Ensuring eSignature Lawfulness for Consulting Agreement in Australia

How to eSign a document: e-signature lawfulness for Consulting Agreement in Australia

welcome to the contract teardown show from law insider where legal experts tear down contracts from some of the most well-known companies and high-profile executives around the world in this episode arthur baker talks about contractor agreements that don't over complicate things so let's tear it down arthur baker welcome back to the contract tear down show how are you today sir i'm fantastic mike thanks for having me back on the show i'm glad to have you back today because this is personally relevant and we know it's all about me we are talking about a consulting agreement let me share this with the folks at home this is an agreement between a company called roll up shutters and shades uh spelled w-r-o-l which is super original and uh the park few group uh what is this document before we dig into it arthur when are we going to see this kind of thing yeah so thanks mike we we live in this consulting world nowadays right and there is no form or market consulting agreement you don't really even know what that consultant's doing until you actually start taking a look at the agreement um but a lot of times when you're a business and engaging these consultants it's on their form you may think it's for a low dollar value or a low risk and you're in this decision mindset of all right how do i handle this and i want to just cover some pro tips of whether you can make an informed decision and sign as is whether you might push for some red lines or minor edits or whether you want to push for your form or some other form i think in a lot of these situations people tend to forget that you know your relationship is a critical unwritten deal term and they might over lawyer these documents and then unsurprisingly the service provider is not so fun to work with yeah it's so interesting because consultancy is like normal in big business but to your point we're in this world now where fairly local businesses are using consultants as a way to scale and grow and be competitive uh with larger businesses so i'm a fan um you know my book lawyer ford talks about this for lawyers like how do you use other providers uh in your law firm so i think this is relevant and interesting for a lot of people including me now that i have a consultancy so um let's dig into it so this document uh give us the background to it um you were talking about you don't want to over lawyer so talk to us about the relationship between these two parties and some background principles that you use for filtering through a document like this right so first and most important if some of the clients i work with small medium-sized businesses as well as some larger companies you really want to understand so what is this consultant doing what is the purpose for this engagement and understanding what their current relationship is like is it positive and there are other transactions that they've worked on with them for varying sizes and deals and they're ongoing is it negative they recently had a bad experience or they changed the deal terms and now it's the first time they're looking at the consulting agreement um or is there no experience they don't really have any relationship with them all of that is relevant when you start getting an understanding of what services are they supposed to provide what's the current tenor of that relationship because if there's as we look at this the parkview group it says that they are have business expertise in the areas of marketing and finance but we'll get into that later what service they're really providing but they might be providing all of these services for all of your other co-business colleagues and other associates you know and been doing a great job so you have that relationship strength maybe they play golf at your country club and there's a lot of social capital that you can trust in them which can allow you to take a little bit more of a informed decision and risk in the document itself yeah it's interesting because you're talking about using contract as a proxy for trust but if you already have a trust relationship in there and and social levers for trust like is the contract actually getting in the way of that trust relationship but people do want to be you know to your point about pro tips people do want to go pro they want to be more professional in their relationships the big question is does this do it so let's start with number four which is the monies uh it says that the company is going to pay the consultant for services for a non-refundable 500 retainer each month uh for uh and then 200 per hour what do you think about the way they're handling money is this very professional the way they're doing this right so to start with a pro tip on that i mean a lot of littles can make a lot right and what our natural instinct a lot of my clients the first thing we do when they get the agreement is well they said it was going to be x dollars they thumb through it try and find where the cost provision is and see what it says and whether it's parallel and this on its face a 500 retainer and 200 an hour we don't really know if that's going to be a lot of money if we don't know how many hours of services they're going to be right so you take a look at this and it's got 500 retainer on the first day of each month under section 3 you see that there's a 12 month term so the retainer alone at 6 grand for the year you look at 200 an hour well how many people are working at 200 an hour it doesn't say there's no key personnel there's no limit of individuals there's no limit on the hours per week um so just thinking of one individual working 40 hours a week at 200 an hour let's say he gets two weeks off vacation but he's a consistent consultant work with your company that's 400 grand for the year so when we look at this and on its face might see a 200 or a 500 and think it's a small contract 406 thousand dollars that's not necessarily a chump change for a lot of people right and the whole you know one of the main