Consulting Contract Pitfalls
I have worked with a number of consultants who, long after the consulting agreement has been signed and after the work has been completed, come to me for help in collecting their fees because the client has failed to pay. One of the biggest hurdles facing consultants in this situation is the amount of attorney fees that can be run up in chasing down the deadbeat client. One way to ameliorate this problem is to include a provision in the consulting agreement that specifies that, in the event of a lawsuit or claim under the agreement, the prevailing party can recover his or her legal fees. This provision may or may not stand up, but it puts the consultant in a much better bargaining position.
These and other considerations are contained in a handy checklist, which can be found here:
http://www.bregmanlaw.com/CM/Articles/Articles71.asp
posted by Geoffrey Hervey @ 1:44 PM
1 comments
1 Comments:
Geoffrey,
I read your squib on the difficulty some consultants have getting paid with great interest. Timing, frequency, and even IF the consultant will be paid is always a consideration with start-up and under-capitalized entities.
I agree that every agreement should have an attorneys fees provision, but you rightly point out that that still is a problem if a consultant has to go out-of-pocket to his/her attorney until fees are recovered.
I wonder if you've considered adding a "confession of judgment" provision as well. Such as provision would in theory eliminate much litigation time and expense in "proving up" the existence of the contract as well as damages. Does Maryland law permit confessions of judgment clauses in personal or professional services contracts? If enforceable, does the concept make sense if it might have the effect of "scaring off" potential clients?
RPC
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