How to review a consulting agreement in Word: a checklist for clients and consultants

Consulting agreements range from a one-page letter for a retired executive to a full services agreement with statements of work. The core questions are the same: what exactly is the consultant doing, how are they paid, who owns the output, and what happens when it goes wrong or ends early. This checklist works for either side. LexDraft's Services playbook is built for this kind of agreement, and LexDraft can also draft a consulting agreement from scratch in Word.

1. Structure and scope

• Is it a single agreement, or a master agreement with statements of work? Check which document wins in a conflict.
• Define the services and deliverables concretely. "Advisory services as requested" invites disputes about what was promised and what was billed.
• Acceptance criteria for deliverables, and a change-control process for new work.
• Key personnel: is the client buying a named individual's time? Can the consultant substitute or subcontract?

2. Fees, expenses and payment

• Hourly, fixed fee, retainer or milestone. For retainers, say whether unused hours roll over.
• Expense approval, caps and receipts.
• Invoicing frequency, payment terms, late payment interest and the right to suspend work for non-payment.
• Equity or option compensation for startup advisers belongs in a separate grant document; the agreement should cross-refer to it accurately.

3. Independent contractor status

Most consultants are engaged as independent contractors, so the classification tests apply: the IRS common-law control test, the FLSA economic reality test and state tests such as California's ABC test (Labor Code section 2775). A long-running, full-time "consultant" who works only for one client under its direction is a classification risk however the contract is worded. See our independent contractor agreement review guide for the tests and the current status of the Department of Labor rule.

4. Intellectual property

• Who owns the deliverables. Clients usually want an assignment; consultants often want to keep their methods, tools and know-how.
• Pre-existing materials: the consultant keeps ownership and grants the client a licence to use what is embedded in the deliverables.
• Do not rely on "work made for hire" alone. Contractor work qualifies only in the nine categories in 17 U.S.C. 101 with a signed writing, and a copyright transfer must be in a signed writing (17 U.S.C. 204(a)).
• Use of AI tools by the consultant: whether it is allowed, whether client confidential information may be entered into them, and who bears the risk in AI-generated output.

5. Confidentiality

• A clear definition of confidential information, standard exclusions and a survival period.
• The Defend Trade Secrets Act whistleblower immunity notice (18 U.S.C. 1833(b)), which applies to consultants as well as employees.
• Data protection terms if the consultant handles personal data. Where it acts as a service provider or processor, a DPA may be needed; see our DPA review guide.

6. Restrictive covenants

• Non-solicitation of employees and customers, and any non-compete. Non-competes are void in California (Bus. & Prof. Code 16600) and restricted in many other states.
• Conflicts of interest: can the consultant work for competitors at the same time?

7. Risk allocation and exit

• Warranties: professional and workmanlike performance, compliance with law, non-infringement.
• Indemnities, and a limitation of liability proportionate to the fees. Check the carve-outs.
• Insurance: professional liability (errors and omissions) and general liability where relevant.
• Termination for convenience on notice, termination for breach, payment for work done to the termination date, and return of materials.

A workflow in Word with LexDraft

1. Open the consulting agreement in Word and open LexDraft in the side panel.
2. Pick the Services playbook and the governing-law state, then run the review. The playbook covers points such as scope and change control and IP ownership and licence. Findings come back graded Critical, High, Medium or Low, with missing standard terms flagged.
3. Run the defined-term and cross-reference quick checks. They are rule-based and finish almost instantly.
4. Accept the word-level redlines you agree with as native Word tracked changes, reject the rest and add your own.
5. Check classification and tax points yourself. No contract review tool can tell you how a worker is treated in practice.

Starting from scratch instead? LexDraft can draft a consulting or services agreement from a plain-English description, asks a few questions about parties, jurisdiction and key terms, and writes the first draft into Word. You then refine it in conversation, for example "make the payment terms net 30".

What LexDraft does not do

LexDraft does not decide worker classification, price an engagement, check a consultant's insurance or credentials, or give legal advice. AI review and AI drafting can miss issues or be wrong, so read every draft and redline yourself before it goes out.

Using AI ethically

ABA Formal Opinion 512 (July 2024) and many state bars say the same four things: understand the tool, protect client confidences, check every output, and bill fairly for AI-assisted work. Our state-by-state guide to AI ethics for lawyers covers 23 states and D.C.

Plans

Start on the Free plan: 5,000 generated words a month, no time limit and no credit card. Professional is $99 a month or $990 a year for 100,000 words a month. Business is $199 a month or $1,990 a year with unlimited words. LexDraft runs in Word 365 (Windows and Mac), Word 2021 and Word on the web, and it does not use customer documents to train models.

This guide is general information, not legal advice. LexDraft does not give legal advice; qualified counsel must review every draft. Spotted something out of date? Email support@lexdraft.ai and we will fix it.