Assurance of Work
The most dangerous and frequent trap for any consultant is the situation in which he gives away his expertise free of charge. This trap awaits him at three different junctures in his dealings with the client: in the exploratory interview, in the written proposal, and in the contract. Notice that in the aforementioned specification of activities, the consultant wisely stated what he would do, not how he would do it. Since no contract is signed on the day that it is presented, the client could very easily refuse to sign, adopt the methodology of the consultant foolish enough to spell it out, and have his staff accomplish the project without incurring the expense of a consulting fee.
IV. Assurance of Payment
You are not a banker; therefore, you should very rarely, if ever, extend credit to the client by merely billing for the entire amount at the end of the project. A good contract will demand a healthy down payment (in most situations, I am personally most comfortable with one-third) and will ensure the fact that regular payments will be forthcoming immediately thereafter while your work is in progress. You will know that your contract has accomplished this if the client owes you no more than ten percent of the total fee at project's end.
V. Avoidance of Liability
More and more, we in the advice business are being looked upon like doctors. This means that more and more clients allow for less and less honest mistakes. So, like physicians, we shall probably all be insured against malpractice in the next ten years—a high price to pay for partial safety. The first place for liability prevention is in the original contract. Spell out exactly what you consider to be your responsibilities and what you don't. Spell out, too, those contingencies beyond your control which may cause the project to fail.
VI. Prevention of Litigation
There are two primary causes for litigation between consultant and client: the belief by the client that work was improperly or incompletely done, and failure by the consultant to collect his fee. Should either or both of these things occur, try to avoid litigation by any and all means. There are a thousand reasons in favor of settling disputes out of court. In any event, a well thought-out, strategically devised contract will go far to avoid either of these primary causes of dissention.
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