reasons that you're getting a consultant in the first place is you're trying to de-risk the hire right the the acquisition of that talent you're trying to de-risk it so not being clear on the money does the opposite the other thing you're trying to get out of a consultant versus an employee who you're paying for attention is specificity and deliverables i'm looking at two under services and i i'm not seeing a lot of specificity what do you think about the way they've drafted section two here uh so two is one of the stereotypical consulting agreements i see where you remember uh uh office space and the bob's the consultants come in and they're talking to milton of so so what it is that you do here exactly and it's a great movie love it watch it if you guys haven't but i always have that in my head when i'm reviewing like the services schedule and when i read this i'm like so what is it that you do here parkview group and it's a whole lot of maybe yeah if you look at the first sentence on the lead in which the consultant services may include but will not necessarily be limited to that's a little backwards um they're trying to set up a statement of a non-exhaustive list of actions they'll do but what i like to see when i'm getting a service provider is exalt services will include a b c and d but aren't limited to those uh this is that that's a a mayor that you may want to change if you were to revise this um and then even further we're talking about deliverables there aren't any clearly defined deliverables like looking at section 2-2 they have them developing marketing plans is that providing them what's the understanding and like we started earlier of having a discussion with your client understanding what the real deal is a lot of times they'll get a big fancy proposal that has all of these detailed items and super sexy marketing positions and a five-year growth chart and all that jazz that's why they're hiring this consultant but you look at the actual agreement and it didn't actually make it from the proposal into this so another pro tip you want to think of on these services is you don't want to assume that all the deal points that you thought were agreed to made it into the contract yeah and i'm wondering even if there were deliverables as i look at this agreement i'm not sure who gets what i mean presumably you can't be a consultant without having a four-part matrix so i can imagine this person who works for this consultancy at some point walking into this shutters and blinds company to a white board and writing a four-part matrix that this person has worked on over the years well does that four-part matrix you know that you created to teach this particular company does that now belong to the company is that yours even if there were deliverables through this time it's not clear to me who owns it what do you think about the the ip rights that are in this document or not uh heavy on the or not right so you know a pro tip you want to think about is you want to make sure you own what you want to own and when you look at this document unsurprisingly when it doesn't address specific deliverables it doesn't also include any specific assignable i p rights or ownership of those deliverables a lot of times when a service provider is creating deliverables they're incorporating some of their existing ip or other items into them uh so that it's often a very heavily negotiated or detailed provision so when i saw this agreement of just three pages very simple right uh it's not problematic that it doesn't identify deliverables or ip ownership if there is truly no deliverable or ip at issue so it's important to think when you're thinking of the services you're going to receive being thoughtful about what what aspects of this might actually contain a deliverable and looking at this it would be having a discussion with the client of what are these marketing plans what are these corporate financing activities yeah you think about you might create like a strategic plan for where this company could go over the course of a year well if that if you own that if you as the consultant own that now you can go teach that same sort of strategic framework to another company but if that belongs to the company that you just advised you know that's a huge difference in terms of who has the long-term value and so probably important if you're going to have a document like this to be clear about it number three on termination i'm also thinking about if i've done a bunch of deliverables and i've done a bunch of work for you and it's on my hard drive and it's in our emails and it's on your whiteboard and it's in my head this termination talks about hey at the end of 12 months you know we're going to keep going um but you've got to give 30 days no it's like the end of a lease or something give me 30 days notice right but there's nothing in here about what termination actually looks like are you taking your box and going home or or what that what do you think about ending a term on an agreement like this yeah so one example i'd think of a termination problem that everyone for better words could probably relate to or understand is thinking of being single going on a first date with somebody might not work out you each choose not to see each other again it's not a very difficult relationship to unravel but if you compare that to a 10-year marriage you own a house together have a couple kids maybe a boxer a couple dogs a boat some debt on a 30-day notice that that that's not really something that's an easy smooth transition that's there's a reason why there's a whole family law attorney uh network and industry and i think it's important when you're thinking of the consultant you're hiring is it a first date kind of situation or is this a marriage and being mindful of do i own all of the you know the couch and materials in the house since my name or did we go to ikea together and we split it and this is going to get real confusing yeah i'm thinking about like to your point on that the scale the scale of the legalization of uh you know how much lost stuff you're bringing into a relationship