The Consultant's Legal Guide: A Business of Consulting Resource

318 Pages·1999·13.59 MB·English

by  Elaine Biech

Praise for The Consultant's Legal Guide: A Businesso f Consulting Resource
"I begy ou, do not starty our own consultingb usinessw ithout first readingT heC onsul-
tanfs LegalG uide.l nd, if you alreadyh ave,r eadi t nowll assurey ou that wheny ou put into
practicet he sounda dviceo f ElaineB iecha nd Linda ByarsS windlingy ou will savey our-
self the heartachea nd headacheo f needleslse galh asslesI.n tellectualp roperty is the con-
sultant'sp resenta nd future value,a nd attorneysa rey our essentiapl artnersi n creating
greaterv aluef or your businessa nd your clients.S oundl egalp racticesh aveb ecomea si m-
portant to the succesos f small consultingp racticesa ss oundf inancial practices,a nd,T he
ConsultantL'se galG uidewtrlh elpy ou everyd ayo f your busineslsif e."
-James M. Kouzesc, oauthor,T heL eadershiCp hallenge
andE ncouragintgh eH eart
"A greatf light plan to avoidt urbulence.. . . Whethery ou area consultanto r the CEOo f a
Fortune5 00c ompanyt,h is book shouldb e on your deskf or a referencein so manya reas."
-Howard Putnamf,o rmerC EOS outhwestAirlineasn d
BraniffInternationaal,n da uthor,T heWndso f Turbulence
"A well thought out, practicala pproacht o dealinge ffectivelyw ith lawyersa nd other con-
sultants.I f followed,i t shouldh elp all partiesb e betterp repareda nd do a betterj ob."
-Rita Reussa, ttorneya, ndf ormerv icep residentL, andO ' Lakes
"What a gift! Everythingy ou needt o know about the legala spectso f settingu p a consult-
ing businessa nd then operatingi t. Bettery et, it is written from the dient's, not a lawyer's
perspectiveB. esty et, it comesf rom seasonepdr os,w ho haved onei t all."
-Jack Zengerp, residentP, ROVANTa,n d cofounderZ, engerM iller
"The ConsultantL'se galG uideisbettetrh an an MBA in businessre lationshipsC. lear,c oncise,
thoughtful,a nd thorough.A fter readingt his book, consultantsw ill sleepb ettera t night!"
-Pamela J.S chmidtv, icep resident,
AmericanS ocietyfo r Traininga ndD evelopmen(At STD)
"This is a terrific resourcefo r any consultantw ho wantst o succeedin today'sd ynamic
marketplaceR. eadi t. Studyi t. Keepi t for valuabler eference."
-Nido R.Q ubeinC, SPC, PAEp, residenCt, reativeS erviceIsn c.,
andf ormerp residentN, ationalS peakerAss sociation
"Ah-ha-the missingp iecet o the puzzle.B iecha nd Swindlingh avef illed the hole (and an
important one I might add) in all the referenceb ookso n consulting.D on't starty our
businesws ithout it."
-Dianna BooherC, SRC Eq BooherC onsultantIsn, c.,a nda uthor
of thirty-sevebno oksi,n cludingC ommunicawteit h Confidmce!
"The ConsultantL'se gaGl uideisa mustr eadf or everyn ewa nds easonecdo nsultantI.t pro-
videsc onsultantsw ith a wealtho f practicalt ools and tips to createi,m prove,a nd sustain
an effectivec onsultingb usiness."
-Richard Y.C hangC, EO,R ichardC hangA ssociateIsn, c., and 1999c hairo f
theb oardf or theA mericanS ocietyfo r Traininga ndD evelopmen(At STD)
.lf 'return
thein tenwt atso c reaateb ootkh apt rovidaendin stant oni nvestmethnetlnt h is
exatehdasti ntenetv,Aerlmyapnocade$g r tea inlyrupnreys,hieduneoptaaract enar u -
tiothnca ot multdvhe o uosdfa onlWdlasrh slve,ta rhe$hi $ o wk hIse tna mrtmeyd m pany?"
-Ron Galbrai$C, EOM, anageme2nl,tl nc.,a nd1 999p resident,
InstructionaSl ystemAs ssociation(I SA)
"List the top five legal issuesin your business,a nd The Consultant'sL egal Guideisbound
to addressth em all. Biecha nd Swindlingh avew ritten a truly practicalh andbookt hat
shouldb e on the desktopso f all consultantsw ho aret rying to maket heir livese asiera nd
their businessems ore successfi.rl."
