Management Consultant Agreement

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Updated January 25, 2023

A management consultant agreement is a contract that outlines the terms and conditions of a consulting arrangement between a management consultant and a company. The average length of a management consultant agreement is between six and 12 months.

Table of Contents

What Does a Management Consultant Do?

A management consultant, also called a management analyst, is a person hired to improve a company’s efficiency. The duties of a management consultant include:

  • Meeting with a company’s staff to understand its internal processes and procedures;
  • Mapping out the company’s organizational structure and analyzing its culture;
  • Reviewing company policies, data, and accounts;
  • Identifying weaknesses in a company’s operations;
  • Making suggestions for improving systems and processes;
  • Training staff in new systems and processes; and
  • Monitoring outcomes and rates of improvement.

There are two broad categories into which management consulting work can fall. The first is general consulting, which targets an entire organization, including its strategy, culture, and governance. General consulting considers every aspect of a company. The second is specialized management consulting, which focuses on a specific area of an organization, such as financial management or technology management.

Management consultancies often involve both types of consulting work.

How to Become a Management Consultant

It’s essential for management consultants to have or develop skills in the following areas:

  • Strategic thinking
  • Problem-solving
  • Strong verbal communication
  • Strong written communication
  • Conflict management
  • Emotional intelligence
  • Critical thinking
  • Project management

Not every management consulting career follows the same formula; some consultants don’t have college degrees and others have doctorates. The general rule is that more training and more experience increase opportunities to land contracts and get paid. What a consultant brings to the table will often determine the size and scope of their contracts.

Entry-level consultants generally have undergraduate business degrees and some experience. More seasoned management consultants tend to have either an undergraduate degree and four years of experience or a graduate degree and two years of experience. A senior management consultant is someone who has a decade’s worth of experience.

Certifications and Training

Earning certifications can increase a management consultant’s marketability, salary, respect, and opportunities. Here are some options for upskilling:

  • Certified Management Consultant: The Institute of Management Consultants USA offers a Certified Management Consultant certification program. Requirements for certification include three years of recent experience, a four-year degree, and professional references. Certified consultants must pass an oral and a written exam. The whole process can take about three months.
  • Project Management Professional Certification: The Project Management Institute offers a Project Management Professional certification program. In order to get certified, consultants with a bachelor’s degree need 36 months of relevant experience. Consultants without a bachelor’s degree need 60 months of experience. In addition to work experience, applicants need to complete 35 hours of formal training, also called “contact hours,” which can be logged through online courses, webinars, and authorized training partners. Here are some ways to log contact hours. The final step to becoming certified is taking the PMP certification exam. Check out some tips for preparing for the PMP exam here.

There are also courses on Coursera, including the Foundations of Project Management course by Google, and elsewhere on the Internet, such as through Harvard Professional Development Programs. It’s a good idea for every aspiring management consultant to get familiar with international standards for management consulting, which are outlined by ISO every five years.

Salary & Hourly Rate

What to Include in a Management Consultant Agreement

A management consultant agreement should identify the parties it binds together and outline the scope of services to be provided by the consultant. A section mapping out the scope of services should be specific and comprehensive so that the client doesn’t expect too much and the consultant doesn’t deliver too little.

The agreement should also specify the duration of the agreement and arrangements for compensation. A section about compensation should outline the type of fee structure that will be employed, acceptable methods of sending and receiving payment, and whether a retainer and/or a contingency fee will apply. If the consultant is eligible to be reimbursed for expenses, the agreement should clarify this and specify which expenses qualify for reimbursement.

The agreement should also include an indemnification clause that outlines the consultant’s liability in the event of a breach of contract, as well as a confidentiality clause that protects the consultant from using or selling the client’s confidential information. In general, it’s a good idea to include a termination clause, which explains how either party can terminate the agreement and within what timeframes.

What is a Retainer?

A consulting retainer is an amount of money paid for the consultancy upfront, or before any actual consulting work begins. Often, management consultants who charge retainers base their pricing on their standard hourly rate but add a discount. The idea is that offering a discount is a small price to pay for securing payment in advance and some stability going into the consultancy.

Most clients are wary of retainer arrangements because they want to see results before they feel comfortable paying for the work. Being flexible and willing to negotiate can go a long way in alleviating their concerns.

What is a Contingency Fee?

Contingency fees are common in the legal profession; many lawyers don’t get paid unless they deliver results or win cases. What a lot of people don’t know is that many consulting arrangements involve contingency fees, too. This means the consultant gets paid when specific targets are achieved.

If this fee structure will be used in a consulting arrangement, the agreement should be clear about pricing and the nature of the goals that must be achieved before the fee is paid.

Confidentiality Clause

While getting to know and analyzing a company’s internal systems and processes, it’s likely a management consultant will come into contact with confidential and commercially sensitive information. This may include financial information, business practices, technology strategies, marketing strategies, or other types of information belonging to the company or its customers and suppliers.

Building a confidentiality clause into an agreement helps to clarify each party’s expectations around the use of that information for the duration of the consulting arrangement and beyond it. Generally, the agreement also stipulates when and how materials relating to the business should be furnished and surrendered by the consultant.

Indemnification Clause

Clients, particularly large companies, typically ask consultants to include an indemnification clause in contracts. This essentially shields the client from liability in the event of a lawsuit that arises as a result of errors or mistakes in the consultant’s work.

When a client demands indemnification, consultants should remember that they can request indemnification in certain situations or come to an agreement about which liabilities each party will own. For example, consultants can agree to indemnify clients if they breach intellectual property laws and get sued, but ask the client to indemnify them if the client does something wrong. This way, each party accepts responsibility for its own actions.

Sample

MANAGEMENT CONSULTANT AGREEMENT

The Parties. This Human Resources Consulting Agreement (“Agreement”) is made effective as of [DATE] by and between [CONSULTANT] and [CLIENT].

Services. Consultant agrees to provide the following Services: [DETAILS].

Term. The Services shall commence on [DATE] and end on [DATE].

Compensation. In consideration for the Services provided, the Consultant is to be paid in the following manner: [DETAILS].

Contingency. As part of the Consultant’s Pay: (check one)

☐ – There SHALL be a contingency-fee arrangement in accordance with:

☐ – [PERCENTAGE] % of [TOTAL].

☐ – There SHALL NOT be a contingency-fee arrangement as part of this Agreement.

Payment. Consultant shall be paid in the following manner: [DETAILS].

Retainer. The Client is: (check one)

☐ – Required to pay a Retainer in the amount of $[amount] to the Consultant as an advance on future Services to be provided (“Retainer”). The Retainer is: (check one)

☐ – Refundable.

☐ – Non-Refundable.

☐ – Not required to pay a Retainer before the Consultant is able to commence work. 

Return of Records. Upon termination of this Agreement, the Consultant shall deliver all records, notes, and data of any nature that are in the Consultant’s possession or under the Consultant’s control and that are of the Client’s property or relate to the Client’s business.

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 Consultant 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.

Confidentiality & Proprietary Information. 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 (3rd) 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.

Signatures. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the dates written hereunder. 

Consultant’s Signature [SIGNATURE]

Date [DATE]

Client’s Signature [SIGNATURE]

Date [DATE]