Legal Issues in Consulting

In order to discuss liability that may arise under a consulting contract, you need to first understand two key terms.

Liability: Negligence occurs when someone directly harms someone else by failing to carry out a duty owed to them. To have liability, you need a duty, a breach of that duty, and resulting harm or injury.

Duty: Anyone who claims expertise in a field or area of study is obligated to meet a minimum industry standard of conduct towards others. In other words, they must follow the same standards of care, skill, and diligence that others with like expertise would normally follow in similar situations.

When a professional is engaged in assessing a problem; developing a solution; implementing a solution; or providing subsequent maintenance of the equipment and software, a breach occurs only when the level of care, skill, and diligence is less than that normally provided by members of the profession in good standing. Also, the law recognizes a bell curve of advice. That is, competent members of a profession can assess a problem differently and reach different solutions while still exercising a level of care, skill, and diligence required by the profession. It's only when the level of effort or knowledge falls below the custom or standard that a breach occurs.

You need to be aware that when promises are made to clients, these promises create a legal responsibility so they should be considered carefully. When you claim expertise in an area and present information or recommendations as facts on which a customer relies, you and your employer can generally be held liable for the representation. Therefore, exercising care in what you promise and preparing a consulting agreement which carefully and clearly specifies the obligations, duties, and expectations of each party are among the best ways to minimize legal disputes around consulting engagements. It is always easier to meet goals and expectations when they are clearly defined and understood.