Business
Aug 19, 2022

Consultancy Agreement Drafting Tips

This article will discuss the key clauses you should consider when you draft consultancy agreements.

Amber Akhtar
Amber Akhtar

Consultancy Agreement Drafting Tips

Consultancy Agreement

A consultancy agreement is made between a self-employed individual and a client who requires the consultants services. Services may include providing expert advice, brand consulting or a freelance project.

A consultancy agreement is important as it clarifies the scope of the consultants services and the rights and obligations each party has in relation to this. Ensuring you have a consultancy agreement will protect both client and consultant with regards to protecting confidential information and retaining intellectual property.

A consultancy relationship differs from that of an employer and employee relationship, the consultant will not have employment status and will have instead a self employed status. Rather than an employment contract being entered into the consultant will enter into a written consultancy agreement.

Drafting consultancy agreements is not the easiest of tasks and there is a number of matters to consider, for example what the consultancy fee will be, will the consultant be processing personal data, will the consultant be required to take out public liability insurance and so on. This article will discuss the key clauses you should consider when you draft consultancy agreements.

Intellectual Property

What is intellectual property (IP)? IP refers to creations such as inventions, designs and artistic works. IP is protected under law by patents, copyright and trademarks which allow people to retain financial benefits from what they have invented/created.

Copyright is a term used to describe the rights a creator has over artistic works created by them, it may include music, films, computer programs or technical drawings.

A patent is an exclusive right granted for an invention, a patent provides the patent owner with the right to decide how the invention may be used by others.

A trademark is a sign which distinguishes goods or services between enterprises.

The consultancy agreement should specify who owns the IP in the work done by the consultant and the IP created. In most cases the client will want to retain IP rights.

Insurance

There are a number of different insurance covers available for consultants, which include:

  • Professional indemnity insurance
  • Cyber and data insurance
  • Public liability insurance

Depending on the nature of your business you should consider whether the consultant is required to take out and maintain an insurance cover during the period of the consultancy. Where this is required, the agreement should include a clause stating the appropriate insurance is required and for how long the consultant must maintain it.

Data Protection

Depending on the nature of the consultancy, the consultant may have rights as a data subject or potentially obligations as a data processor. To understand the requirements under UK GDPR please click here.

It is important consultants and clients adhere to the requirements of UK GDPR and DPA 2018 when dealing with and processing data or personal data. In addition the client may also process the consultants personal data, as such the client must ensure the consultants data is processed accordingly.

It is important to have a bespoke data protection clause in the agreement which reflects the nature of the consultancy and the potential data which may be processed as part of it.

It should also be considered where the consultant is processing personal data will the consultant be required to:

  • Apply appropriate technical and organisational measures to secure it.
  • Maintain records of processing activities.
  • Notify the client in the event of a data breach.
  • Seek the client's written consent when engaging a substitude.

In addition to ensuring the agreement includes reference to these obligations, both client and consultant should consider whether there is appropriate insurance in place to cover these eventualities.

Confidential Information

It is common for confidential information to be divulged during the course of business, as such it is important there is a confidentiality obligation in place prior to the consultancy commencing.

This will ensure the consultant is bound by confidentiality with regards to the client's confidential information.

The agreement should include a definition of confidential information alongside the consultants obligations to comply with maintaining the confidentiality.

Conclusion

We have listed a few key clauses in this article, however this list is not exhaustive and it is important you seek legal advice where you are drafting a consultancy agreement. Alternatively, you may wish to use a contract template provider such as Legislate to meet your contract drafting needs.

Please note the contents of this article do not constitute legal advice, we do not offer any legal advice, opinions, recommendations or guidance on which you should rely. Whilst we attempt to make sure our information is accurate and self, we recommend you consult a lawyer if you want legal advice.

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