External consultants can offer UK companies expertise in their field without having to retain all of their capabilities internally. External consultants can be appointed for the development of technology, marketing, design, strategies, compliance, or operations.
However, the appointment of an external consultant can involve various legal, commercial, and operational issues. An external consultant may have access to sensitive information, create intellectual property, or take on responsibilities that coincide with other workers or service providers.
Therefore, companies should think about the legal aspects of such a relationship before commencing the work and during its performance.
Establish a Clear Consultancy Arrangement
It is important to have the terms and conditions for a consultancy engagement spelled out before the work begins. It would typically involve the scope of services, deliverables, applicable fees, time scales, and responsibilities.
A written agreement would also cover those issues that may become material during the course of the engagement or subsequently, such as confidentiality, intellectual property, termination, and the permissible uses of business information.
The right type of contractual arrangement depends on the facts involved. A consultant hired to complete a project would need a different contract from one hired to provide ongoing strategic or operational advice.
Businesses must also look beyond the contractual terms and think about the true nature of the relationship. How an individual performs his/her work would matter in determining what sort of work arrangement he/she is in.
Protect Confidential Information
Commercially confidential information, including information about customers, finances, internal systems, product strategy and more strategic information may be provided to external consultants.
It will be necessary to evaluate the information that needs to be disclosed in order to deliver the service contracted, but also to limit any information that is not needed.
Also, it will be necessary to think of what happens when the need for access to certain systems or information no longer exists and to review that.
The business will have to include confidentiality agreements within its contract. This will mean that it will need to identify the information that must be kept confidential as well as the reasons when disclosure may be allowed or even necessary.
If there is personal data, the business will have to think about the consultant’s responsibility with this data.
Clarify Intellectual Property Rights
IP issues can arise when a consultant produces IP in the course of consulting activities.
The company should understand the rights that it needs in relation to any products created for it and make sure that the relevant agreements cover its needs. This can prevent problems in connection with the use of such products after the consulting engagement is completed.
Creative assignments can raise specific IP issues. For example, when a company engages an outside expert to create marketing material or design a logo, the company needs to be clear on the rights that it would have in using, reproducing, altering or distributing that product.
There could also be an issue of IP developed specifically for the company in comparison with existing materials, software, methodology and other IP rights held by the consultant.
Define Responsibilities and Authority
In a consultancy engagement, an external professional will be able to get deeply involved in the operations of the business. He/she can attend internal meetings, engage with customers or suppliers, or be responsible for certain processes.
It would be important for businesses to set the boundaries of the scope of decision-making for the consultant. It could be about finding out which decisions can be made individually, which ones need internal approvals and whether the consultant has the authority to commit the business.
Such reporting procedures will help clarify the role of the consultant for other staff members.
Review the Relationship Throughout the Engagement
Consultancy engagements need not necessarily be fixed. The project may be extended, roles may change, or the consultant may need access to more systems and information.
In case of any significant changes to the relationship, the business needs to assess whether the current arrangement is still appropriate. In particular, this might cover the scope of work, fees, confidentiality clauses, access, and intellectual property agreements.
It is equally important to properly handle the conclusion of the engagement. In certain cases, this may be done by withdrawing access to systems, returning any documents and equipment and dealing with ongoing confidentiality and intellectual property issues.
Electronic tools can help with some of the documentation procedures. There are several electronic platforms that provide features that may prove useful to a business handling contracts and other documents:
LawDistrict
LawDistrict offers a wide range of document templates that can be customized by the users in their process of creating their documents. This site’s consultancy agreement template may serve well in case businesses hire external consultants, because they will have the chance to record all issues such as the terms of payment.
- Legal and business document templates
- Guided document creation
- Customisable agreements
- Electronic signing and document storage
DocuSign
DocuSign allows for electronic agreement of documents, and also allows for management of documents during the signing process. The capabilities offered by DocuSign may especially be applicable where the consultants and other businesses signing agreements are at different places.
- Electronic signatures
- Signing-status tracking
- Automated workflows
- Audit trails and completed-document records
Adobe Acrobat
Tools that Adobe Acrobat offers include creation, editing, review, and management of PDF files. These can be useful to businesses while preparing contracts, reviewing amendments, commenting, and organizing documents.
- PDF creation and editing
- Document review and commenting
- File conversion
- Document sharing and organisation
PandaDoc
PandaDoc offers the ability to create documents, approve them, and also electronically sign documents using one tool. Companies can leverage templates and workflow tools to ensure that agreements are created, approved, and executed.
- Reusable document templates
- Electronic signatures
- Approval workflows
- Document tracking and notifications
Rocket Lawyer
Rocket Lawyer has several types of document templates along with tools that are available online to create, sign, and manage documents. The system is well suited for those who have frequent documentation needs and need to maintain records of the agreements made.
- Legal and business document templates
- Online document creation
- Electronic signatures
- Document storage and management
These channels can facilitate the creation and processing of legal and business documentation, but the employment of technology does not on its own define whether or not the agreement is fit for purpose in any given case. In cases where things get complicated or where the legal situation is unclear, companies may require proper guidance from professionals.
Conclusion
While external consultancy services may bring expertise and flexibility, such advantages may need to be weighed up against legal and commercial risks that could arise due to involvement of third parties in business activities.
In regard to UK businesses, particular emphasis should be placed on contract terms, confidentiality agreements, intellectual property rights, access to systems and information, and powers of the consultant.
Discussion of these issues from the very start of the cooperation and their regular review throughout the process may increase transparency for all parties involved and contribute to securing the business’ information and intellectual property, and other assets. An appropriate approach to this issue may therefore become an important element of risk management.
