Templates and Checklists


Advisory and Consulting Agreement



Douglas Bean
by Douglas Bean, J.D.

Advisory and Consulting Agreements are a simple way of clearly outlining the scope of the work, payment schedules and deadline expectations when working with independent advisors and/or consultants. This template includes a confidentiality agreement, insurance expectations and an indemnification clause as well as other provisions designed to get the job done and protect you and your business.

Use an Advisory and Consulting Agreement if:

  • You are independent of the professional (an advisor or consultant) providing the work to you or your company.
  • You are working with another professional and need your agreements outlined in a contract.

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ADVISORY AND CONSULTING AGREEMENT

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This Advisory and Consulting Agreement (this "Agreement") is made effective as of [INSERT EFFECTIVE DATE], by and between [INSERT NAME OF YOURSELF OR YOUR COMPANY] (the "Recipient"), of [INSERT COMPANY ADDRESS], [INSERT COMPANY CITY], [INSERT STATE OR COUNTRY] [INSERT ZIP OR POSTAL CODE], and [INSERT ADVISOR'S COMPANY NAME] (the "Advisor"), of [INSERT ADVISOR'S ADDRESS], [INSERT ADVISOR'S CITY], [INSERT ADVISOR’S STATE OR COUNTRY] [INSERT ADVISOR'S ZIP OR POSTAL CODE]. In this Agreement, the party who is contracting to receive the services shall be referred to as "Recipient", and the party who will be providing the services shall be referred to as "Advisor".

1. DESCRIPTION OF SERVICES. Beginning on [ INSERT DATE ], the Advisor will provide the following services (collectively, the "Services"):

[NOTE: This template contemplates one of four types of advisory services. Use the language corresponding to the type of advisor you are hiring and delete the others.]

  • Financial Advisory Services: The Advisor will suggest and render financial services, in a commercially reasonable manner, to the Recipient based on their professional opinions and in compliance with all required licensing, professional, legal and ethical standards.
  • Tax Advisory: The Advisor will use their advanced training and knowledge of tax law to aid and assist the Recipient to minimize taxation while remaining compliant with the law.
  • Business Valuation Advisory: The Advisor will assist the Recipient in the process of determining the value of a business or company. The valuation may be used for determining the fair value of a business including sale value, establishing partner ownership, or for any other purpose the Advisor and Recipient deem appropriate.
  • Legal Advisory: The legal Advisor will be responsible for: conducting legal analysis and research, providing advice on different legal issues and assisting in drafting legal opinions, sales memoranda and other briefing documents, and assisting in reviewing legal material and any other relevant documents and identifying the most important issues that need addressed by the Recipient.
  • [Other: Please specify]

Furthermore, the Advisor has the right of control over how the Advisor will perform the services. The Recipient does not have this right of control over how the Advisor will perform the services.

2. PAYMENT FOR SERVICES. The Recipient will pay compensation to the Advisor for the Services in the amount of $[INSERT FULL PAYMENT AMOUNT]. Payments will be made as follows:

[NOTE: This template contemplates one of two types of payment arrangements: Fixed milestones and corresponding payments, or a "retainer" fee where the Advisor receives a lump sum and then draws down that amount as services are rendered. Use the language corresponding to the type of advisor you are hiring and delete the other]

[OPTION 1: Milestones and Payments]

Milestone and Payment Amount

1. [DESCRIBE FIRST MILESTONE]

Payment Amount: [$00.00]

2. [DESCRIBE FIRST MILESTONE]

Payment Amount: [$00.00]

3. [DESCRIBE FIRST MILESTONE]

Payment Amount: [$00.00]

[Continue with all remaining milestones.

[OPTION 2: Retainer]

The parties agree the Recipient will deposit with the Advisor the amount of [INSERT RETAINER AMOUNT] as a retainer to be drawn upon as Advisor performs work. The agreed upon hourly rate for the Advisor will be [INSERT HOURLY RATE]. The Advisor will keep the retainer in escrow, separate from company funds, and only draw those amounts necessary to cover hours worked while providing a written statement to the Recipient. The Recipient shall have thirty days to dispute items appearing on Advisor’s statement.