you know sometimes you see contracts like this that my wife and i our first date was we went to taco bell and it's almost like people are creating i know super romantic people are creating a document to say who gets to have the wrapper from the burrito when it's just like man we just went on a quick date and to your point with this this is like a long-term there's a lot of advice being given but right i i want to be mindful of what people are trying to do here and i'm going to read between the lines here and ask you what to do about this i'm looking at this is this is probably a couple buddies in a town and they know each other like you said from the golf course they hang out and they want to formalize a little bit this relationship where you know joe is just like giving advice to sam over here over golf and and now they want to formalize it and create some kind of structure how do you if you want to be a consultant being a consultant is like by nature wavy you know it's a lot of it is unpredictable how do you use contract to build in the flexibility that you want but also the protection that you want is that a longer contract is that a shorter contract is that no contract is that just two guys shaking hands uh uh you know two people a man and a woman at a restaurant who like each other you know shaking hands and saying let's talk about this later how do you maintain both flexibility and protection right so uh before i open my law office i worked in-house for a large global real estate services company where unsurprisingly our primary revenue generator was services so we were the service provider consultant and i also negotiated a variety of consultant agreements where we were the recipient of services one even negotiated a magician's services agreement magical experience um let's see what you did there that was i tried i tried to get a little bit yeah and um it's important to just think through the practical realities of when there's relationship separates who's more likely to have more stuff or actions outstanding and typically the service buyers just want their money and if there's an outstanding payment framework uh is it clear and expressed that all amounts you know payable to that date are still to be paid uh but more often it's usually the company receiving the service is that they want to have a finished deliverable they want the intellectual property to be formally assigned and finalized um so it's it's always important to think of which position are you thinking from and then also just what's the nature of the services in the relationship so in the overall with this agreement if this truly was meeting at the golf course they know that one of the contacts that parkview group has worked with a bunch of the other people at the country club um i would look at this agreement and feel a little unsure with some of the vagary of the services but it's talking through with the client understand what is it you're really getting did you clarify and if there weren't any deliverables i feel comfortable there's a back end termination and if you have a relationship where you're probably not going to try to ramp up you know 20 or 10 individuals putting in 40 hours a week for one week i mean that alone could be 80 grand in a week with no right to dispute that bill but again trying to not overload a situation to where the services are now not going to be great the relationships tend i think this is agreement where it might just reflect that country club handshake and it's about having that informed decision of that you went forward knowing these risks or that if you brought them up with the parkview group this consultant that you're actually on the same page because sometimes they might say oh you didn't actually pay for that fancy five-year plan that's an extra 20 grand right yeah and i could say as i mentioned earlier this is relevant to my business and to to what i'm dealing with and for what it's worth i am sort of at the point where i'm combining this with a conversation i had in another episode with john grant and an agile contract and a bit of a hybrid arrangement where the consulting stuff that you want to be flexible you want to have the ability to pivot both in terms of your advice and in terms of what your deliverables are have that in the contract that there's you know agile there's flexibility so i would encourage you guys to go uh and listen uh or watch that episode but also for the sake of the the the buyer the person who is buying the services they do want deliverables so use that as an opportunity to have this sort of hybrid arrangement where you can get detailed in this way so that for what it's where that that's my solution is trying to to build in both because we it i think it's important i think to your point about uh going pro and and these companies that are probably historically have built on handshakes on a golf course it's time to go pro it's time to to improve your processes including sort of the legal relationship so i appreciate you sharing that arthur for people who want to learn more about your practice and get in touch with you in florida what's the best way to do that yeah best way is probably by email or linkedin it's arthur baker my office is concord advantage legal based here in tampa florida you can email me at a baker at concord advantage legal dot com and better yet just add me on linkedin that's how we connected originally so arthur baker concord advantage legal and always happy to chat perfect we'll make sure that's available at the episode information over at loincider.com resources and if you want to be a guest on the contract tear down show just email us we are community at law insider.com we will see you all next time thanks again arthur have a great day thanks so much take care thanks so much for tuning in to this episode of the contract teardown show from law insider if you're enjoying the show please feel free to rate subscribe and leave a review wherever you listen to your podcasts that helps others find the show we really appreciate it thanks again for listening and we'll catch you in the next episode