Planning to Hire a Consultant or Freelancer? Protect Your Business First – Part 1

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As mentioned in my previous article, when hiring a consultant, there are several nuances to be aware of. In this article, I will address two specific items: IP and exclusivity.

Protect your intellectual property.

Consultants are brought in as an investment in your business’s development. To that end, they are, by nature, conceiving and presenting new ideas. They can be anything from branding, to technical inventions, to methodologies, to HR solutions. If it helps improve the business, great. You would hope that their ideas are efficient and effective, but, you must ensure that all of the newly devised materials and methodologies are left with you when they leave. The consultants must have no claim to their formulations. All intellectual property, of any kind, should, upon conception, be assigned to the employer. The consultant’s work is what’s termed a “work made for hire.”

Watch out for “exclusivity.”

Additional prudence is necessary when the consultant hands over their own in-house contract as a starting point in negotiations prior to hiring. Consultants are (almost) always going to prefer an independent and solitary position vis-à-vis their client, so their contract will provide for exclusivity. That particular term can prove strikingly troublesome based upon what kind of control they then have. If the contract states the consultant is the only person, or entity, permitted to proffer new business ideas and directions, contract carve-outs become imperative. Certain company officers, directors, and employees may wish to retain some degree of creative control.

If possible, a non-exclusive agreement is much preferred. Multiple perspectives may be best. It is one thing to hire and pay for an outside perspective. It is quite another to tie your wagon to a singular influence for a significant amount of time.

Next time, I will discuss insurance and Liability and Percentage of Revenue as it relates to independent contractors.

Aaron Pierce
(212) 882-1752
299 Broadway, Suite 1405
New York, NY 10007

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