Updated October 21, 2022
A consulting agreement is used between a client and a consultant who provides professional services, advice, or knowledge in exchange for payment. A consultant is usually an expert in their field with vast experience and extensive knowledge.
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What is a Consulting Agreement?
A consulting agreement is between a consultant that offers their services to a client for payment. Under this arrangement, the consultant is working as an independent contractor, and any work that is provided falls under the ownership of the client unless otherwise agreed upon.
Payment Methods
The agreement can be structured in two ways:
1. Per Hour ($/HR)
The most common structure is the client agrees to pay the consultant per hour ($/hr). A maximum number of hours will usually be set for a given time period.
- Example: $20 per hour with the client agreeing to a maximum of 40 hours per month.
2. Per Project
The client agrees to pay the consultant a fixed amount to complete the project. Therefore, if it takes one hour or 100 hours, the consultant will be paid the same amount. This is ideal for the client in an effort to keep costs at a manageable amount.
- Example: An attorney agrees to complete a client’s estate planning for a payment of $3,500.
What is a Retainer?
A retainer is an upfront payment made by the client that is required by the consultant in order to start the work.
In most cases, a retainer represents a minimum amount of billable hours paid immediately by the client ensuring the consultant that their services are required for an extended period of time. This gives the consultant the security they need to invest the proper amount of time into the project without fear of the client breaking their commitment or infringing on the agreement.
Retainer vs. Non-Retainer
For retainer agreements:
- A minimum deposit or pre-ordered number of hours is required
- Long-term or ongoing
- The consultant usually has more than five years of experience
- The industry is highly competitive
For non-retainer agreements:
- A minimum deposit or pre-ordered number of hours is not required
- Short-term
- The consultant usually has less than five years of experience
- The industry is not as competitive
Consulting Agreement Samples
Sample 1
Download: Adobe PDF, MS Word (.docx)
Sample 2
Download: Adobe PDF, MS Word (.docx)
Sample 3
Download: Adobe PDF, MS Word (.docx)
Consulting Agreement: Clauses
Confidentiality Clause
Description: A confidentiality clause is an agreement by the parties to not disclose the contents of the contract or any of the materials handed over to the consultant by the client. If the consultant or client should breach this clause, by informing third parties of trade secrets or any other forbidden information, it could irreparably harm the other party.
Sample Clause
Confidentiality. The Consultant acknowledges that it will be necessary for the Client to disclose certain confidential and proprietary information to the Consultant in order for the Consultant to perform their duties under this Agreement. The Consultant acknowledges that disclosure to a third party or misuse of this proprietary or confidential information would irreparably harm the Client. Accordingly, the Consultant will not disclose or use, either during or after the term of this Agreement, any proprietary or confidential information of the Client without the Client’s prior written permission except to the extent necessary to perform the Services on the Client’s behalf.
Non-Compete Clause
Description: A non-compete clause is a statement that ensures none of the parties will compete in each other’s business during or after the agreement. There are state laws that restrict the use of a non-compete and its time frame, but it is generally recommended no matter the laws in the state.
Sample Clause
Non-Compete. During the term of this Agreement, and for 12 months following its termination, the Consultant shall not engage in any activity that would compete in any way whatsoever with the activities of the Client in which the Consultant was or is involved, or where the Consultant gained confidential or sensitive information of the Customer, directly or indirectly through the delivery of the Services. For further clarity, this Section is to be geographically limited to areas and locations that the Customer operates and conducts its business activity.
Indemnification Clause
Description. An indemnification clause allows the consultant to work and provide their services while providing indemnification to the client for any consequences as a result of their work. Depending on the agreement type, the indemnification may or may not cover negligence and other liabilities whose fault is directly attributed to the client’s carelessness.
Sample Clause
Indemnification. Consultant shall release, defend, indemnify, and hold harmless Client and its officers, agents, and employees from all suits, actions, or claims of any character, name, or description including reasonable attorney fees, brought on account of any injuries or damage, or loss (real or alleged) received or sustained by any person, persons, or property, arising out of services provided under this Agreement or Consultant’s failure to perform or comply with any requirements of this Agreement including, but not limited to any claims for personal injury, property damage, or infringement of copyright, patent, or other proprietary rights. Client reserves the right to retain whatever funds which would be due to the Consultant under this Agreement until such suits, action or actions, claim or claims for injuries or damages as aforesaid shall have been settled and satisfactory evidence to that effect furnished.
Termination Clause
Description. A termination clause is very important as it allows either party to cancel the terms of the agreement, provided they notify the other party within a specified time period. The clause is simple and if there are any conditions to be added, such as payment by the Client for work completed, then it should be added to the clause.
Sample Clause
Termination. The Consultant and Client may: (check one)
☐ – Terminate this Agreement at any time with ____ days’ notice.
☐ – Not terminate this Agreement.