Consultant Contract Issues: Feb. 26, 2014

Consultants Contract Issues: CNET meeting Feb. 26, 2014

Later this month, on Wednesday, February 26, 2014 at 630pm, I will be the speaker for the meeting of IEEE Consultants’ Network (CNET) on “Contract Issues for Consultants and Clients”. The presentation will be at the group’s current Needham, MA location: Olin College, #113 Academic Center, 1000 Olin Way, Needham, MA. Below is the article on this presentation based on the article I wrote for publication in the February 2014 issue of the IEEE Reflector.

Legal Issues in Consulting, Subcontracting, and Software Development

As a consultant, entrepreneur, client or professional, you are often dealing with contracts, your own and others.
• What should you be looking for in your contracts? What makes a good contract?
• What terms to include in consulting agreements? Contract and tax issues structuring compensation?
• Should I hire a subcontractor? How to structure the Relationship? What protections do I need? Why contracts are needed between friends.
• What terms to include in software development contracts? How to structure milestones and intellectual property rights?
• How to negotiate VAR and distribution agreement? Terms to include in licensing products and technology?

1 – Making Good Contracts. Contracts should be clear and complete to reduce uncertainty, and cut legal costs to enforce. The contract should cover
• Mission – Defining your mission and covering the scope of contract
• Conditions – Current and relevant variables, contingencies to performance
• Reliance – Setting out warranties and representations that each side relies upon Consideration – Stating what each party contributes regardless of form it takes
• Mutuality – requiring each party to contract to “ante up”
• Commitment – Timing contributions so vulnerability to non-performance reduced.
Proposals – How/whether to include in contracts

2 – Client Consulting Agreements. Contracts should set out Scope of services, reports, deliverables, and set out agreed restrictive Covenants – confidentiality, assignment of inventions, non-solicitation, No-raiding and non-competes as negotiated and agreed.

3 – Compensation Arrangements. Manner of payment whether by Job and assignment with rights for change orders, or by time and materials. An advance should be paid, with collection terms for late payment. If cash is short, debt or equity terms should be negotiated and spelled out. Immediate issuance of stock with appropriate IRC §83(b) elections can Avoid costly tax “surprises” down the road if a company does succeed.

4 – Subcontractor Arrangements. One hates to turn away business and if your consulting has reached that level, hiring qualified subcontractors to help can be a win-win-win. But hereto, a proper contract to assure no poaching of your clients and clarifying compensation terms can help.

5 – Software & Product Development. These contracts should include Accepted specifications, terms of acceptance, milestones for completion and payment, and a parsing of intellectual property ownership rights to assure the developer ownership of his tools and the client his full rights in the product being developed if paid for. Termination rights, source code escrows, warranties, maintenance and upgrades are also important for the completed agreement.

6 – Liability, i.e., how do I keep from getting sued. Insurance, etc.

7 – Removing NDA agreements for public domain information.

For more information on IEEE Consultants’ Network, LINK:

For more information on this February 26, 2014 meeting, LINK:

Hopefully, this CNET meeting on contract issues will be helpful to the independent contractors, consultants and entrepreneurs I represent. Hope to see you at this CNET meeting at Olin College in Needham on February 26!

I am appreciative to the IEEE Consultants’ Network for again inviting me to speak for the group.  Over the last ten years, I have given a number of presentations for CNET, including the following:

·       “Ethics and Consultant”

·       “Taking Stock and Promissory Notes for Pay”

·       “Consultants:  Taking Steps to Assure payment”

·       “Copyright and  Trade Secret Issues for Consultants”

·       “Tax Changes for Consultant”

·       “Independent Contractor Status for consultants

Let me know if any of these past presentations might be of interest.  I would welcome the chance to work with consultants or entrepreneurs if you have issues in any of these areas.


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