THE CONSULTANT CONTRACT
by Paige Proctor
So you decided to hire a consultant. You received the proposal and liked what it said. You then checked the references and decided to move the proposal forward. What should you look for in a consulting agreement?
In most cases, the consultant delivers an agreement to the client. In the insurance industry, clients seldom write their own consulting agreements unless they have special needs that the agreement does not address and choose to adapt the terms to their individual concerns.
Exceptional circumstances aside, short- or long-form contracts should contain these essential elements:
- A list of all parties involved in the contract or agreement
- A description of the work to be performed
- Dates marking the duration of the consultation
- Fees, including complete description of time estimates, flat charges, hourly rates, travel expenses, and any other anticipated consultation-related costs
- A description of follow-up procedures to be performed after the consultation, such as a written report, contacting the consultant with questions, and any other services the client believes is important to implementing the consultant's recommendations successfully.
The consultation agreement might contain a cancellation penalty, particularly relating to airline fees, since discounted airline fares are nonrefundable. Competent consultants usually book the lowest fares possible.
The proposal can include the standard fee schedule with a budgetary breakdown of all the services necessary. This schedule helps the client calculate such expenses as cost per mile for driving and any charges for travel time, often referred to as 'portal-to-portal' consulting charges.
See the consulting forms below for an outline of what goes into a complete contract.
SOME WORDS OF CAUTION
Exercise caution when reviewing any consultation document. If you, as a client, are concerned about or dissatisfied with the little details in the contract, you have the option to move on to another consultant. The consultant and the potential client should be sizing each other up during the negotiating process, deciding whether they make a compatible team.
A good consulting relationship offers ongoing value beyond the contract period, and the consultant may be requested for return visits far into the future.
Most consultants are dedicated to the success of their clients. They see the potential renewal value of the consulting arrangement the same way an insurance agent looks at the value of renewal commissions when selling a policy.
Always check references and talk to other agents before hiring a consultant. A consulting agreement should come with a professional who's qualified to accomplish the work on demand.
CONSULTING FEE SCHEDULE FOR SERVICES
ABC CONSULTING SERVICES, INC.
AGENCY APPRAISALS/AGENCY OPERATIONS REVIEW
Agency appraisals: opinion of value per quotation, plus expenses
Agency operations review: per quotation, plus expenses
EXPERT TESTIMONY/DEPOSITIONS/COURT APPEARANCES
All locations: actual appearance $1,650 per diem, or any part thereof, plus expenses
Expert designation fee: $1,650, reduced by expert or consultation earnings
Preparation, research, review: $175 per hour and analysis
CONSULTATION/PROFESSIONAL SERVICES
Hourly rate: $195 per hour, plus expenses
In our office: Minimum 2 hours
At other locations on site: Minimum 4 hours
By phone: Subject to 15 minutes per call plus toll charges
EXPENSES AND TRAVEL
Air travel: Actual cost
Auto mileage: $0.35 per mile, round trip
Lodging, group transportation: Actual cost and car rental
BILLING INFORMATION
Billings, which may include deposits, are made monthly. Retainers and/or deposits are required in most instances, with the remainder due payable at the end of the onsite consulting session. Consulting time is computed from the time the consultant either begins or is scheduled to begin until the time of departure, which is earlier.
Unless otherwise mutually agreed to in writing, all retainers, fees, and expense deposits are payable before the service begins. All fees and expenses are considered earned in full at the earlier of the times (1) service begins or expenses are incurred, or (2) travel to site begins. Cancellation by client of any service at any time during the two (2) days prior to the date travel or service is scheduled to begin will subject client to a minimum fee of not less than the amount that would apply for an onsite consultation, plus expenses incurred.
Charges for all fees and expenses assume and reflect timely payment by valid check. Any balances that are billed are due immediately upon receipt of statement, unless otherwise indicated on statement. Amounts not received in our office within 15 calendar days after the statement date are considered delinquent, and thereafter the client agrees to pay 1.5% monthly interest on delinquent balances, plus collection costs, including all legal and attorney fees, should that be necessary.
The fee for providing valuation of an agency is not contingent on the value determined by this assignment.
Example: Short-Form Consulting Agreement
CONSULTING AGREEMENT AND DEPOSIT
This Agreement between ABC Consulting Services, Inc. and _____ will confirm the Consultation arrangement and dates of _____. The Consultant, ______, will provide ____ days of consulting and will provide the following services:
____ Agency is enclosing a deposit check for $ _____, which represents a deposit of twenty-five percent (25%) of the $ _____ consulting fee. The balance plus travel expenses will be payable on the final day of the visit.
For ABC Consulting Services, Inc. Date
Agency Principal
For ____ Agency Date
Please make check payable to ABC Consulting Services, Inc.
SAMPLE FINANCIAL CONSULTING AGREEMENT
Date
Name
Company
Address
City/State/ZIP
Dear :
This letter shall serve as a letter of agreement between ____ (client) and ____ (consultant) governing the provision of professional financial consulting services for client by consultant.
CONSULTANT shall provide such consulting services as determined appropriate and as specifically requested by CLIENT.
CLIENT agrees to compensate CONSULTANT on an advance base retainer arrangement. Under the terms of such an arrangement, CLIENT will provide CONSULTANT with a check in the amount of $____ per month on or before the first day of each month (except for the first month, ____, when payment shall be due on or before the 10th day of the month. In exchange for this compensation, CONSULTANT shall provide up to six (6) hours per month consultation. Additional time expended by CONSULTANT shall be invoiced at the rate of ____ per hour, and CLIENT shall provide payment to CONSULTANT within ten (10) days of the date of such invoice.
CLIENT agrees to reimburse CONSULTANT for direct expenses specifically incurred as a result of providing such services to CLIENT, to include travel and communications within ten (10) days of the date of an invoice for such expenditures. Travel expenses, if any, shall be invoiced as follows:
Air Travel: Standard Coach Rates
Per Diem: per day or _________ plus the cost of hotel lodging, whichever is greater, for any travel in excess of 50 miles from _________ . Partial day per diem (where no hotel room is required) at __________.
Ground Travel: Personal Car mileage at $0.xx/mile and rental cars and public conveyance at actual charges incurred.
CLIENT may terminate this agreement upon thirty (30) days written notice, and the agreement shall otherwise be terminated on _____.
If the terms of this agreement meet with your approval, please indicate same below by your signature and return a copy for my files.
Sincerely
Accepted for Date: