When a time-sensitive project or staffing need requires you to quickly bring in a consultant, it’s easy to give the contract less attention than it deserves. But that time saved is rarely worth the risk of an expensive, time-consuming legal problem, especially if a more careful reading would have revealed a red flag.
More than once, we’ve heard stories of life science consulting firms locking their clients into agreements despite a consultant turning out to be the wrong fit for the project or role. When things go wrong, and work products can’t be delivered, the pain of paying out a contract under the threat of lawsuit only gets worse when delays and re-hires add even more stress and expense to the equation.
To help prevent contentious situations like this, we spoke with Attorney Jessica E. Murphy, an experienced civil litigator specializing in business disputes involving supplier and vendor relationships, to identify a few of the often-overlooked components to watch for when approaching any consulting contract.
While the items we identify here are certainly not the only things to pay attention to in a contract, the issues associated with these areas commonly present themselves through red flags to be on the watch for.
1. Term and Termination
Term and Termination provisions offer details about the duration of the contract.
- How long is the contract?
- Can you get out of it? If so, for what reason?
- Does a breach of contract expose you to the risk of remaining “locked-in” for the entire term—potentially forcing you to pay for unrendered services you’ll likely need to pay for again with a different firm?
While these provisions may be highly dependent on the nature of the work, be sure you understand if and how possible situations might be handled in the event of a potential work issue.
2. Transparent Deliverables, Timelines, and Costs
A contract may refer to deliverables as “Benchmarks,” “Objectives,” “Performance,” “Output,” or a similar term. No matter what it’s called, there should be a provision that clearly establishes what you will get and when you should expect to get it.
With consulting or contractor arrangements, look to see if the contract is transparent about who, specifically, will be assigned to the project. If resources aren’t named when they ought to be, it may present some risks you’ll likely want to address with the firm proactively.
If work products are time-sensitive, be sure the contract details any critical timelines in as much specific detail as the project demands.
Costs should also be clear in the contract. Consider the following questions:
- Are there deposits and retainers required?
- What type of expenses will you incur?
- Is the fee commensurate with the consultant’s expertise and experience?
3. Warranty or Guarantee
While warranties or guarantees are somewhat uncommon, these provisions offer clear recourse if specific deliverables, performance goals, or other conditions aren’t met. Such a clause could also be non-specific, using terms like “for any reason” to enable clients to change or sever agreements if they’re dissatisfied with the person or team delivered, but don’t have a tangible deliverable or performance problem to point to.
Since these are not commonplace provisions, their absence isn’t necessarily a “red flag.” Rather, their presence may be a welcome surprise—potentially signaling a willingness to resolve problems if they arise—something that tends to come with the territory in consulting.
“In my experience, firms that offer full guarantees know that they are going to do the job right and understand that things don't always work as expected. They're the firms who will say, ‘it doesn't matter if it doesn't work the first time. If there's something wrong with it and you don't like it, we're going to fix it until you're satisfied.’ Of the companies I work with that take that approach, it has clearly been borne out over time.”
— Attorney Jessica E. Murphy, Mirick O’Connell Attorneys at Law
4. History of Litigation
While it’s outside the written contents of a contract, another essential step in understanding whom you’re working with is determining whether or not a firm is particularly litigious or has been subject to litigation from others. In this case, looking back on past legal actions the firm has brought or received can be a helpful indicator of what to possibly expect yourself.
Today, online search tools make it relatively easy to check civil dockets in many states, and all federal dockets are available to access and view.
Here are some practical tips for looking into a firm’s legal history:
- Locate state cases by searching the state court dockets where the company is located (if possible). Some states offer a public docket search for cases. Others do not. The National Center for State Courts (NCSC) provides a directory of available search tools by state here.
- Locate federal cases using the Public Access to Court Electronic Records (PACER) Case Locator or other tools. The PACER Case Locator enables you to conduct nationwide searches to determine whether or not a party is involved in a federal case. Searches performed on sites like Justia may also surface cases.
“If you're going to enter a large contract, which is common in consulting, it’s important to determine if a company has been the target of litigation in the past. This could indicate that they struggle to meet their performance expectations or run into issues drafting contracts. Similarly, if they have a track record of suing their own clients that obviously doesn’t bode well either.”
— Attorney Jessica E. Murphy, Mirick O’Connell Attorneys at Law
Keep in mind that an attorney or private investigator can take on this work as well.
5. Jurisdiction and Venue
In this context, jurisdiction pertains to which judicial district an entity is subject to suit in. While laws differ from state to state, many jurisdictions stipulate that you can sue, or be sued, anywhere you do business. If that business is delivered remotely, which has become common during the pandemic, it may complicate this legal question, possibly creating some risk that is often best dealt with through a proactive conversation with the vendor or with a skilled attorney.
While state laws may permit remote work without additional risk, the contract could be written to create a risk, making it a critical provision to be aware of.
“If you have a remote work contract with someone in California, could you subject yourself to suit in California just by conducting business remotely? Maybe not according to state law. But if the contract says that you're subject to suit in California, that's a big red flag that could open the door to an expensive liability risk.”
— Attorney Jessica E. Murphy, Mirick O’Connell Attorneys at Law
A Couple Simple Reminders
Here are a few general points to keep in mind at the outset of any prospective consulting engagement.
- Get a copy of the contract in advance. If you’re thinking about doing business with a company, make sure you know what terms you’ll be subject to in advance.
- Carefully read and understand the contract in full. This point seems obvious but is routinely ignored. Don’t assume a dense contract is necessarily “good” or “bad.” Some of the best functioning contracts don’t happen to be written in plain language. If it’s tough to understand, first ask the company for clarity and then get independent legal advice if needed. In general, a company should be able to clearly explain any part of its contract.
Depending on the details of the contract, and especially the timing of the services rendered, it’s possible that an overlooked detail could end up turning the agreement on its head.
Some parts of a contract, such as indemnification provisions, are naturally hard to understand and often deserve the trained eye and expertise of a legal professional who can offer important guidance depending on the context of a given agreement.
Our Commitment to Contract Transparency
At The FDA Group, we make a point of making every contract as transparent, easy to understand, and client-focused as possible.
Here are a few things to expect in any of our contracts:
- A Total Quality Guarantee: Simply put, if you are dissatisfied with any service for any reason, we will provide you with a full refund. No company should be locked into an agreement that isn’t working.
- Named resources: We clearly identify each person designated to work on a project or as an extension of your team.
- Clear timelines and costs: We know the importance of executing projects on time and on budget. You will receive clear details on each deliverable.
Need a reliable life science resourcing partner?
Contact us today and join the thousands of life science companies executing their projects with The FDA Group.
