Discussion: View Thread

Consulting Agreements

  • 1.  Consulting Agreements

    Posted 04-16-2012 11:30
    I am writing with a request.  Now that I am post-tenure, and I begin to develop my statistical consulting practice.  First of all, thanks to those who posted a few documents (including sample contracts) for this group. 

    I am curious how you go about reviewing contracts given to you by clients.  Are there tips that you have?  Do you always consult an attorney or can you review it on your own?  In addition, I would be interested in any references someone has for a small business attorney in the Philadelphia (or Pennsylvania) area, but please send this one offline.

    Any advice you can offer would be much appreciated.  Thanks.


    Michael


    -------------------------------------------
    Michael Posner
    Villanova University
    -------------------------------------------


  • 2.  RE:Consulting Agreements

    Posted 04-16-2012 11:39
    Mike:  I have a small private consulting business.  I have at any one time between 5 and 10 clients.  Some with informal agreements and some with formal contracts.  I always review the contracts on my own and negotiate with the client if I think changes need to be made.  I have not yet found any issues sticky enough for me to think about consulting an attorney.  I imagine others work like I do too and that there are many particularly those who make consulting their primary business that do get involved with lawyers.

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








  • 3.  RE:Consulting Agreements

    Posted 04-16-2012 11:44

    I also have a small consulting business (I'm it!)

     

    I usually work informally with my clients, but institutions often require contracts. I've usually had lawyers look at them if there is anything not completely obvious, they often find strange things that I would miss. Even if I spot something, I will often not know what to suggest instead.

     

    Peter



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








  • 4.  RE:Consulting Agreements

    Posted 04-16-2012 12:24
    For 30 years I have been self-supporting in consulting (with one employee now and several part-time, as needed) and I have never used an attorney to look at a contract. I look at them carefully myself and ask for modifications , if needed. By the way, virtually the only times I have ever not been paid have been with attorneys (three times--one was a very substantial loss.) So, now when I an retained by an attorney, I use an agreement letter which mostly covers payment. It is a very simple letter which I made up.

    However, it depends on your comfort. If you feel edgy, use an attorney. Also, if the risk of a bad outcome which a good contract would have avoided is one in five thousand clients, then that is a serious risk. I may simply not have accumulated enough clients to have hit the iceberg. Nevertheless, i am planning to continue without an attorney. I tend to have faith in people.

    Best wishes,

    Nayak



    -------------------------------------------
    Nayak Polissar
    Principal Statistician
    The Mountain-Whisper-Light Statistics
    -------------------------------------------








  • 5.  RE:Consulting Agreements

    Posted 04-16-2012 12:13
    Michael Posner asks,

    > I am curious how you go about reviewing contracts given to you by clients.  Are there tips that you have?

    When I was employed at a large firm, I had lawyers on hand to do the reviews: working with them was valuable preparation for starting my own business 15 years ago.

    Since then, only two issues have come up in contracts.  They are involved in almost every case, whether it's with another one-person firm or with a Fortune 10 company: (1) insurance and (2) intellectual property rights.  You usually have some control over these.

    Boilerplate insurance requirements can be onerous and often reflect concerns unrelated to statistical practice (such as medical or environmental damages).  You can almost always negotiate those requirements away.  The only ones worth any consideration are (a) automobile liability, for travel to and around the client's site(s), and (b) professional errors and omissions.  E&O is an issue you ought to consult an attorney (and insurance agent) about.  If a client is very demanding, offer to obtain the insurance--in return for an increase in your fees to cover it!  That usually brings them around.

    Intellectual property rights matter because you almost certainly will be using software for the project, software that you may have developed on previous occasions, and you may be developing or customizing software.  Do not let your client ending up owning it (and preventing your future use)!  Unless the engagement is specifically for software development services, the client rarely cares about such clauses.  I have been successful in all cases in offering a sharing agreement: you (the client) may use any software I develop or customize for you, but I retain all rights, including use for other clients and even commercialization.

