I’ve been consulting with business owners for many, many years and there was a time when I did not use contracts or agreements. I never felt the need to inject a formal and legal aspect to the work I had proposed and so a handshake seemed like the way to go.

consulting contract

photo credit: NobMouse via photopin cc

A few years ago I changed my tune completely on contracts and not because I got burned or felt the need to create something legally binding.

What changed was my view of what a contract could stand for and perhaps my definition of the word contract in general.

In my mind, particularly in the coaching, consulting and professional services world, a client relationship must be a mutually beneficial one if it’s going to work. In other words, both parties have to come to the relationship fully prepared to do their part if the most value is to be realized.

Now, what that mutual participation looks like differs for every business, but in my experience if a clear expectation and understanding of what that looks like is missing, trouble is not far away.

Think about past client work that didn’t go as well as it could. Usually what occurred was miscommunication or a misunderstanding of expectations.

Quite often we are so happy to get the work we don’t have the authentic conversation that needs to be had upfront. It’s so much harder to go back and recreate expectations once the work has begun.

So, back to the idea of a contract

I now use contracts with every engagement. I don’t use them, however, to create some legally binding agreement, I use them as a tool to communicate expectations, needs and wants for both parties.

Of course I want to be paid as agreed and that’s part of the contract, but I write these contracts in very plain language after careful discussion with the client about what we both need to do. The document is more of a social contract than a legal one.

I know my more legal minded readers may take issue with the casual nature of my use of contract. For what I’m describing I could easily use the term agreement and communicate the same thing, but here’s why I intentionally choose the word contract.

A valid contract needs to be entered into with the consent of both parties and it needs to spell out clearly the value exchanged by both parties. I don’t necessarily view my contract with a client as any more binding than an agreement, but I do find that the use of the concept raises the level of commitment from both parties.

I use the tool to spell out what kind of access and information I need from the client to do the work, the objectives and deliverables I am responsible for and they are responsible for, the level of support and communication I need from the client and their staff, the time table for getting together and finishing the work, the way results will be measured, how feedback will be given and of course how payment will be made.

The contract is drawn directly from the conversations we have in preparation for doing the work. The objectives are often outlined and prepared by the client through a collaborative approach, as are the goals and metrics.

I have found that this conversation is the best way to measure the client’s actual level of commitment to the work I’m being asked to do.

This approach to drawing up our ultimate contract is one of most important aspects of getting a project started right. In fact, this conversation has led to agreeing not to work together as well and that’s another powerful reason to make it an essential process.

I’ve wrestled with many names for this process but the term contract keeps coming back as the best use. The level of commitment it expresses, from both parties, sets the table for meeting and exceeding expressed expectations and guiding projects back on track when one or both parties fails to perform.

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John Jantsch

John Jantsch is a marketing consultant, speaker and author of Duct Tape Marketing, Duct Tape Selling, The Commitment Engine and The Referral Engine and the founder of the Duct Tape Marketing Consultant Network.
  • You’re spot-on. A contract can help the relationship / project to start out with both parties on the same page. This minimizes misunderstanding throughout the project, as well.

  • Jen

    I send out a very detailed proposal first. Then, if the person wants to move forward, we each sign a scope of work agreement/contract. I do put in all the legal stuff but it’s more about being specific with expectations. I want the client to know what he or she is getting and feel confident that I am taking the work seriously. As far as I’m concerned, clarity is always a good thing.

  • Steve Woodruff

    We should never assume that 2 people have the same understanding of words, or the same recollection of a (verbal) agreement. Written contracts won’t eliminate, but can definitely minimize, misunderstandings that can poison a relationship. Worth the time to make it all clear in a document.

  • Like Jen, I send out a detailed proposal first. I often break up a project into four distinct phases with all the details on what the client is actually getting out of this deal. I actually ran a business for about 10 years without doing this, but having this “conversation” up front has improved everything and is better for all in the long run.

    • That’s great Craig, but I can’t emphasize enough spelling out the client’s responsibility – a lot of the work I do depends upon them holding up their end of the bargain by doing tasks or making people available to do task so I spell that out as well.

  • That’s the purpose of having written contract, to clarify us and and be more accurate on the goal.

  • As a consultant I’ve always viewed the prospect of taking legal action against someone to enforce the terms of a contract would be like getting into a puking contest with a buzzard…

    For my business, the contract is more of a marketing and project management tool than legal document, and something we use for every engagement. Some of the key benefits we realize from our use of contracts include clearly articulating our understanding of the client’s needs, setting expectations for the scope of work from the client’s perspective, detailing the client’s responsibilities (hear hear!), demonstrating a level of professionalism/sophistication, and articulating how we handle matters of privacy and ownership of intellectual property.

  • Love this article, John. When I’m consulting and when my team implements marketing strategies, manages social media platforms, develops web sites, or performs other implementation work, because the work is technical in nature and payment comes in stages, we do a proposal and have a clear contract that states the deliverables, timeline, and payment schedule. When I’m coaching one-on-one, I typically haven’t worked with a contract, but my clients and I spend time in the initial session discussing our expectations. After reading this, I’m thinking that I’ve been too casual about coaching. Contracts are on the way!

  • Fascinating – your contract sounds like it helps with marketing too.

