IP Provisions in Consulting Contracts – Part 4

By Debby Winters

Consulting contracts can be for work performed by an outside service provider or consultant, like market research, product design, product development, software implementation, employee benefit plan administration, and the list can go on. The consultant can begin to negotiate the consulting contract once the project proposal is accepted. Many times these contracts, as prepared by in-house counsel, are one-sided with intellectual property provisions that can be a disaster for the consultant with regards to future work. Believe me, I’ve been that in-house counsel drafting these contracts. The goal of in-house counsel is to protect your company but looking at these contracts from the consultant’s viewpoint, the contract can limit their ability to bid for and perform future work. In my last two blogs on this subject,  we looked at ownership of the work product and confidentiality provisions. This time, let’s look at the non-solicitation provisions in consulting contracts and suggests some possible approaches for workarounds.

Non-Solicitation of Employees and Contractors

Always keep in mind that much of the intellectual property used by a consulting firm resides in the brains of its personnel. Many standard services contracts prepared by large entities will contain provisions prohibiting the consultant from soliciting and hiring the employees and other contractors who work for the customer. If you think about it, this isn’t an unfair request, because your consultant client will probably be interacting with hard-to-replace, specialized customer personnel. But the same rules should apply to the consultant’s personnel, as good people are hard to find, particularly in certain specialized consulting fields, and your client’s employees and contractors should not be raided by the customer.  If the form contract contains a one-sided non-solicitation clause, propose a mutual one. If the contract lacks a non-solicitation provision, be sure to add one in favor of the consultant.

Next time we will talk about dealing with large entities that may have legal departments that you have to deal with.


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