    I can't cover all considerations here, but additional things to look for and modify are:
    • Payment terms.  If possible, make your client responsible for paying you.  Eliminate any contingencies (such as their receiving payment from their clients first).  Consider asking for a retainer (some people have been successful with this; I rarely have).
    • Equitability.  A good contract treats both parties fairly and similarly.  Many boilerplate contracts offered you may be singularly one-sided.  Ask for changes that even the balance.  E.g., if the client wants the right to dismiss you at any time for any cause, ask for the right to walk off the job at any time for any cause.  Reviewing the entire contract from this point of view often suggests many other changes to propose.
    • Onerous requirements.  I have seen contracts that would make you responsible for all costs of completing the work even if the client dismisses you.  I suspect such clauses may be unenforceable, but you don't want to be litigating them after the fact.  If the contract requires you to do something you might be unable to carry out, or will have no control over, get rid of the provision.
    Perhaps surprisingly, the worst and longest contracts tend to come from the smallest and least sophisticated clients--but they are the ones you can usually negotiate with.  If you get a lengthy, detailed contract from a large firm, ask them whether they don't have a shorter version for small companies (like you) or small projects.  Usually they do, but they offer the worst contracts as a matter of course, so you have to ask.

    --Bill
    -------------------------------------------
    William Huber
    Quantitative Decisions
    -------------------------------------------



  • 6.  RE:Consulting Agreements

    Posted 04-16-2012 12:22

    Michael, I sent a potential attorney, Philadelphia,  referral in private email. An attorney my family and I have known for 30+ years.

      Before I sign contracts, with firms inside/outside of California, I have an attorney review them.
    Its a relatively minor expense.   It has been helpful, everytime to have the attorney review the contract.
    One example, my attorney figured out that the client had sent the wrong contract entirely, and the client took another 4 weeks to look into their processes and eventually agree.

    My view, just as I'd consult with a statistician about a statistical analysis plan, and proper method of statistical analysis, I ask an attorney to review  my contracts.


    -regards

    -------------------------------------------
    Chris Barker, Ph.D.
    President - San Francisco Bay Area Chapter of the American Statistical Association
    www,barkerstats.com

    ---
    "In composition you have all the time you want to decide what to say in 15 seconds, in improvisation you have 15 seconds."
    -Steve Lacy
    -------------------------------------------








  • 7.  RE:Consulting Agreements

    Posted 04-16-2012 13:53
    It all depends.  I am certainly not going to spend more time dealing with a contract than it takes to do the job.

    For pro bono work, I orally discuss conditions, etc., but do not have contracts. Although at Statistics Without Borders, and at the AAAS Science and Human Rights Coalition we are working on some written documents that clarify conditions.

    Most of the time I do not have contracts for small projects.  E.g., when a university prof wants to talk for a few hours, I just discuss hourly rates and then get paid at the end of the session.

    For small government projects, they just issue a purchase order not to exceed x dollars.

    Even for  a few days  work at an NGO or business, I just let them use a purchase order for x hours of discussion, meeting, etc.

    For projects that are larger, e.g., over  weeks or months, I do have the client make up a formal contract. I then have it looked at  looked at by an attorney and amend it if necessary.

    Even with a fixed amount contract some government agencies will try to push for work beyond what is on the written agreement.

    When the client is an attorney, I have the contract looked at by another attorney and am careful to get paid as the work is going along as in my experience, YMMV, attorneys are the worst clients for paying up.

    -------------------------------------------
    Arthur Kendall
    Social Research Consultants
    -------------------------------------------








  • 8.  RE:Consulting Agreements

    Posted 04-16-2012 14:17

    Another small project I had an attorney help with was to write a "non disclosure agreement" (NDA).

    I needed a non disclosure agreement so that i could, if needed, talk in some detail to another statistician about the work I was doing with a client.

    At a later time, after I got a couple questions on the first document, I had a second attorney, and friend write a second one (no charge :) ). (Everyone needs an attorney friend who can occasionally work for free).
     
    My attorney friend helped take out some of the "scary wording" from the first document.


    -------------------------------------------
    Chris Barker, Ph.D.
    President - San Francisco Bay Area Chapter of the American Statistical Association
    www,barkerstats.com

    ---
    "In composition you have all the time you want to decide what to say in 15 seconds, in improvisation you have 15 seconds."
    -Steve Lacy
    -------------------------------------------








  • 9.  RE:Consulting Agreements

    Posted 04-16-2012 14:48

    Hi All - 

    I have been consulting since 2004.  I have found a few things essential so I thought I would throw in my 2 cents.  I am sure most of you know all of this stuff but just in case - I thought I would send along.