    Do you have an example (with private info redacted) you’d feel comfortable sharing?

    • Mark,

      Every one is custom so I can’t really give an example, but here’s the framework I start with

      Statement of Engagement

      Primary Objectives

      What We Need from You

      What You Can Expect from Us

      Communication and Confidentiality

      What We Will Deliver

      Project Timetable

      Results Review

      Fee Schedule

      Options and Additions

      • Thank you so much for such a thorough outline – very helpful.

        IMHO, you might reverse the order of ‘What We Need from You’ and ‘What You Can Expect from Us.’ My thought is that you’re telling the client what they can expect, then what you’ll need from them in order to provide the prior item. Tiny suggestion – work fine as you have it.

        • Thanks Mark – it’s actually a very intentional order – I can’t get them a result unless I get what I need from them first so I want to make that very clear – it’s a 50/50 collaboration.

          • Touché – as I live, I learn…

            Enjoy the weekend!

      • BH Dicaire

        Hello Mark,

        Sound to me like a Statement of Work, i like you rigor and your customers must appreciate it too.

        Can you elaborate on the Statement of Engagement item?



  • This is a great blog. In environmental consulting, we use contracts all the time too. One thing we find is that when a client seeks to negotiate whether, when and how he might have the opportunity to sue us, that is a client not worth having and we exit the engagement before entering it. In that connection, the contract tests the workability of the client.

    Secondly but perhaps more importantly, the contract gives us an opportunity to concisely state our understanding of the client’s needs and objectives. We call this “Statement of Understanding” and its always on page one. If we misapprehend or mis-state the problem need or goal, client feedback before signing can result in further beneficial discussion and a revised contract.

    And yes, contracts are administrative vehicles too, to help assure payment.

  • Debora Hood

    Thanks, John, for this affirmation. I, too, worked for many years without contracts, outlines or agreements in place, but find that my service agreements (I don’t call them contracts) which are based on in depth conversations with the client before getting to that point, give the client a strong comfort level that I really did hear the requests and wants. I also add just enough of the process to give the more linear client a feel for what we’ll be doing, without overwhelming the more dynamic client with too much of the ‘how-to’ info. With a bit of well-crafted legalese added, and both our signatures, we have an easily-understood service agreement, and, when needed, a binding contract.

    I haven’t had to pursue legal recourse often, but occasionally something goes south — agreement, outline and service commitment aside. When necessary, the document has resulted in successful court awards. Mostly, though, it helps the client and me stay centered and focused on the outcomes we’ve agreed to pursue, rather than getting caught up in the cycle of the ‘doing-ness.’

  • Bill Doerr

    John, I like that you’ve defined the ‘contract’ not as a physical means of securing legal recourse as much as a tool to facilitate communications between a buyer and seller of a professional service.

    In my experience, such an ‘Up Front Contract’ is imperative to avoid just the kinds of misunderstandings (and, uncomfortable feelings that follow!) that are so easily created when mutually understood and confirmed expectations are not made and accepted by all parties at the beginning of an engagement.

    Great post and excellent points!

  • Tom Schafer

    In reality, the essence of a contract is power and control. The wording of the contract becomes the structure of the document e.g. who does what, when, where, why, how. When stated in plain English, this has power in any civil dispute and judges love plain English contracts because it makes their job easier. Power also is illustrated in the professionalism conveyed to the client. For this reason, why waste time and effort on detailed proposals that usually serve for a prospect to take that information and use it as a bargaining chip with another competitor. Taking the points from the initial discussion with a prospect and using them in creating the contract makes the prospect commit to you, which is what you want. I’ve had prospects present detailed proposals to me and I’ve been able to turn them into clients while the so-called competitor shakes their head wondering what happened. The contract gives you control, which you want to maintain and also adds to the professionalism whereby the prospect looks at you as a true professional. Image is important in consulting and other endeavors, use it wisely and effectively. Contracts become power and control in the event the client gets cold feet and wants to opt out. The contract is the beginning and once the work begins to satisfy the needs/desire of the client, the time clock also begins and your resulting efforts need to be compensated, otherwise look for a job in a grocery store stocking shelves. In the words of Kevin O’Leary of The Shark Tank, “In the end, it’s about the money.” Contracts insure you get the money.

  • Kirsty Wilson

    We call our contracts ‘Engagement Letters’. Sounds less formal and all it means is we all start on the same page. No working relationship commences until one is signed.

  • Patrick Mahan

    Thanks John! Great advice for that all important task of managing client expectations. I like how you call it a social contract rather than legal contract. Like you said, often we are so glad to get the business that we fail to write a contract out of fear of scaring them away. But the way you’ve presented it here (as a mutually beneficial outline of expectations) makes the process more comfortable. You said you’ve had a hard time finding a good term to describe this process, so you settled on the word ‘contract’. I like the term “Scope of Work Agreement”. So when a client ask for something above and beyond the agreement, we can refer them to the document and say: “I would love to help you with that. However, as you can see, that falls outside the scope of this project. So we would just need to rework the terms of the agreement.”

  • gregschenksior

    I speak teach and train in this area and have a sample agreement happy to share email me schenkseminars.com
    I agree never ever work without an agreement and if start up or little credit get a retainer to begin.