No other fees and/or expenses will be paid to the Advisor, unless such fees and/or expenses have been approved in advance by the appropriate executive on behalf of the Recipient in writing. The Advisor shall be solely responsible for any and all taxes, Social Security contributions or payments, disability insurance, unemployment taxes, and other payroll-type taxes applicable to such compensation. The Advisor has the right of control over the method of payment for services.

3. TERM/TERMINATION. This Agreement may be terminated by either party upon 30 days' written notice to the other party. Furthermore, the Advisor has the ability to terminate this Agreement "at will".

A regular, ongoing relationship of indefinite term is not contemplated. The Recipient has no right to assign services to the Advisor other than as specifically contemplated by this Agreement. However, the parties may mutually agree that the Advisor shall perform other services for the Recipient, pursuant to the terms of this Agreement.

4. RELATIONSHIP OF PARTIES. It is understood by the parties that the Advisor is an independent Advisor with respect to the Recipient, and not an employee of the Recipient. The Recipient will not provide fringe benefits, including health insurance benefits, paid vacation, or any other employee benefit, for the benefit of the Advisor.

It is contemplated that the relationship between the Advisor and the Recipient shall be a non-exclusive one. The Advisor also performs services for other organizations and/or individuals. The Recipient has no right to further inquire into the Advisor's other activities.

5. RECIPIENT'S CONTROL. The Recipient has no right or power to control or otherwise interfere with the Advisor's mode of effecting performance under this Agreement. The Recipient's only concern is the result of the Advisor's work, and not the means of accomplishing it. Except in extraordinary circumstances and when necessary, the Advisor shall perform the Services without direct supervision by the Recipient.

6. PROFESSIONAL CAPACITY. The Advisor is a professional who uses its own professional and business methods to perform services. The Advisor has not and will not receive training from the Recipient regarding how to perform the Services.

7. PERSONAL SERVICES NOT REQUIRED. The Advisor is not required to render the Services personally and may employ others to perform the Services on behalf of the Recipient without the Recipient's knowledge or consent. If the Advisor has assistants, it is the Advisor's responsibility to hire them and to provide materials for them.

8. NO LOCATION ON PREMISES. The Advisor has no desk or other equipment either located at or furnished by the Recipient. Except to the extent that the Advisor works in a territory as defined by the Recipient, its services are not integrated into the mainstream of the Recipient's business.

9. NO SET WORK HOURS. The Advisor has no set hours of work. There is no requirement that the Advisor work full time or otherwise account for work hours.

10. EXPENSES PAID BY ADVISOR. The Advisor's business and travel expenses are to be paid by the Advisor and not by the Recipient.

[OPTIONAL SOCIAL MEDIA/WEB CLAUSES]

11. OWNERSHIP OF SOCIAL MEDIA CONTACTS. Any social media contacts, including "followers" or "friends", that are acquired through accounts (including, but not limited to email addresses, blogs, Twitter, Facebook, YouTube, or other social media networks) used or created on behalf of the Recipient are the property of the Recipient.

12. CONFIDENTIALITY. Advisor may have had access to proprietary, private and/or otherwise confidential information ("Confidential Information") of the Recipient. Confidential Information shall mean all non-public information which constitutes, relates or refers to the operation of the business of the Recipient, including without limitation, all financial, investment, operational, personnel, sales, marketing, managerial and statistical information of the Recipient, and any and all trade secrets, customer lists, or pricing information of the Recipient. The nature of the information and the manner of disclosure are such that a reasonable person would understand it to be confidential. The Advisor will not at any time or in any manner, either directly or indirectly, use for the personal benefit of the Advisor, or divulge, disclose, or communicate in any manner any Confidential Information. The Advisor will protect such information and treat the Confidential Information as strictly confidential. This provision shall continue to be effective after the termination of this Agreement. Upon termination of this Agreement, the Advisor will return to the Recipient all Confidential Information, whether physical or electronic, and other items that were used, created, or controlled by the Advisor during the term of this Agreement.