    1.  Have a clear statement of work with clear deliverables from you AND from your client.  Early on I was burned several times trying to meet deadlines after the client sent me the data very late or in very poor shape.
    2.  If possible make the time frames contingent on when you receive the deliverables from your client.
    3.  Bill by the hour not by the project - estimate the number of hours.  This helps with the scope creep that always seems to come up. 
    4.  NDAs will always be needed but make sure they are two sided.  You do not want your client turning around and selling a model you built.  There are several examples of NDAs you can get for free online.  I will gladly send you an example as well.
    5.  Be aware if you are receiving personally identifiable information that you may be liable if any of that information is breached.  You should look into getting a policy to cover data breaches.  Or make sure you never receive personally identifiable information - this is my company policy.
    6.  You also may want to look into getting a policy to cover error and omissions.
    7.  Set up an LLC or other business structure so that you can protect you personal assets if sued.  I have an LLC.

    Michael I am local and a grad of the program at Villanova so I would be happy to show you copies of my agreements etc.


    Kellie Bach
    Owner - Analytic Solutions




  • 10.  RE:Consulting Agreements

    Posted 04-16-2012 14:57
    Well, Michael, you got tons of information from your simple question.  Let me summarize what i took home from reading the responses (other than my own).
    1.  Some consulting jobs don't need contracts.
    2.  For those that need contract many don't require legal review.
    3. For some contracts legal review is essential to avoid problems.
    4. If you don't want to have legal reviews and other contract hassles don't engage in consulting projects with government agencies.

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








  • 11.  RE:Consulting Agreements

    Posted 04-16-2012 15:13

    I am sorry to *SPAM* :)  I just thought of one other thing.  When I got started I was in Iowa and I consulted with the small business development center at the University of Iowa.  They were very helpful and FREE.  I have not looked in the Philadelphia area but I am sure there has to be something similar.

    Kellie







  • 12.  RE:Consulting Agreements

    Posted 04-16-2012 14:02


    -------------------------------------------
    Hugh Peach
    H. Gil Peach & Associates, LLC
    -------------------------------------------

    Most of the responses on the thread so far are for direct consulting on limited statistical analysis and questions.  If you engage in larger projects for public entities such as cities or states and semi-public entities such as public utiliites you will find an amazing variety of historically accreted boilerplate requirements that you absolutely need to know about so that you can decide whether or not to go forward and, assuming you go forward, to be in compliance.  Many of these have exemptions for firms under a certain size and/or for projects under a certain size, but not all and there is no regularity so each contract has to be carefully read.

    It is absolutely necessary to know exactly what is in the "boilerplate" part of the contract.  For example, a nuclear utility will usually have insurance requirements very much higher than actually required for statistical consulting and these are easily negotiated down.  Often some of the insurance requirements can be dropped from the contract.  But you may find surprising paragraphs regarding agreement to criminal background checks, requiring you to put drug free campaign stickers on your vehicles, agreement for drug testing, old or new social conflict requirements (such as left over language that requires you to certify that you do no business in Northern Ireland), requirements for demonstration that you attempted to include subcontractors from socially disadvantaged areas and/or groups, a requirement that you have advertised and solcitied to include disabled veteran content in your project, a requirement to spend some percentage of the project dollars within the jurisdiction and the like.  Also, if you are based outside of Philadelphia and cross the city line to work for a client you will be liable for two kinds of city tax and required to file city tax forms.  This will be in the boilerplate for contracts with city agencies but not in the boilerplate for contracts with private sector firms located in the Philadelphia, but the law applies in either case.  Each time you acquire an obligation to file new tax forms to a different jurisdication figure on from three days to some weeks to learn the rules and keep filings current.  So, in addition to the possible use of an attorney to review your contracts, a separate need for each assignment is to contact a professional to research tax requirements for any assignments that require you to cross state or city jurisdictional lines and what constitutes a local tax "nexus" that makes you taxable by that jurisdiction.  And, if you will have additional taxes and tax processing time as overheads and risks, you need to figure that into your rates.

    Another thing that happens, particularly when you deal with a large public or private organization, is that someone who is working on your contract from the organization end will tell you to disregard most of the boilerplate, it is just something they have to pass on and is mostly both non-negotiable and meaningless.  That is something that requires a judgment call.  Contacting situations vary a lot.  Sometimes the organization is very responsive to requests for negotiation on specific points but other times you will be dealing with a kind of rote processing that the persons you are working with in the organization are unable to change.  In that case, it is 'take it or leave it."  Well, the variety makes it all interesting.  If your client is mid-management they will often not be empowered internally; if your client is an officer, their legal or contract group responds quickly and is often accomodating.