. It's a cost of doing business, just like having insurance if you own a house, a car, etc.

-------------------------------------------
Michele Burlew
Episystems, Inc.
-------------------------------------------







Original Message:
Sent: 05-05-2012 14:59
From: Rocco Brunelle
Subject: Advice on Consulting

This is an interesting point - if no one ever gets sued then the rate should be close to zero.  But it seems relatively expensive.  I wonder if an insurance company would share this type of information.

-------------------------------------------
Rocco Brunelle
Senior Statistician
Bowsher Brunelle Smith LLC
-------------------------------------------







Original Message:
Sent: 05-05-2012 14:24
From: Michael Chernick
Subject: Advice on Consulting


I would not claim that our group would be a representative sample of statistical consultants but it is a large list of consultants and people interested in consulting.  Those who have never consulted should be eliminated from the count since they have never consulted and did not have the opportunity to be sued.  This may be the best large list to look at.  Another problem is that some that did get sued may not want to respond.  I ask because it is interesting to know and may shed light on how rare this is even though I would not want to use it to estimate the rate.   I do think that it is quite possible that some one could have been sued and put out of business and still be members of this group.
-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-05-2012 13:03
From: Dennis Helsel
Subject: Advice on Consulting

I do have insurance, as it is required by most of my clients in their contracts.  I have not been sued.  But I wonder whether if someone had been, would they have been put out of business and so now working at Walmart rather than on this discussion group?  I doubt that response here is a valid survey, in other words.

-------------------------------------------
Dennis Helsel
Practical Stats
-------------------------------------------







Original Message:
Sent: 05-05-2012 12:43
From: Michael Chernick
Subject: Advice on Consulting

I don't disagree with anyone.  But if anyone has had a case of being sued I would like to hear and if you didn't have insurance did you regret not getting It?

-------------------------------------------
Michael Chernick
Director of Biostatistical Services
Lankenau Institute for Medical Research
-------------------------------------------







Original Message:
Sent: 05-05-2012 10:54
From: Scott Berry
Subject: Advice on Consulting


I was unclear when I said: "if it is more than an occasional gig, I suggest it"...  The 'it' I mean is the "LLC" component.  I suggest creating an LLC if you consult more than occasionally.  Separating your personal world from your business dealings is valuable.  It's easy and straightforward to create an LLC.  I wasn't 'suggesting' insurance (in fact creating an LLC mitigates some needs for insurance).

I don't think there is a right/wrong to the insurance.  We functioned without insurance for 5 years with little worry.  We pushed back when this requirement was in contracts and it wasn't a big deal.  When we picked up employees and it became a stronger demand too often, and eventually a requirement, it was a natural choice to get insurance for us.  I suspect getting insurance does nothing but increase the likelihood of getting sued.  

It certainly depends on who you work with, how much you consult, to whom you consult with, etc.  Is it a contract with a CRO?  Is it with Pharma? Is it a DSMB? Is it engineering, financial, government, ... do you license code to them, etc.

I wasnt trying to convince anyone to buy insurance -- just stating what I (we) do....


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Scott Berry
Berry Consultants
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I would like to thank you all for your comments and suggestions and also for the fruitful discussion. I really appreciate your input and definitely helps me to move forward. We are privileged to have access to such a forum consisting of knowledgeable and experienced members to help the new comers.
Thanks once again.
Sunita

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Sunita Ghosh
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