Legal Risks For Consultants And How To Avoid Them
By Patricia S. Eyres
From unauthorized use of music and graphics to offensive
content in presentations to contractual disputes, there are legal land
mines out there that you don't want to step on as a professional
consultant. Some basic awareness coupled with consistent procedures
can save both anxiety and expense. At a minimum, you should know the
steps you must take to license copyrighted materials and protect your
own proprietary rights. When you speak to business groups in their
work environments, be aware of their employees' rights to equal
employment opportunities, and how your talk may impact those rights.
Most significantly, take appropriate proactive steps to be sure
your fee agreement hold up in court if your client later claims you
didn't deliver what you promised.
1. Failing to honor contractual commitments or
misrepresentations about qualifications to perform:
Consultants may breach contractual obligations in a
number of ways, including failing to produce the required deliverables
or breaches of a confidentiality agreement.
In addition, when the client requires the consultant to
represent that she owns the right to use specific tools or instruments
‑‑ such as tests or performance aids ‑‑ any
violation of copyright law may also lead to breach of contract;
particularly when the client is also sued for infringement.
The best way to avoid breaches of contract is to make
realistic commitments and to proactively manage your performance of
contractual commitments. If
you promise a rapid turnaround of work product, plan for foreseeable
contingencies that may interfere with performance.
Address these issues at the outset.
Then, if unforeseen circumstances occur, contact the client
immediately to discuss reasonable modification of your contractual
commitment based on the changed circumstances.
Unfortunately, the most frequent source of contractual disputes
involves failure to meet commitments in a timely manner. Often open
communication will alert the client to the reasons for any delays and
avoid misplaced expectations.
Finally, you risk legal exposure when you exaggerate
your experience in a particular industry or subject area.
While aggressive "marketing spin" may result only in
damaged credibility, outright misrepresentations about education,
specific certifications or experience can lead to breach of contract
and in extreme cases fraud claims.
At best, such representations to clients can tarnish your
reputation when you can't meet their expectations.
At worst, they can lead to legal action for return of fees or
damages based on the client's detrimental reliance on your
2. Failure to protect your rights through negotiation and enforcement
of effective contracts: Meeting contractual commitments is a sound business practice.
It is equally important for consultants to enforce your own
contracts. A common legal
problem is the inability to quickly and effectively collect fees and
enforce clients' promises. Professional
consultants should be prepared to pursue appropriate legal action to
enforce your contracts. This
requires negotiating and memorializing enforceable agreements, so the
contract will hold up in court. There
is no substitute for addressing specifically allocating
responsibilities for timing, deliverables and reasonably foreseeable
contingencies and build them into your contract.
3. Negligent advice or instructions that causes business harm to a
Consultants provide advice on a wide range of topics,
including skills, which are essential for your clients' business
practices. Clients rely on
you to render advice or provide information on essential business
issues, such as development of test instruments, initiation of team
building, diversity or organizational development issues or other
human performance interventions. Your
client's legal and regulatory compliance may be affected, so that
reliance on inaccurate advice may result in significant liabilities.
Likewise, if you present skills-based training programs
on using technology, managing diversity, financial management, safe
work practices or other core business issues, you must provide both
appropriate content and methodology to assure that your client's
employees apply the information as intended.
When your client's employees make mistakes based on information
you provide, you may be sued for subsequent business losses.
Negligence lawsuits against consultants run the gamut
from personal injury claims (such as participants injured during a
program facilitated by a consultant), to breaches of professional
standards for accountants (a form of "malpractice") to
claims for indemnification by a client who is sued due to the
consultant’s advice on how to design and deliver safety training.
4. Discriminatory training materials and curriculum on client projects or
External consultants are often held by the courts to the
same standards as their clients' training staff.
Just as internal trainers who design curriculum may generate
liability for harm to employees if the methodology doesn't meet
appropriate standards or the content is discriminatory, so too can the
external trainer. While
negligent curriculum design will result only in liability for the
sponsoring organization ‑‑ the employer or client
‑‑ discrimination in content or delivery may create
personal exposure as well.
In order to prevent legal exposure for discrimination,
consultants should be well versed on the various forms of discrimination
and take proactive steps to avoid inappropriate methodology.
While most consultants are not in a position to provide legal
advice ‑‑ and should never attempt to do so ‑‑
you can provide appropriate direction to clients who may be in danger
of violating regulatory standards or other legal responsibilities in
the discrimination arena.
5. Copyright infringement by incorporating protected work into reports and
materials without permission:
Consultants frequently create and distribute written materials in the form of
handouts, articles, outlines or graphic presentations. Use of
materials owned by another person, without permission or a license
agreement, can result in legal action by the copyright holder.
Such action may be brought against the consultant and the client for
whom the materials are used.
6. Ineffective protection of your own work product and proprietary
interests: As a professional consultant, you invest significant time and resources
developing speeches, handouts and audio visual or graphic materials to
enhance your presentations. In
addition, you develop and market workbooks, instruments and other
products, including audio and videotapes.
These materials are proprietary and of substantial value.
Yet, many consultants don't take the time to protect their own
work product from infringement or misappropriation.
When you learn that a unique exercise or technique has been
used ‑‑ verbatim or in significant detail by someone else, you may not be positioned to enforce these rights and
obtain redress for losses caused by the misappropriation.
Know Your Rights Understand which of your products and materials are subject to
protection under the Copyright Act and any relevant state laws.
Your rights include reproduction, distribution, display and
public performance rights, as well as the right to create derivative
Preserve Your Rights Take the steps to reserve and enforce copyright protection.
This includes placing appropriate copyright notices on all
written materials and audio visual aids you will reproduce,
distribute, display or publicly perform.
Take the steps to register those products and materials that,
if used by others, would impair your business and for which you wish
to preserve the right to sue for infringement.
Be Prepared to Respond to Requests
to Use Your Work When you preserve your
copyrights, you should be prepared when someone asks for permission to
use, display or perform the work. If you don't want others using your
work, politely decline. Be
prepared to define the limits of authorization you are willing to
provide to those who request negotiate effective license agreements
for handouts, unique presentation products and related materials.
Consider, in advance, the parameters of any license agreements
you will sign for use of your materials.
This will facilitate easier negotiations, and reduce the risk
that your pleasure at someone's interest in using your work will
interfere with your thorough analysis of the financial dimensions of
7. Ineffective or non-existent documentation:
Documentation is a written record of an event,
discussion or observation by one or more individuals. Most
organizations rely on documentation to record their activities and
those of their employees. Any written information, whether formally or
informally generated, can be considered documentary evidence if it is
pertinent to an administrative proceeding or lawsuit.
When called upon to defend against a legal claim ‑‑ copyright
violation, discriminatory content, negligence or professional errors,
breach of contract ‑‑ consultants must be able to provide
credible information to reconstruct events, to explain what occurred
or to substantiate their efforts to comply with applicable legal
record keeping, ambiguous commitments, or incomplete agreements are
both frustrating and potentially devastating to the successful
position in a legal dispute.
Read other articles and learn more
Patricia S. Eyres.
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