A successful consulting agreement playbook is built on specific, high-stakes clauses that dictate who owns the work and who carries the risk. When reviewing or drafting these agreements, these are the five "Battleground" provisions that require standardized positions to ensure consistency across all external engagements.
This is the most contested section of any professional services contract. The goal of your consulting agreement is to ensure that the "Foreground IP" (everything created during the project) belongs to the company.
- The "Work Made for Hire" Standard: Your preferred position should state that all deliverables are "works made for hire."
- The Backup Assignment: Because not all work fits the legal definition of "work made for hire," your contract should include a backup clause that automatically assigns all rights, titles, and interests to your company upon payment.
Next, consultants often bring their own pre-existing tools, templates, or code to a project. You cannot own their "Background IP," but you must ensure it doesn't "infect" your deliverables.
- The Strategy: Your consulting deal should define Background IP as anything owned by the consultant prior to the start date.
- The License: Ensure the consultant grants the company a perpetual, royalty-free, irrevocable license to use any Background IP that is embedded in the final deliverables. Without this, you may own the "car" but the consultant owns the "engine," effectively holding your project hostage.
Another thing to watch out for is unlike a software license, a consulting deal is about human performance. You need to define what "good" looks like.
- The Provision: Include a clause requiring the consultant to perform services with the "highest professional standards" or "in accordance with generally accepted industry practices."
- The Personnel: If you are hiring a firm because of a specific "star" consultant, your consulting playbook should include a "Key Personnel" clause, preventing the firm from bait-and-switching you with junior staff once the contract is signed.
Another area to take note of is liability as this is where most negotiations stall. Most consultants will push for a total liability cap equal to the fees paid over the last 12 months.
- The Battleground: Your contract should insist on "Super-Caps" or uncapped liability for specific high-risk breaches.
- Must-Haves: Third-party IP infringement, data privacy breaches, and gross negligence should ideally sit outside the standard liability cap to protect the company from catastrophic losses.
Lastly, in a fast-moving business environment, you need the ability to "pivot" or end a project that isn't working.
- The Clause: Standardize a "Termination for Convenience" provision that allows you to end the agreement with 15 to 30 days' written notice.
- The Wind-Down: Your agreement must specify that upon termination, the consultant must immediately hand over all "Work in Progress" and return all company data before the final payment is released.
And there you have it...
If you're building your agreement from scratch, make sure to use a consulting agreement playbook checklist to audit your current terms, ensuring you have total coverage across these key areas:
- Ownership: Clear distinctions between Foreground and Background IP to ensure you own what you pay for.
- Performance: Defined standards of care and key personnel protections to guarantee quality.
- Risk Control: Targeted indemnities and liability "Super-Caps" to prevent lopsided risk.
- Agility: Fair termination rights that allow you to exit a project without unnecessary financial penalties.
But - if you are tired of redlining these terms manually and want to start negotiating from a position of strength, you can try out our free consulting agreement playbook generator to codify your standards in minutes.