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Legal Contracts or Legal Contractual Agreements with a Client

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I am the only consultant I ever heard of who absolutely refuses to enter into any legal contractual agreement with a client. As a consequence, this cannot be an article on how to write an airtight contract. Rather, I would hope to make you understand why I shun them. Perhaps I can convince you to do likewise.

It is most often the consultant who tries to get the client to sign a contract, not the other way around. The client is usually shy of this. What if the consultant doesn't produce, proves himself inept somewhere down the line, becomes lazy, misses meetings or writes an unintelligible final report? The client would be stuck. So, pragmatically, pushing a contract into a client's face and trying to force him to use legal counsel to make a deal with you simply cuts your chances of working in half. Let us assume, however, that a one-year contract is signed by the client, engaging your services. You are now married to each other. The first two months comprise the honeymoon. You are the darling of the company. Everyone is running around, pointing you out as the genius who is going to solve all of their problems, eliminate their competition, and make them a huge success. After all, they have a contract. Let us even assume that you are indeed good enough to accomplish this insane one-year goal. It will take you some time, even though you are a genius, to get started. It takes a couple of months just to get acquainted with how the client has been doing things wrong. His middle management will constantly try to hide it from you. You invoice them monthly, because this is the usual procedure and the only sensible one. By the end of the third month, they still haven't conquered the world and they see no tangible progress. A bit of the heartiness goes out of their greetings in the morning. You are not slapped quite so hard on the back anymore. You are invited to fewer meetings. They become somewhat soured by the fact that your monthly invoices are going to be arriving like clockwork for the next nine months, and as yet they have nothing concrete to show for their money. They are finding it just a bit difficult to justify your presence and your expense to their controller. In short, the honeymoon is over. You are stuck with each other. You are grudgingly going to their meetings, and they are grudgingly paying your invoices. The relationship should terminate right here, but it can't. There is a contract, and the first one to even suggest termination is "in breach." Then it becomes bitter. They may lose some more money, but you lose reputation - and the work is no longer enjoyable.

Here is another reason to eschew contracts. A consultant is not a TV repairman. The work is neither that precise nor that cut-and-dried. But even a TV repairman will not quote a price for his work until he sees exactly what is wrong with the set. You do not have that opportunity on any long-range project. You go into a contractual agreement with absolutely no idea of how much of your time it will eventually take, what political internal obstacles you will meet, how many meetings a week your client will require you to attend, and what tangential business of theirs you must familiarize yourself with to accomplish their goals. Your retainer is only a wild guess at best on your part. You could well be required to put in so much time that you come out having earned an average of $3.50 an hour by the end of the year or whatever the contractual period. Without a contract the fee may be renegotiated anywhere along the line by either party, up or down. The consultant/client relationship has a much better chance of thriving.

Again, suppose you start working and find that your client is involved in practices that are against your moral principles. If you signed a contract, you are stuck.

It has always seemed to me that contracts are entrapments. Remember, you chose the career of consulting to avoid being trapped in life ever again. Now you are back where you started. Let's return to the professional parallel with the doctor, dentist, or psychiatrist. No property is being negotiated here, just as in your case. If one person needs help and the other person is willing and capable of giving it, who needs lawyers, legal contracts, and their attendant expense? If a prospective client insists on it, I automatically don't trust him. The only time it is ever necessary to sign a contract is when you do work for any government agency on any level.

With regard to long-term or ongoing projects, here is what I do. I always request and get a letter of intent from the individual client or responsible executive representing an organization. In this letter is a general description of the work required of me and the monthly fee to be paid. There is also a sentence that states that either party may terminate this arrangement with thirty days of prior notice to the other. Prospects are very pleasantly surprised to come upon such an arrangement. When I proffer it, they look upon me as being guileless, which I am. They are also more easily able to enter into such an agreement because it does not require a large figure entry into the annual budget beforehand, and therefore doesn't require approval from a superior, controller, or board of directors. Recall that my very first client retained me for over six years on this basis.

The strangest and nicest thing about this letter of intent (which I request be no more than one page long) is that it is, in effect, legally binding. I had an unfortunate incident in which this legality was tested. Here is what happened.

One of the largest professional associations in the country called upon me to do a study concerning the feasibility of a project. My study proved the project feasible. The executive in charge of the division called me in and asked if I would like to administer the project on a freelance basis. I agreed and quoted my fee annually, since I knew exactly how much time would be required in this case. He accepted with the proviso that I waive my fee for the feasibility study. I agreed to this, too, because I liked both the man and the project. I requested my usual letter of intent setting all of this forth on one page in simple language. The letter arrived the following day. I immediately started work. Several weeks later, this man was promoted to another division, and another man moved into his place. This second individual called me into his office, thanked me for what I had done, and informed me that the association could very well proceed without me. I quickly turned the letter of intent over to my attorney, who sued forthwith on the strength of that letter. The matter was settled out of court, and the client paid me $10,000.

I rest my case concerning contracts.
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