Consultancy services have become increasingly popular among individuals and businesses. Consultants offer a wide range of services such as digital marketing, branding, and others. They bring industry experiences and fresh perspectives to the table, assisting clients to address specific issues, improve performance and drive revenue growth.
However, one of the common concerns shared by consultants is the potential risk of not receiving timely and full payment for their services, even if they have diligently fulfilled their obligations. On the other hand, clients are concerned about the lack of significant improvements in their business or consultancy fees that are disproportionate to the results achieved.
To address these valid concerns and foster a win-win situation, a well-structured consultancy agreement with customised clauses plays an important role to protect the interest of both parties.
Protecting the Consultants:
A consultancy agreement outlines the scope of work, deliverables, and expected outcomes provided by the consultants. These clauses establish a clear understanding between the consultants and the clients. To address the issue of non-payment or delayed payment, consultants may include clauses such as late payment charges or suspension of services until full payment is received. These clauses ensure protection and compensation for consultants in the events of payment-related issues.
Besides that, the consultants may include an outcome disclaimer clause in the consultancy agreement, specifying that certain results or outcomes cannot be guaranteed. For example, a successful franchise application or a top 3 Google ranking. This clause is especially important when the consultancy services involved third parties or are subject to external circumstances. By managing clients’ expectations and clarifying the limitations of the services provided, this clause protects consultants from unrealistic demands.
Protecting the Clients:
To address concerns of performance not up to the standards, clients can specify milestones or performance targets within the consultancy agreement. This ensures that consultants must meet these targets before clients are obligated to make payments. Such an arrangement safeguards clients’ interests by ensuring that satisfactory results are delivered before any financial commitments are made. Additionally, clients can explore alternative payment mechanisms, such as offering free shares, as a means to motivate consultants and enhance their performance.
For clients who pay a substantial consultancy fee, it is reasonable for them to expect exclusive services for a specified duration. To formalise this expectation, an exclusive service clause can be included in the consultancy agreement, stipulating that the consultants will solely provide services to the clients during the specified period. This clause ensures undivided attention from the consultants to the clients’ business and helps prevent conflicts of interest.
Protecting Both Parties:
To safeguard the interests of both consultants and clients, the consultancy agreement can include clauses relating to intellectual property rights, confidentiality, and dispute resolution. These clauses protect the parties’ proprietary information and confidential information as well as help the parties to find a mutually agreeable solution to solve disputes.
In conclusion, a customised consultancy agreement ensures that the consultants and the clients are aligned towards achieving their goals. Most importantly, it establishes a solid foundation of understanding and sets realistic expectations for both parties. This clarity not only helps consultants to focus their efforts on addressing specific issues, but also allows clients to have a clear understanding of what they can expect from the consultancy engagement.
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About the author:
This article was written by Wong Shen Ming, Corporate Associate – law firm in Kuala Lumpur, Malaysia.
The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.
