Adviser Agreement Contract Template Guide

Published:

Oct 26, 2022

An adviser agreement is, in essence, a legal contract between a company and an individual who will advise the company in some form.

This agreement sets out the terms on which the adviser will be engaged. It can also be known as a board adviser agreement, a business consulting agreement, an independent adviser agreement, or even just a consulting agreement.

These adviser agreements are crucial in formalising the advisory role within a company. For instance, they help to:

  1. Clarify the adviser's duties and roles

  2. The scope of work

  3. Compensation

  4. The terms of engagement

Understanding the purpose and critical components of such agreements is, therefore, essential for both parties involved.

Top Features

☑ Advisors bring specialised knowledge and experience that can help guide the organisation through complex challenges and opportunities, offering insights that may not be available internally.

☑ Advisors can provide an unbiased, third-party perspective on business strategies, helping organisations to see their situation from a different angle and avoid echo chamber thinking.

☑ Advisors often have extensive professional networks, which can provide connections that can lead to new partnerships, customer opportunities, or access to talent.

☑ Advisors can help with strategic planning, offering advice on market trends, the competitive landscape, and long-term growth strategies, ensuring the organisation remains focused and aligned with its goals.

☑ Advisor agreements often offer you flexibility, allowing your organisation to seek advice as needed without the commitment of a full-time position.


Table of Contents

  • The Purpose of Adviser Agreements

  • Critical Components of an Effective Adviser Agreement

  • Adviser Agreement Contract Template & Key Components

  • Crafting a Legally Binding Adviser Agreement

  • Confidentiality and Non-Disclosure Agreements

  • What Are Some of The Common Pitfalls of an Adviser Agreement?

  • What Are The Legal Implications of Not Having An Adviser Agreement in Place?

  • How Often Should An Adviser Agreement be Reviewed and Updated?

  • Can an Adviser Agreement Include Clauses on Intellectual Property?

  • What Should I Do if a Dispute Arises Under the Adviser Agreement?

  • Ready to Get Started With Your Advisor Agreement Template?


The Purpose of Adviser Agreements

An adviser agreement is used when engaging an individual to advise your company. The adviser will typically commit to working for a certain number of hours or days a month, and the role will tend to be more part-time and broadly defined as they will usually be providing general advice rather than working on a specific project—most of the time.

Looking more for a Full Time Role?

If you are looking at engaging someone for a full-time role, you should consider whether the individual will need to be full-time. In that case, an employee contract or a consultant agreement may be a better fit for you.

Employment Status

Employment status is determined more by how an individual operates in practice - and not the type of agreement you use.

In particular, the key factors to consider are:

(a) Mutuality of Obligation (i.e. whether the company is required to provide work and whether the individual is required to carry it out)

(b) Personal Service (i.e. whether the individual is required to provide their services personally or whether they could provide a substitute in their place)

(c) Degree of Control (i.e. how much control the company has over the individual). 

Consider the agreements listed above more if this is more of a total time commitment expected.

Consultancy Agreements

Consultancy agreements, for instance, include a lot more detail about the services that the individual will be providing you, as well as clear deliverables that are not appropriate for the role of an adviser. 

Critical Components of an Effective Adviser Agreement

Overall, a comprehensive adviser agreement should contain the following components to ensure clarity and legal enforceability.

Identification of Parties Involved

This section should clearly define the company and the adviser entering into the agreement.

Scope of Adviser Services

The Scope section specifies the services to be provided, including any particular objectives or projects.

Term and Termination Clauses

When it comes to term length and termination clauses, these should be included, outlining the duration of the agreement and the conditions under which both parties may terminate it.

Compensation and Reimbursement Details

This component of the agreement should describe how the adviser will be compensated and any eligible expense reimbursements resulting from costs acquired.

Adviser Agreement Contract Template & Key Components

This type of contract should cover several essential elements to the core components to ensure both parties' expectations, responsibilities, and the nature of their relationship are clearly defined. 

An advisor agreement contract template can typically contain the following:

Parties Involved

Clearly identify the advisor and the company or individual seeking the advisory services, including legal names and addresses.

For instance, in this section, it could be clearly stated: 

"This Agreement is made between [Company Name], a [Type of Entity] incorporated under the laws of [Jurisdiction], with its principal office located at [Address] ('the Company'), and [Advisor's Full Name], residing at [Address] ('the Advisor').

Term of Agreement

This section should specify the start date and duration of the agreement, including any conditions for renewal or termination.

Scope of Services

The scope section should define in detail the advisory services to be provided. 

