There are attorneys and there are attorneys. I’ll tell you right now who you do not want:
- Any family member.
- Anyone who’s giving you a “break.”
- Anyone who is just starting out.
- Anyone whose expertise is not in professional services and contract law.
That’s probably insufficient. I was speaking to a group of consultants and one actually proclaimed, “My husband is an attorney, and he’s assured me that I do not need to incorporate or carry malpractice insurance, both are wastes of money. What do you say to that?”
What I said was to get a new attorney and a new husband, but I doubt that she did either.
So the first thing I need to make absolutely clear is that the attorney who closed on your house for you, or did the title search, or wrote your wills, or represented you in an auto accident, is probably not the right person for this. His or her firm may be appropriate, if they have multiple attorneys in different practices, and it’s always good to stay in one place if you can. But I have attorneys for contract, trademark, estate planning, and litigation—all different people in two different firms.
Ideally, your attorney should be adept at both contract work and the working of personal services firms. Thus, a seasoned attorney who has a private practice with one or two others and specializes in this area would be ideal, but they are hard to find because, by definition, they can’t specialize to that degree as independents and still make money (just as with consultants).
The time to consult your qualified attorney specifically about the proposal process is at these junctures:
- If you do not use my kind of template, but invent your own format and wording, you should pass it by your lawyer not to have it rewritten in legal terms but to ensure that you haven’t inadvertently shot yourself in the foot. Remember that you don’t have to accept all the attorney’s suggestions, but you should responsibly be aware of any potential risks the attorney unearths. You may have accidentally implied that your proposal can be applied to other areas at no extra cost, for example.
- When the client comes back to you with legal questions or the client’s own attorneys’ wording in lieu of your own in the proposal or on a separate document. This is particularly important in terms of non disclosure and/or non compete clauses.
A nondisclosure agreement merely demands that you will not reveal proprietary client information to anyone else. It’s reasonable and many clients request it, though the wording can vary widely. These are usually mandatory when requested, but innocuous.
A non compete is far different. These agreements request that you refuse to work with organizations similar to the client—most likely, competitors—for varying periods of time. When you are asked to conform to this request, you should charge more in your proposal at every option level, because the client is removing a portion of your market for which you deserve compensation. Here you must ascertain the time frame, exactly which firms would be included (nothing vague, such as “anyone deemed to be a competitor”), and which of your services. You might charge a premium, for example, of $25,000 not to work with two competitors with a certain offering for a year, or $250,000 to never work with them in any area.
You’ll need your attorney’s advice to make any adjustments in the agreement, because the client’s lawyers will have structured this to their maximum benefit and to your maximum detriment. And this is something that your buyer really can’t help with.
Another critical area is “work product.” Generally, you take out the intellectual property that you arrived with, the client keeps what was theirs to begin with, and you jointly own what was created during the project. However, the client will often demand that all “work product” created during the engagement be strictly theirs (so that it can’t be used with competitors, a version of a non compete), and may even try to insist that they own your original intellectual property to apply as they wish. This last provision would effectively make your client a competitor, if they offered, say, your strategy approach to a third party.
This is why you need a careful legal review and opinion on such matters. I’ve seen consultants essentially “frozen” out of a vibrant market and/or surrendered their intellectual property for what they thought was a nice project but which in actuality ruined them.
As a rule of thumb, whenever your client returns an amended or additional document to you with words not your own, run it by your attorney. You aren’t compelled to follow the advice, but you should know all your options. I noted earlier that the 32 pages from the Federal Reserve attorneys didn’t really change anything, but that’s a rarity. Most of the time they are stacking the deck for the home team.
You’ll also want to be sure that you’re not getting into unnecessary arguments. When Hewlett-Packard, for example, requests a copy of in-force errors and omissions insurance, that’s reasonable and you should simply comply. But when some other firms request that you make changes to your liability insurance coverage for the duration of your work with them, that’s both unreasonable and unnecessary and you should know that you don’t have to comply. In many cases, a legal department will try to obtain an advantage, knowing they won’t press the issue if there is resistance, but there’s nothing to lose in trying.
Therefore: Consult your attorney once with your proposal template just to make sure there are no glaring problems, but don’t feel obligated to follow all of the ad- vice. Consult your attorney whenever you receive a legal form, advisory, or request from the client’s attorneys, even if it’s by way of your buyer. Then you make the decision about what’s reasonable and not (our next segment deals with compromise). Make sure that your attorney understands your type of business and your type of firm.
But be master of your own fate. Attorneys aren’t adept in the consulting profession. In fact, almost all of them are still charging by the hour.