I present my clients with simple written agreements to record the details for each of my speaking and consulting engagements. These usually work fine, but occasionally the client will push back on specific terms. Sometimes, the client’s legal department ignores my simple agreement and sends me a massive document to sign.
But I don’t just sign that contract. A contract is naturally written to the benefit of the entity that created it, so you need to watch out for any terms that are unacceptable to you. I read the contract carefully, looking for anything that makes me uncomfortable. It turns out that many of the terms in a boilerplate contract can be adjusted if you aren’t happy with them. This article (adapted from Successful Business Analysis Consulting) describes some typical categories where you might need to negotiate with a client to reach a mutually acceptable agreement.
I’m in the midst of such a negotiation this very day. So far, this client is proving quite flexible on my requested changes. For instance, the client’s standard services contract demands that the consultant take a drug test, something I’ve encountered only once before. I explained that I don’t take drugs — and I don’t take drug tests. The client dropped the requirement. Sometimes you just have to ask.
I’d like to believe that reasonable adults can find a way to reach an agreement that they can all live with. Sadly, that’s not always true. A consultant friend of mine was once required to sign over to a new client all intellectual property rights to anything she was currently working on and anything she’d ever work on in the future. She explained why this demand was unreasonable, but the client refused to change it. Smartly, my friend walked away from that gig.
Start at the Top
Whether discussing an engagement or finalizing terms, it’s best if you can work directly with the client’s key decision maker. Otherwise, all conclusions are tentative, and you can waste a lot of time on discussions that do not lead to fruition. Unfortunately, the decision maker rarely makes the initial contact with me. It can be difficult — or impossible — for a consultant to reach that ideal decision maker to expedite the negotiations.
There are several reasons to negotiate high up the food chain. A senior client can help keep a project from becoming a technical success yet a political failure. It also helps you understand what would constitute a win for upper-level management, so you can keep your focus on that objective. If a high-level manager wants to bring you in, it’s more likely that he will go to battle with any resisters in purchasing or legal and make it happen.
Recently, a new client contacted me about providing training in software peer reviews across his organization. He had seen the benefits of peer reviews in his previous company and wanted to bring them into his new organization. His management seemed enthusiastic. We had multiple email and telephone exchanges, and I wrote a proposal with several options for them to consider. My revenue from the gig could have been substantial. My contact said he was just waiting for his CIO to approve the engagement.
After I didn’t hear anything more for several weeks, I followed up and learned that his company now had a new CIO — the whole thing was off. Had I been able to work directly with the first CIO early on, we might have reached an agreement quickly. Instead, my revenue turned out to be zero. It’s frustrating, but this is a common outcome.
The most obvious negotiable term is your fee. I find that clients don’t challenge this as often as you might expect. I have standard rates for certain services, but there’s some flexibility in them. I’ll offer a nice discount if a client opts to acquire a site license for some of my e-learning training courses in addition to having me present a live class. I’ll also drop the price if the client wants a combination of consulting and training services or requests multiple presentations during the same trip.
Once, a prospective client asked for a discount of several thousand dollars off a two-day training course simply because my quote exceeded her budget. She said she hoped I would knock the price down just because I’m such a nice guy. Sorry, I’m not that nice. I wasn’t willing to do the job for the price she suggested, and we never did come to an agreement. That’s the way some negotiations turn out.
I try to sell my services on the basis of value, not cost. Most of my work as an independent consultant has involved delivering training on software requirements and business analysis. If I sense that my fee is making the client hesitate, I suggest they think about the price their organization is paying for the way their teams are operating today. That is, what’s the cost of not bringing me in to help their teams learn how to work in more effective ways?
I encourage my clients to think in terms of the potential return on investment they might achieve from my services. A software team doesn’t have to go very far wrong to waste a lot of money on rework because of requirements problems. If I can teach them how to define and communicate requirements better, they can recoup the cost of the training quickly.
Suppose the fully burdened cost — salary, taxes, benefits, overhead — of each business analyst in the client company is $125,000. If the company has eight such employees, and if you can provide them with knowledge that could make each of them just five percent more efficient for the next five years, that works out to a cost savings of some $250,000 (not accounting for inflation). Wouldn’t it be worth it to the company to spend, say, $20,000 to bring you in to provide those capability-enhancing services? Companies should be thrilled at a potential ROI like that. Getting clients to consider the value that engagements can provide — not just their cost — can help turn proposals into contracts.