This section should also outline the advisor's role, areas of responsibility, and any specific tasks or goals as well.

For instance, it could cover that the advisor agrees to provide strategic consulting services to the Company as requested, which may include but are not limited to:

  1. Guidance on market strategy

  2. Product development

  3. Fundraising efforts

  4. Networking opportunities with potential partners, clients, or investors


It may also cover the fact that the advisor will offer insights based on their expertise and experience aimed at supporting the Company's growth and strategic objectives. 

Services may be delivered through meetings, calls, and written communications as deemed necessary. At the same time, the advisor commits to availability for [Specify Number] hours per month for these purposes, as an example.

Compensation and Equity

Please detail the advisor's compensation structure, including any cash compensation, equity options (if applicable), and the vesting schedule. 

This section should also clarify the conditions under which compensation is payable as well.

Confidentiality

Include a confidentiality clause section that ensures that any sensitive information shared during the advisory period is protected and not disclosed without permission.

Intellectual Property

One section to consider adding is how to address the ownership of any intellectual property (IP) created during the advisory period.

Typically, IP developed during the engagement belongs to the company, and you should make this clear.

Conflict of Interest

Including a section and clause requiring the advisor to disclose any potential conflicts of interest that might affect their advisory role is always a good thing to do as part of your due diligence.

Termination Conditions

Outlining the conditions under which either party can terminate the agreement - including any notice periods and obligations upon termination.

For instance, this section could look like instance:

This agreement shall commence on [Start Date] and continue in effect until [End Date] unless terminated earlier in accordance with the termination provisions below. 

This term may be extended by mutual written agreement between both Parties.

Termination Clauses

Mutual Agreement

This agreement may be terminated at any time by mutual agreement between both Parties.

Termination for Cause

Either party may terminate this agreement immediately upon written notice if the other party breaches any of its obligations under this agreement and fails to cure such breach within [Specify Number] days after receiving written notice of the violation.

Termination Without Cause

Either party may terminate this agreement at any time without cause upon providing the other party with [Specify Number] days' written notice.

Effect of Termination

Upon termination, the advisor shall be entitled to compensation for any services rendered prior to the notice of termination. Any provisions of this agreement that by their nature should survive termination will remain in effect after termination, including, but not limited to, confidentiality obligations and any accrued rights to compensation.

Non-Compete and Non-Solicit

Depending on the advisory role, the agreement may include a section on non-compete or non-solicit clauses to protect the company's interests post-engagement.

Dispute Resolution

Although not a requirement, it is always good to include a section that specifies the process for resolving any disputes that may arise under the agreement - including the choice of law and jurisdiction, as long as this is legally binding to do so.

Indemnification

Another good area of consideration is including an indemnification section or clause to protect both parties against losses resulting from breaches of the agreement or other specified liabilities.

Entire Agreement

This section outlines a statement indicating that the document contains the complete and entire agreement between the parties, superseding all prior discussions and agreements.

Amendment and Waiver

Another section to add to your agreement is the conditions under which it can be amended, the process for such amendments, and how waivers can be granted.

Signatures

The last section you will need to include tends to include spaces for both parties to sign and date the agreement, formally acknowledging their acceptance of its terms.

Please note: Not all advisor agreements will need to include all of the above.

Crafting a Legally Binding Adviser Agreement

As you can see, crafting a legally binding adviser agreement requires careful consideration of critical elements to ensure that clarity, enforceability, and compliance with relevant laws all kick in correctly.

Subsequently, it should clearly define the roles, responsibilities, and expectations of both parties, including compensation, confidentiality obligations, and termination conditions - which are covered in more detail above.

Furthermore, the agreement must be executed with proper formalities, such as signatures from all parties involved, and ideally via an eSign or eSignature platform.

Confidentiality and Non-Disclosure Agreements

Confidentiality and Non-Disclosure Agreements (NDAs) are also crucial components of advisor agreements, particularly when sensitive information and trade secrets are shared during consultations.

These agreements, for instance, help to protect proprietary information by legally binding the advisor to keep the information confidential and not disclose it to any third party without explicit permission. 

Critical elements of an NDA to include in your Advisor Agreements, for instance, should consist of:

Definition of Confidential Information

This section should clearly specify what constitutes confidential information, including documents, oral communications, and electronic data, while also outlining any exceptions.

Obligations and Duties

This section details the advisor's responsibilities regarding the handling, storage, and protection of confidential information. 

This includes measures to prevent unauthorised access or disclosure.

