Contracting is Vital; Legal contracts are not
Done well, all of our early marketing considerations will yield clients who want to use our unique combination of abilities and are willing to put their resources behind their wants. Now it is time to reach a common understanding with those clients.
There is nothing more important to the consulting process than attending to contracting. You must attend to it constantly because it is alive and always moving, changing, and adapting to what is happening. The client and consultant need to be mutually clear about what each expects of the other and what each is going to provide the other. Contracting is an exchange of wants and needs that goes both ways. It starts with the 1st contract and is alive, and being renegotiated, throughout the entire consulting relationship. Either person can open a discussion of this living contract at any time. If my needs as a consultant are different now than they were yesterday, then I will open a conversation. If the wants of a client are going to be different tomorrow, then he or she should discuss that with me today.
My contracting differs from a legal contract. My reservations about legalistic contracting concerns what happens to the partnership while the legal document is being created. A legal contract, once it is finished is more dead than alive. Contracts that emphasize form more than substance kill the client –consulting partnership. Contracts that are legalistic have the same effect on our relationships with our clients that prenuptial agreements have on marriage. Even when they are necessary, they are not very romantic, and certainly not what the partnership is all about. I avoid them whenever possible.
I attempt to create a contracting process with my clients that is alive and adaptable, not one that is fixed in ink. I encourage trust between client and consultant. I see anything that smacks of
mistrust- as defensive legal contracts can do-as damaging to the partnership I want to establish. I favor written communication that records what we decided so we don’t forget our responsibilities. I keep files/emails tracking the work the client and I are doing together, but I balk at anything written that suggests we need to protect ourselves from each other.
I have never required a client to sign an agreement with me. I have been “burned” only a few times in my over twenty plus years in consulting and then not badly enough to reconsider my practice that “our word is our bond”.
Clients occasionally require some form of contract with me and I am usually willing to sign what they put together. I am not ornery about it, I just don’t encourage the practice by giving it attention. If all that is required of me is a signature then I’ll sign. If the legal contract begins to intrude on our work discussions, I get concerned. At the same time, I must acknowledge that most of the major problems I have had as a client and as a consultant, can be traced back to poor contracting. I hasten to add that the problems would not have been solved by a legalistic document or process. Instead I would criticize my own lack of clarity, inattention to detail, failure to keep up with changes, or misunderstanding of the other persons intentions. Just because it is a barrier for me doesn’t mean that it is a poor fit for everyone. I also know that my “ contractless approach” is possible because I am a one-person firm taking on projects of limited scope. But, whatever the size and nature of your consulting business, watch out for relationships that focus more on the written word than what is happening between the people involved. ( Peter Block’s book “ Flawless Consulting”, provides an excellent description of a contracting process).
Now that my biases are clear, how do I integrate my need for a living contract with the need for a written memory of what we are doing together? Following a discussion or negotiation with a client, I find it useful to outline in an email/letter the major points covered and the actions we plan to take. I see this as confirming our contracting rather than a contract in the legal sense. I will do whatever I can to make sure the client and I understand each other, and reinforcing our face to face meetings with the written word just makes sense. It gives us a mutual record of what has happened.
In my early years as a consultant, I spent a lot of time talking with clients about what I would do and they would do, however, lately I have found that it is useful to make a few more assumptions about how we are going to work together, to reinforce actions that fit with my assumptions, and to question actions that do not. To me this is similar to dancing with someone you have never danced with before. You and this new dance partner do not have to go through a long negotiation about when you are going to dance, who is going to lead or follow, or how long you will dance. There is usually an invitation, an acceptance, and a dance. You learn from each other as you go along what each needs to do to allow the dance to work. It is much less important to me than it used to be to stop working/dancing in order to talk about how things are going. More often, I try to check in regularly how we are doing as we work.
My current practice is to begin the contracting with more positive assumptions about how the client and I will work with each other and to put fewer concrete details in the initial contracting process. Then I watch to see how those assumptions are borne out in the work, and I continue contracting as the work calls for it. I see to it that the client and I have a clear understanding of what will happen between now and our work horizon. And I don’t spend much time contracting for what is over the horizon. I find clients are more drawn to this approach than to my process laden contracting of a few years back. I also find that we get more work done and our contracting is more relevant because it’s more timely.