Cancellation or Rescheduling
My speaking agreements always include a fee for canceling or rescheduling the event. My premise is that I’m committing a certain block of days for the client event, plus preparation and travel time. Should the client decide to change the agreed-upon date or to cancel the event entirely, I probably can’t re-book that time slot with another client on short notice. Therefore, I ask the client to make a similar commitment to me in the form of agreeing to pay me 20 or 25 percent of the price as a cancellation or rescheduling fee.
Some clients balk at this. Sometimes we negotiate a lower such fee. Or, we might put some time bounds around it. Maybe no payment is due if I can reschedule at no cost to me or if they cancel at least X weeks prior to the event. If rescheduling it doesn’t inconvenience me or cost me out of pocket, I will generally waive the rescheduling fee. But I always insist on including some language about rescheduling and cancellation fees in the agreement. If the client won’t accept that, we don’t make a deal.
One client tried waiting until immediately prior to the event date to sign my speaking agreement. She wanted to minimize the likelihood of having to cancel or reschedule, thereby incurring a fee. However, my policy is to not commit specific dates to a client until I receive the signed speaking agreement. I felt no qualms about giving that client’s requested dates to another who was willing to make the commitment. I didn’t appreciate the game this client was playing with me. That gig ultimately fell through.
Some contracts claim unreasonably broad rights for the materials used in a training class. They might stipulate that the client has a perpetual free license to use the class materials in any way they wish. In principle, this right could extend to unlimited distribution of the material throughout the company, teaching the class themselves within or outside their company, posting the materials publicly on the internet, or even sublicensing the courseware to other companies.
This is the first clause I ask to remove from every such service contract. My clients do not have the right to use my training materials for any purpose other than the courses I am presenting myself, unless we execute a separate licensing agreement. I’ve never had any problem getting this clause removed.
Contracts coming out of the legal department stipulate the various types of insurance the consultant is expected to carry. If your company has multiple employees, you might be required to provide workers’ compensation insurance coverage. To my understanding, though, sole proprietors with no employees are exempt from carrying workers’ comp. Make sure to check your state laws on this.
I do carry business liability insurance, which offers some protection if, say, I injure a student with my laser pointer or damage client property with my rental car. If the coverage amounts stipulated in the contract are higher than I carry, I request to lower those coverage expectations to match my policy limits. The clients’ legal departments have always approved such requests. Some clients request to be listed as a named insured on my business liability insurance policy. This is easily accomplished with an email to my insurance agent.
Boilerplate contracts sometimes request types of insurance coverage that I don’t carry because they’re not necessary for the sorts of engagements I perform. Clients have always been willing to remove such requirements when I explain this.
A client once required that I undergo a criminal background investigation. I have no objection to that (so long as they don’t find out about all my secret offshore bank accounts or the yachts), but they wanted to charge me $49.79 for the privilege of being investigated. I persuaded the client to cover this unexpected cost.
That’s the way most negotiations go. I agree to something the client is requesting, but then I issue a request of my own of comparable magnitude. We both feel as though the other party is being reasonable and flexible, which makes us amenable to reciprocating.
That same client also asked about pulling a credit report on me. Also fine, if peculiar, as they would be paying me money, not the reverse. However, I have security freezes on my credit accounts with the three major consumer reporting agencies (Experian, Trans Union, and Equifax) as a protection against identity theft. Until late 2018, if someone needed my credit report, I would have had to pay ten dollars per agency to temporarily unfreeze my account. I asked the client to pay for that also, but they decided they didn’t need to do a credit check after all. What a surprise. Fortunately, freezing and unfreezing your credit file is now free of charge throughout the United States.
Each party involved in a negotiation strives to adjust the outcome in its own favor, but they should also respect their counterpart’s legitimate needs. We all have limits to our flexibility. If the people with whom we’re negotiating insist on finalizing the terms beyond our tolerance limits, we won’t reach a mutually acceptable outcome. You won’t win every negotiation, but you might be able to do better than you expect just by asking. I will sometimes concede a minor point to resolve something I feel more strongly about in my favor.
For more on effective negotiation, I highly recommend Getting to Yes: Negotiating Agreement Without Giving In by Roger Fisher, William Ury, and Bruce Patton. This classic book provides excellent advice on how to successfully negotiate from an understanding of each party’s interests, rather than by passionately defending immovable positions.