-Diane Hessanb, usinesgs uru,a nda uthor,C ustomer-CenterGerdo wth
"Today consultantsn ot only needt o prove their credibility and market themselvest,h ey
havet o protect themselvesa sw ell. They havet o protect themselvesfr om misunder-
standingsw ith clientsa nd misuseo f intellectualp roperty (both theirs and others).T hese
two examplesa rej ust the tip of the iceberg.TheC onsultant'Ls egalG uideshouldber ead-
ily availableo n wery consultant'sb ookshelf."
-Bob Pike,C SBc hairmana ndf oundet CreativeT iainingT echniques
InternationalI,n c., ande ditor,t he CreativeT rainingTechniquneesw sletter
"Whethery ou area start-up consultingb usinesso r a veterani n the industry,t his is a must
read.E laineB iecha nd coauthorL inda ByarsS windlingd elineateth e fundamentalsfo r
successT. heir practicalt ips and concretes r.g gestionsre latedt o legali ssuesw ill savey ou
time, help you steerc learo f potential pitfalls, and ensurey our ability to build a prosper-
ousb usiness."
-Toni Lucia,m anagingpartneMr, ANUS-A RightC ompany
and coauthorT, heArta ndS ciencoef 360"F eedback
"Ifyou area consultantd, o not passg o.D o not collect$ 200u ntil you readt his book! Clear,
accessiblea,n d practical,T heC ,onsultanfLse galG uideisa n easy-to-usree ferenceth at every
consultants trouldh aveo n his or her shelff or answersto anyl egalq uestiont hat concerns
your businesso r practice."
-Ann Herrmann-NehdiC, EO,H errmannI nternational
"As a managemenct onsultantf or more than twenty-fivey ears,I wish I had this book a
long time ago.I t would haves avedm e a lot of pain and money.W ritten in plain English
rather than legalesei,t should be a must for the experienceda sw ell ast he budding con-
sultant.B uy it, usei t, and don t lend it out."
-George Morrisey,C SBC PAEa, uthor,M oniseyo nP lanning
"Wherew ast his book when I wass tartingo ut?O r lasty earf or that matter?E lainea nd
Linda provide an awesomec ompendiumf or the consultant.I t containse verythingI
learnedi n twenty-fivey earso f consultingt hrough the schoolo f hard knocl<sH! eret hey
givei t away!I f only Elainea nd Linda could turn this book into a pill. Everyc onsultantI
know would be standingin line!"
-Beverly Kayep, residentC, areerS ystemIsn ternationala, uthor,U pI s Not the
'Em 'Em:
OnlyW aya, ndc oauthorL, ove or Lose GettingG oodP eopleto Stay
" Md TheC onsultant'Ls egalG uideto the dictionary and thesaurusa so ffice necessitiefso r
anye xistingo r aspiringc onsultingb usiness."
-Steve CohenC, EOT heL earningD esignG roup,
andp astp residenItn, structionaSl ystemAss sociatio(nIS A)
"Elainet earlierb ook, TheB usinesosf Consultingis an incredibler esourcea ndh andbook
that I've usede xtensivelyT.h is companionp ieceo n the legala spectso f consultingc on-
tinuest he tradition-a practicalh andbookt hat hits the mark from an experiencedp rac-
titioner who hasl earnedth esele ssonsin the trenches!"
-Linda Growneya, ssistanvti cep resident,
CUNAM utual InsuranceG roup
"Finally,a book that is comprehensivoen legalq uestionsth at mostc onsultantsd on't ask
until it's too late.T his is full of practicali nformation that helpst raining professionals
work confidentlyw ith their clients."
-Shirley IQsinich,c orporatetr aining director,
AmericanF amilyI nsurance
"As the legala nd operationapl itfallsi n successfullryu nning an independenct onsulting
firm multiply, this concisep, racticalg uide expertlyf ills a critical tr".d. With this book ai
a companionc, onsultantsc anl earnf rom the authors'extensiveex periencea nd knowl-
edgea nd sparet hemselvetsh e oftenp ainful, expensivea,n d time-ionsumingc ostsi n-
volvedi n going it on their own-unprepared. It is a must for everyc onsultant,lsib rary-I
wish it hadb eeni n mine ten yearsa go!"
-Herbert Cohen,C Eq MOHR RetailL earningS yntemsIn, c.
"The countesso f consultantsO. ncea gainE lainem akesy ou think and guidesy ou effort-
lesslyt o understandingA. fter thirteeny earsi n businessI, wass hockedto learn how much
I didn't know. This book is truly a gift."