_______________________________________________________
Also since above is more left brain here is one for the right side
____________________________________________________
To Contract or Not to Contract
I have been asked to write a short piece addressing the issue of formalizing agreements in a written contract. At the outset, it should be noted that although there are many fundamental contract principles which are universal, each state has their own laws and regulations with regards to contractual relationships. In addition, many professional associations mandate certain constraints, requirements and ethical codes when contracting with clients. You should always check those local regulations first and consult with an attorney in your area.
Ok. Enough caveats. Many people confuse the notion of a contract with an agreement. They often think that you need to have a written contract in order to have an agreement, and they make the further mistake of assuming that a written contract is more powerful than an oral agreement. I remember a professor I had in school who was famous for saying (in a Texan accent): “A contract won’t protect you from stupidity or dishonesty.” Among all the things I learned in school, this is the only statement that has remained absolutely true over the years.
A contract is memorial of an agreement. Lawyers often call it a “recital” of the reciprocal obligations. However, a written agreement is not magical. Many states will enforce an oral agreement as binding upon the parties. Certain agreements, such as transfers of land, must be in writing. However, the list of contracts the must be in writing is remarkably short in most states. So the fact that you do not have a written contract does not mean you cannot enforce your agreement. So don’t panic if you have always made hand shake arrangements, or continue to do so today.
People often also make the false assumption that a written contract somehow protects them in a special way. Don’t get me wrong, a written agreement is far superior to an oral agreement in that the terms and obligations are in black and white for everyone to see. However, if the contract is poorly written or if terms are ambiguous, the contract may not be enforced by a court, or certain clauses in the contract may be given no legal affect. Unfortunately, those clauses could have been the ones you were counting on in order to get paid! Of course, some people can simply choose to disregard a contract, and you have no choice other than spend your own money to sue the party, spend several years of your life fighting the suit, and hope you win. Remember: a contract is only as good as the people who sign it.
You are fully able to draft a contract yourself. You may want to consult books that contain form contracts, or use self-help legal books. Nolo Press (www.nolo.com) is the best known publisher in that realm. If the contract is complex, , it is strongly recommended that you seek the advice of a lawyer. Always have a lawyer review any contract presented to you for signing. If you choose to write it yourself, here are a few pointers:
1. Use simple language – say what you mean and mean what you say. Even among lawyers, there is a movement away from “legalese”. Use the KISS method.
2. Due your best to describe all of the terms and obligations. It is helpful to have paragraphs labeled “Obligations of Me” and “Obligations of You”. Fill in proper names for “Me” and “You.”.
3. Make the contract fair to both sides. If you make the contract heavily weighted in your favor, there is a good chance the other party will just walk away from it, and a court may not look favorably on your heavy-handedness. Even if you sneak a certain clause past the other party, you won’t sneak it past a judge.
4. Try to think of some worst case scenario. It is difficult, but when you write a contract you need to think of a day when you and the other party are not speaking to each other anymore (picture a pre-nuptial). It’s not fun, because now is the time when business is great and everyone is smiling. Prepare for the rainy day in your contract. You will be happier when that day comes. Notice, I didn’t say “if” that day comes.
5. Have a lawyer review it, or at the very least, show it to someone with experience in your industry. Two heads are better than one, and if this is your first time at this, you should get some advice.
6. Have everyone sign and date the document and produce two originals so each party has a copy.
A carefully drafted contract that accurately describes the obligations, and one that is fair to all parties is a very useful tool. It will be a document that you will refer to often during the relationship. If disputes arise, it will be invaluable to quickly prevent a disintegration of the relationship. You will not remember what you agreed to many months down the road. If you have a written contract, you can quickly review what the parties need to do. You may be surprised to find out that they are right and you are wrong!
Depending on your type of business, a few of the things you might want to include in a contract are:
Term or length of agreement
Fees
Payment terms
Cancellation terms, including fees
Details of services or work to be performed
Client responsibilities such as providing office space or access to information
Who pays expenses for travel, materials, etc.
Appropriate disclaimers
How any dispute about the contract will be handled
The last thing I’ll leave you with is “take your time.” You should never draft a contract quickly or rush through it because you are anxious to start the work. This is a sure-fire way of writing a contract that does not fully describe the relationship. You may also end up with a contract that is sloppy in its construction and proves itself useless in Court. If you follow these simple rules you will find that your business relationships are much smoother, and many difficult situations can be avoided. Happy contracting!
Feel free to email or call with any questions -thanks for reading!
