Updating Consulting Agreements as Your Business Grows
A consulting firm begins with a defined advisory service. Its engagements are relatively short, the founder delivers much of the work and clients have direct access to the person making commercial decisions.
As the business grows, the arrangement changes. Projects involve more people, services extend into implementation and clients expect ongoing assistance. The firm begins using specialists and taking on engagements with more demanding approval processes.
The original agreement remains in use.
It may still describe the broad service accurately. It may say little about the responsibilities, dependencies and costs introduced by the expanded offering.
Updating consulting agreements helps leadership bring those elements into alignment. The objective is a clearer basis for deciding what the firm will deliver, what the client must contribute and how changes will be managed.
Growth Changes the Commitment Behind the Fee
Consulting fees are commonly based on assumptions about the work required.
Those assumptions may concern the number of meetings, the information available, the stakeholders involved or the extent of implementation support.
When the service expands, the same pricing structure may no longer reflect the effort needed.
Consider a firm engaged to assess a client’s sales process and provide recommendations. During the project, the client asks the consultants to introduce new reporting, train managers and help implement the recommendations.
Those activities may be valuable additions. They require a decision about scope, resources and fees.
An agreement built around general “sales consulting” may leave the parties uncertain about where the original engagement ends. A more precise structure can distinguish assessment, recommendations and implementation, with appropriate terms for each phase.
Describe Deliverables Separately from Business Objectives
Clients engage consultants because they want results. The agreement should connect the work to those objectives without confusing them with outcomes the firm cannot fully control.
A consultant may commit to developing a strategy, preparing a report or conducting specified workshops. The client’s eventual performance may also depend on internal decisions, employee participation and execution after the engagement.
The documents should distinguish those elements.
This gives the client a clearer understanding of what it is purchasing. It also allows the firm to assess completion against agreed work rather than an evolving expectation of business success.
Sales proposals deserve attention alongside the agreement. Broad statements made during the sales process should not undermine a carefully defined scope.
Make Client Participation Part of the Delivery Plan
Consulting depends on access to information and people.
A project may require financial records, interviews with managers, timely approvals or feedback from a designated contact. If those inputs are delayed or fragmented, delivery can require additional effort.
The agreement should identify material client responsibilities and explain how changes affect the schedule.
For example, a report may be priced on the assumption that the client will provide complete records and consolidated feedback. Several rounds of comments from different departments can create work that the original fee did not contemplate.
Recording those assumptions supports an earlier conversation about the consequences. It also gives project managers a basis for raising an issue before the team absorbs substantial additional work.
Separate Advisory Work from Continuing Support
An engagement can become open ended when the firm continues answering questions after the agreed deliverables are complete.
Some assistance may be appropriate. The business should know whether it is included, limited or separately chargeable.
The agreement can distinguish delivery, an agreed review period and any continuing advisory service. It should also address how new assignments will be approved.
This is particularly useful when the firm moves from individual projects into recurring retainers. The recurring fee needs a defined commercial basis, including the services or capacity it supports.
A clear structure helps preserve the relationship while allowing the firm to plan its resources.
Coordinate Ownership and Use of Consulting Materials
Consultants may use existing methods, templates and tools to produce client deliverables.
The agreement should distinguish those materials from work created specifically for the engagement. It should also establish the rights the client needs to use the deliverables.
Broad ownership language can create uncertainty if it extends to resources the firm relies on across its business.
The review should consider the materials involved and the intended commercial arrangement. Where external specialists contribute, their agreements should support the rights the firm has promised to the client.
The objective is a coherent position across the delivery chain.
Review the Framework Around Your Current Offering
A growing firm may need a common master agreement supported by service specific statements of work. Another business may benefit from a revised agreement for a single recurring service.
The appropriate structure depends on the transactions.
Start with the services sold most often and the issues that repeatedly require explanation or negotiation. Input from sales, delivery and finance can reveal where the documents differ from actual practice.
Updated templates should be distinguished from existing signed engagements, which require separate consideration of amendment procedures and any necessary client agreement.
Before Your Next Larger Engagement
If your team regularly provides implementation or continuing assistance beyond the work it priced, the agreement may no longer fit the offering.
A new service, larger project or move into recurring engagements provides a useful point to begin.
Reviewing the documents before signing gives leadership time to clarify the commercial decisions and establish a framework the team can use.
Discuss Your Consulting Agreements with Delta Law
Delta Law helps consulting firms review and update client agreements around scope, fees, deliverables and responsibilities.
A consultation provides an opportunity to discuss your current offering, identify recurring contract issues and consider an appropriate scope for review.