-Peggy |oyce,r eale statec onsultantR, e/Maxp referred
"With oneb ook,E lainea nd Linda deftlya nd painlesslye liminatet he decadeos f diverse
legale xperienced,o cumentsa nd (for many of us) uninspiring-but-needekdn owledge
you needt o acquiret o successfulolyp eraten ot only a consultingb usinessb,u t anyp ri-
fessionaol tganizationC hecklistsg,u ideliness, amplele gald ocumentsi,n formatives ce-
narios,y ou namei t-they're all heret o help the professionasl uccessfirllnya vigateth rough
the numerousl egalw atersi nvolvedi n profitably providing their services."
-Raymond T. Halagerav,i cep resident,
theS trategiMc anagemenGtr oup,I nc.
"Preventingp roblemsis a lot lesse xpensivien time, money,a nd aggravationth an fixing
them.I only wish this book had beena vailablew hen I wass tartingm y business-even
aftera ll thesey ears( anda ttorneys'fees),sIt ill found somep racticJsoggestiontsh at will
help protectm y companya nd keepe mployeea, llian6sa, nd customerr eliionships healthy
and mutually beneficial."
-B. Kim BarnesC, EOB, arnes& ContiA ssociateIsn,c .
"Everyc onsultanta nd consultingf irm needsa copy of this book for their library, . . . and
they shouldr efert o it often.I t certainlywill saveti me and moneya nd makef or more pro-
ductivem eetingsw ith legalc ounselJ. ustt he sectionso n'protectingw ork product'and
'avoiding
legalp roblems'alonem akei t worth the priceo f the book."
-Jack SnaderC, EO,S ystemCa orporation
"Linda and Elaineh aveg ivenc onsultantsa n excellentto ol for avoidingl egali ssuesT. his
book is a must havef or consultantstr, ainers,a nd speakersIt! is alsoa greatr esourcefo r
thoseo f us who interfacew ith outsidec onsultantsT. hanky ou Lindaa ndE laine."
-Cindy Hammondd, irectoro f traininga ndd evelopmenCt,o mdataC orporation
"A masterpiec.e . . an absolutem asterpiecfeo r anyc onsultantT. his cutting-edgein for-
mation will be one of the most valuablei nvestmentsc onsultantsc anm akef or their
careersT. his is a gold mine."
-Joe CharbonneaCu,S PC, PAXp, residenPt, resentationInsc, .
"The Businaso f Consultingwaes xcitingt o reada nd madem e feell ike I could go right out
and startm y own businessT. his newb ook takesy ou to the next levelb eforeyouh it the
icebergW. herew erey ou when the Titanic took sail?"
-|udye Tirlbot,c lient
"When you area n orpert in a specifics ubjectm atter,w ork processo, r contenta rea,m aking
'the
big money'v ia consultinga nd sharingy our e4pertisec anl ook so easya ndv erya ppeal-
ing asa job. Howevert,o be a successfuclo nsultantm eanst hat you cannott reaty our work
likey ou would a hobby.C onsultingis a professionablu sinesvse nturew ith wide-rangingle gal
ramificationsa nd concernsI.n becominga successficrlo nsultanyt ou cand rooset o stumble
along,f acingt he legala ndb usinessc hallengeass t hey occur,o r you cans eekt he counseol f
thesew isdom-makerasn da voida lot of pain.l n TheC onsultantL'se gaGl uideE, lainea nd
Linda sharet heir wisdoma nd personallyd emonstrateth e bests pirit of businessc onsulting
for all of us to model.T hanky ou Elainea nd Linda for your'wise-fiilI' contribution to our
profession."
-Richard V Michaelsm, anagingp artne6M ichaelsM cVinneyI,n c.
Endorsemenfrtos m the tegalF ield:
"The ConsultantL'se galG uideo ffersa hands-ona pproachto avoidingli tigation.I heartily
recommendit ."
-Robert L. GreeningE, sq.P, enick& GreeningP, .C.
'Elaine
& Linda offer a greatp rimer on the legali ssuesfa cingm nsultantsT. his book should
saveit s readerss ignificantm oneyi n legalf eesa nd maket hem informed consumersw hen
theyd o seekle galc ounsel."
-foseph B.C onboyE, sq.a, ssociadtee ano f TexaTs echS choool f Law
'Congratulations
on a job well done!T his book providesv ery meaningfirli nformation for
thosei n the consultingin dustry."
-David B.M oseley|r,. , Esq.M, oseley& StanderfePr,. C.
The Consultant'sL eg alG uide
A BU5INE55 OF CONSULTING
RESOURCE GUIDE
ffi
elaineb iecha ndlindab yarss windlinge, sq.
Copyright o 2000 by Iossey-Bass/Pfeiffer
ISBN: 0-7879-4763-6
Library of Congress Cataloging-in-Publication Data
Biech, Elaine.
The consultant'sl egal guide : a businesso f consulting
resource/ Elaine Biech, Linda Byars Swindling.- lst ed.