13. INJURIES. The Advisor acknowledges the Advisor's obligation to obtain appropriate insurance coverage for the benefit of the Advisor (and the Advisor's employees, if any). The Advisor waives any rights to recovery from the Recipient for any injuries that the Advisor (and/or Advisor's employees) may sustain while performing services under this Agreement and that are a result of the negligence of the Advisor or the Advisor's employees. Advisor will provide the Recipient with a certificate naming the Recipient as an additional insured party.

14. INDEMNIFICATION. The Advisor agrees to indemnify and hold harmless the Recipient from all claims, losses, expenses, fees including attorney fees, costs, and judgments that may be asserted against the Recipient that result from the acts or omissions of the Advisor, the Advisor's employees, if any, and the Advisor's agents.

15. NO RIGHT TO ACT AS AGENT. An "employer-employee" or "principal-agent" relationship is not created merely because (1) the Recipient has or retains the right to supervise or inspect the work as it progresses in order to ensure compliance with the terms of the contract or (2) the Recipient has or retains the right to stop work done improperly. The Advisor has no right to act as an agent for the Recipient and has an obligation to notify any involved parties that it is not an agent of the Recipient.

16. ENTIRE AGREEMENT. This Agreement constitutes the entire contract between the parties. All terms and conditions contained in any other writings previously executed by the parties regarding the matters contemplated herein shall be deemed to be merged herein and superseded hereby. No modification of this Agreement shall be deemed effective unless in writing and signed by the parties hereto.

17. WAIVER OF BREACH. The waiver by the Recipient of a breach of any provision of this Agreement by Advisor shall not operate or be construed as a waiver of any subsequent breach by Advisor.

18. SEVERABILITY. If any provision of this Agreement shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid and enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.

19. APPLICABLE LAW. This Agreement shall be governed by the laws of [INSERT STATE OR COUNTRY WHOSE LAWS SHOULD GOVERN].

20. SIGNATORIES. This Agreement shall be signed by [INSERT COMPANY REPRESENTATIVE WHO WILL SIGN], Owner on behalf of [INSERT NAME OF YOUR COMPANY] and by [INSERT ADVISOR'S REPRESENTATIVE WHO WILL SIGN], Owner on behalf of [INSERT ADVISOR'S COMPANY NAME]. This Agreement is effective as of the date first above written.

RECIPIENT:

[INSERT NAME OF YOUR COMPANY]

By: ____________________________________________________

[INSERT COMPANY REPRESENTATIVE WHO WILL SIGN]

[INSERT TITLE OF PERSON WHO WILL SIGN FOR YOUR COMPANY]



ADVISOR:

[INSERT ADVISOR'S COMPANY NAME]

By: ____________________________________________________

[INSERT ADVISOR'S REPRESENTATIVE WHO WILL SIGN]

[INSERT TITLE OF ADVISOR’S REPRESENTATIVE WHO WILL SIGN]



Comments

by Douglas Bean, J.D

Some important distinctions about the Advisory and Consulting Agreement:

  • The first distinction that needs to be made about these contracts is that they are not for employees. Instead, it's an agreement between you (or your company) and an freelance advisor or consultant. They are independent professionals, and since they are not employees, the consultant/advisor is responsible for most of their own tax obligations.
  • Why are Advisory and Consulting Agreements important? The first is that they help protect your business interests. The contract outlines exactly what work needs to be completed, when it needs to be finished by and how much you are going to pay. The second is that it shields you from liability issues and helps protect your assets and proprietary information.
  • Advantages to hiring an independent contractor. There are many advantages to hiring a contract worker over a regular employee, including that you don't have to pay their FICA tax obligations. You don't have to offer health insurance or other benefits either. You only have to pay them for agreed upon work. It is often easier to end a contract than firing an employee.
  • What are my IRS obligations if I hire a professional using an Advisory and Consulting Agreement? If the person you are contracting to do work for you is a self-employed person you will need to have them complete a Form W-9 and you'll need to fill out a 1099-MISC, both forms can easily be downloaded from the IRS website. The W-9 is to gather their contact information and tax identification number. The 1099-MISC is how they report income on their individual income tax return. You are required to do this if you pay them more than $600 within a year. To satisfy your IRS obligation, you'll have to send the completed 1099 Form to the IRS and the contract worker before January 31st of the following year.

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