Contract for Professional Services
Communication in a business relationship is key. Bookkeepers, consultants, graphic designers, or any other professional get clients by building relationships based on trust, knowledge, and understanding. However, those relationships can go south because the parties have differing opinions about their accompanying duties and responsibilities. This is why anyone who provides professional services needs a Professional Services Contract. A well-drafted Professional Services Contract can keep those professional relationships from going sour and let you concentrate on what you do best – serving your clients.
Below are 10 things that should be addressed or at the very least considered in every Professional Service Contract:
What services will be performed?
Being as specific as possible, what exactly are the services that you will perform for your client. There will be instances when clients refuse to pay because they will argue that you didn’t perform the services that you were obligated to carry out. When you’re specific about the services you’ll perform, you’ll have proof on what services you will or will do not.
You can lay out these services in a body of Service Contract or as an attachment to it. They can also be defined on a matter-by-matter basis, using task or subject-area orders to set out a particular set of services and change orders to modify the list of services covered in the contract.
2. Contract Duration
How long will this arrangement last?
The Services Contract should also indicate how long your contractual relationship with your client will last. Is it documenting a one-shot deal? Or does the agreement reflect a long-term arrangement where the client will order your services as needed via task orders? If the Services Contract will be renewable, include terms that specify when it is going to take place.
Also, specify the ways in which the relationship may end. You will probably want to build in an escape clause that you, and perhaps your client, may cancel the contract with a particular number of days’ notice. You will probably also want to provide for the agreement to terminate immediately if the client does something particular bad; make sure to tightly define that list of bad things.
How will your client and you protect each other’s confidential information?
The client is hiring you because you have some expertise that they do not have. What you don’t want is for the client to use you to develop their own expertise and then not compensate you for the information that they’re taking from you. Similarly, you most likely will view some of your client’s confidential information in the course of providing services for that client. You and your client may bind yourselves in the Services Contract to keep each other’s confidential information secret.
Sometimes, you or your client will prefer to keep the existence of your business relationship secret. To avoid misunderstandings, the Services Contract should include provisions that detail whether the parties may publicize their business relationship and how that publicity may take place.
How will you be compensated?
You want your client to pay you. The Services Contract should specify the amount that the client will pay you – both for the base services and for any additional work that may need to be performed. Many disagreements arise when more extensive work is required to achieve the client’s goals. The Services Contract should also specify when the client is going to pay you… whether that is immediately, prior to any work being performed, within 15 days of receipt of their monthly bill or upon completion of the project.
Also, you should specify what costs and expenses, if any, will be reimbursed to you by the client.
What happens if you are not paid?
Sometimes you will not get paid, regardless of the language of the Services Contract. You can use the Services Contract to encourage each client to pay by providing that the client will be charged interest, attorney’s fees and other costs of collection if the bill is not paid on time. Give your client reason to pay you first.
Who will provide the equipment?
Besides laying out the exact services you will provide, identify who will provide the equipment necessary to carry out those services. For example, if you agree to give a presentation, who will provide the conference room space, podium, and projector? The objective here is to avoid any misunderstandings on these issues by covering equipment in your Services Contract.
Will you be restricted from servicing to competing clients?
In the process of negotiating the Services Contract, your client may request that you not provide services to their competitors. Consider the consequences carefully before agreeing to limit your future client base and ensure that the restrictions are the same as what you discussed with your client. If you agree to such restrictions, make sure you are being fairly compensated.
8. Intellectual Property
Who will own any intellectual property that you create?
Freelance professionals use their ideas to create value for their clients. Those ideas, and the products of those ideas, may be protectable intellectual property. Specify in the Services Contract whether you or your client (or both of you) will own the intellectual property created under the agreement.
Do you want to restrict your client’s ability to hire your workers?
As a freelance professional, your relationships with individuals you place on a client job may be critical to your business. You want to avoid having your client cut you out of the loop by directly hiring a person you placed. The Services Contract may include non-solicitation provisions that forbid your client from hiring your workers without compensating you.
How, when, and where will disputes be resolved?
No matter how well thought-out your Professional Services Contract, you will have disputes with some of your clients. The Services Contract should specify the mechanism for resolving disputes: when claims must be made, where the claims will be heard (e.g., in your home jurisdiction or the client’s) and who will decide whether the claims against the contract are meritorious (e.g., judge or arbitrator).