P. cm.
Includes index.
ISBN 0-78 79- 47 63-6 (acid-free paper)
1. Businessl aw-United States. 2. Consultants-United
states-Handbooks, manuals, etc. I. swindling, Linda Byars,d ate.
II. Title.
KF390.C65B s4 1999
346.7307-dc2I 99-6480
No part of this publication may be reproduceds, toredi n a retrievals ystemo, r transmittedi n any form or by
any means,e lectronic,m ec.hanicapl,h otocopying,r ecording,s canning,o r otherwise,e xcepta sp ermitted under
Sections1 07o r 108o fthe 1976U nited StatesC opyright Act, without either the prior written permissiono fthe
Publishero r authorizationt hrough paymento fthe appropriatep er-copyf eet o the Copyright Clearance
center,222R osewoodD rive,D anversM, A 01923(, 978)7 50-8400f,a x (97s) 750-4744.Requetsots th e
Publisherf or permissions houldb e addressedto the PermissionsD epartment,J ohnW iley & Sons,I nc., 605
ThirdAvenueN, ewYorlsN Y 10158-0012(2, 12)s 50-601l,f ax (212)8 50-6008e,- mai}p [email protected].
Printed in the United Stateso f America.
Publishedb y
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AWiley Company
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For Shanea nd Thad,
the best in any case
For Mom, Dad, Gregg,a nd Parker,
the verdict is in . . . you atet he best.
Thanks for your love, guidance,
patience,a nd constants upport.
BusinessE ntity or Structure 31
Choositrgt he Proper BusinessE ntity 33
Entities for Certain Professions 43
Filing AssumedN ame Certificates 43
Organizet o Get Started 46
FoUR StartingY our Office 47
LeasingY our Own Space 48
Subleasingf rom Others 53
SharingO ffice Space 53
ExecutiveS uites 54
Home Offices 56
Start Your Office on the Right Foot 58
F I v E Contracts and the Law 61
Contracts 62
ServiceP roviders 65
s tx Employmelnsts ues 79
Working with Others 80
Hiring Issues 87
How to Avoid Harassment 94
Complaints and Investigations 95
Helping Your Clients Avoid Liability 96
Your EmployeeP oliciesa nd Handbook 97
sEvENW orkingw ithO therC onsultants 111
Typeso f Relationshipsw ith Other Consultants 113
How Are the RulesD etermined? 115
Working with Subcontractors t17
Responsibilitiesto a Subcontractor 123
Contents
EtcHT Clientl ssues r27
Con sultant'sA greement r28
BasicE lementso f All ConsultingA greements r37
FeeA rrangements t43
Negotiation Points t44
What If You Don t Have an Agreementi n Place? r46
Communicatirg with Your Clients 146
Documents Requiredb y Or ganizations 147
Consulting Agreementsw ith a Former Employer 148
Debt Collection 149
N I N E ClientsO utside the CorporateA rena 155
The Government r56
Nonprofit Organizations 1s9
Associations 162
ReligiousO rg anizations r63
rE N UniqueC onsultingS ituations 165
What's a Consultant to Do? 169
Unique Consulting SituationsW hen Training 172
How Can You Limit Liability and Also Appear Sensitive? 174
ELEVEN ProtectingW ork Product,T radeS ecrets,
and IntellectualP roperty 179
The Value of Information 180
Tiade Secrets 180
Copyrights 187
Trademarks 192
Patents 199
Contents xl
TWELvE GivingC reditW here Creditl s Due 205
Using Information and Material That Does Not Belongt o You 206
How to Avoid Infringing on Others'Property Rights 206
What Is Fair Use? 207
Gaining Permissiont o UseO thers'Works 209
Music and Sound Recordings 214
How Can PermissionB e Granted? 2r5
What Can Happen to You If You Don't ObserveP roperty Rights? 215
TH I RTEE N ProtectingA ssetsT hrough Insurance 219
Reducirg or PreventingE xposuret o Liability 220
What Are the Risksi n Consulting? 220
Insurance 223
ShouldY ou Insure Againstt he Activities of Your ContractWorkers? 230
Choosirg InsuranceC overa ge 232
FOURTEEN Buyingo r Sellinga ConsultingP ractice 235
Getting a BusinessR eadyt o Sell 235
Getting YourselfR eadyt o Purchasea Business 239
Participation of the Former Owner 243
Owner Financing 244
Other FinancialC onsiderations 246
Interferencew ith a Business 246
Public izing the Ownership Transfer 248
FIFTEEN AvoidingL egalP roblems 249
Good BusinessP rinciples 25r
Work with Your Attorney 252
Work with Your Clients 253
xllll Contents