Use different types of major contracts

There are a lot of different types of contracts you’ll deal with as a consultant. These include master services agreements, services agreements, letters of agreement, letters of intent, statements of work, task orders and purchase orders. Each of these has a specific purpose and contains or excludes clauses that govern the relationship between you and the client. Know the differences and when you should use each of these types of contracts. Master services agreements, or MSAs, are usually long term. They run from two to five years. They govern all elements of your relationship with a client. They’re usually renewable at the end of the term and they function, typically, at the corporate level. They cover all business units and functions at that client. They include things like the nature of the relationship, payment terms, confidentiality, liability, intellectual property and client-specific policies. The MSA process is lengthy and it can be painful, but it’s definitely worth it. Usually, big companies have a standard MSA that you can make some modifications to. The good news is, once an MSA is in place, future projects are run through task orders and statements of work, or even purchase orders. Getting an MSA in place makes contracting for future projects much easier. Services agreements usually govern an individual project versus a comprehensive relationship. If you sell another project in the future, you’re going to need to do another services agreement. These include things like the nature of the relationship, payment terms, confidentiality, liability, intellectual property and client-specific policies. A services agreement takes less effort to get in place than an MSA, and it’s appropriate if you won’t be doing multiple future engagements. If you do plan on doing some future work, consider trying to get an MSA in place. A benefit of a services agreement versus an MSA is they’re usually smaller, they’re easier to negotiate than the MSA because they’re less comprehensive in scope. That sometimes means you can use your own standard services agreement versus having to use the client’s preferred one. The result of that is the agreement can have more favorable terms to you because you’re the one who drafted it. MSAs can help you build that long-term relationship with a client. They take a lot of time and effort, but they’re worth it if you’re doing a lot of future work. If you don’t plan on future work, look to do more of a services agreement approach.