Duration

The agreement should state the period during which the confidentiality must be maintained, noting that obligations may extend beyond the termination of the advisor agreement.

Consequences of Breach

Where possible, the legal and financial repercussions for violating the confidentiality terms and reinforcing the seriousness of the agreement should also be included.

Return or Destruction of Information

Upon agreement termination, you should stipulate the return or certified destruction of all confidential information provided by the disclosing party.

Consequently, including a confidentiality clause - or even a link to / or just a separate NDA - in your advisor agreements ensures that both parties are legally committed to protecting your sensitive information, minimising the risk of intellectual property theft or unauthorised dissemination, and simultaneously maintaining trust in the professional relationship.

What Are Some of The Common Pitfalls of an Adviser Agreement?

From the company’s perspective, it is critical that the contract used properly reflects the individual's employment status - i.e., a company should only use this agreement where the individual's employment status is definitely not that of an employee. 

If a company treats an individual as a self-employed employee or contractor when the reality is that they are actually an employee in some form, the company could become liable for unpaid tax. National Insurance contributions (plus interest and penalties) and the likelihood of a dispute on termination (leading to a potential Employment Tribunal claim) are more significant.

Include Robust Confidentiality Provisions

As advisers will have access to the company’s board, it is essential that the adviser agreement includes robust confidentiality provisions.

Competitor Restrictions

It is also recommended that the agreement includes restrictions that prevent the adviser from working with a competitor and non-solicitation clauses to prevent the adviser from poaching your employees. 

Avoid Ambiguities in Language and Terms

Ambiguities in language and terms within legal agreements, including advisor agreements, can lead to disputes, misunderstandings, and legal challenges in your agreement.

These issues arise more due to these ambiguities stemming from vague language, undefined terms, or the use of jargon that needs to be clearly explained.

To mitigate these risks and ensure clarity and enforceability, you should, where suitable to do so, consider the following:

Define Key Terms

Clearly define all key terms and phrases used in the agreement.

This includes, for instance, specifying what is meant by "confidential information," "termination," "services provided," etc.

A definitions section, even though not necessary, at the beginning of the document can help ensure that all parties have a common understanding of important concepts, for instance.

Use Plain Language

Avoid legal jargon and complex language where possible. Using more straightforward, plain language helps ensure that all parties clearly understand their rights and obligations under the agreement.

Provide Examples

Providing examples to clarify abstract concepts or complex terms can also be beneficial. 

This can be particularly helpful in sections dealing with confidential information or intellectual property rights.

Avoid Broad and Undefined Terms

Terms like "reasonable efforts" or "best practices" can be interpreted in various ways, for instance.

If using such terms is necessary, provide a clear definition or criteria for what is considered reasonable or best in the context of the agreement, which works better for all involved.

Failure to Specify Dispute Resolution Mechanisms

Failure to specify dispute resolution mechanisms in advisor agreements or any legal contract can lead to significant complications, increased costs, and prolonged conflicts, especially if disputes arise between the parties involved. 

Without a predetermined method for resolving disagreements, parties may resort to litigation, which is often time-consuming and expensive. 

Consequently, including these in place helps you and your advisor understand the processes if disputes arise.

Ensuring Compliance with Local Laws and Regulations

Ensuring compliance with local laws and regulations in your Advisor agreements is always crucial to avoid legal pitfalls and ensure the agreement is actually enforceable. 

Overlooking this step may make the whole agreement null and invalid, for instance.

Tailor Classes

Tailoring clauses to match your unique aspects of the advisory relationship further helps to ensure legal compliance.

What Are The Legal Implications of Not Having An Adviser Agreement in Place?

Not having an adviser agreement in place can lead to legal uncertainties and disputes over roles, responsibilities, compensation, and confidentiality. 

For instance, with a formal contract, it's easier to enforce agreements or protect intellectual property. 

This lack of clarity can also result in financial losses, legal liabilities, and damaged business relationships.

Additionally, it complicates compliance with tax and labour laws - potentially leading to regulatory penalties and legal action as a result.

All in all, if you are working with an advisor, you really need to have an Advisor Agreement in place.

How Often Should An Adviser Agreement be Reviewed and Updated?

Advisor agreements should be reviewed and updated at least annually to ensure they remain compliant with current laws and continue to reflect the nature of the advisory relationship accurately. 

Significant changes in legislation, business operations, or the advisor’s role, however, should prompt an immediate review. 

Consequently, regular updates help you maintain legal validity and relevance at all times, adapting to new challenges and opportunities in what we all know is a dynamic business landscape.

Can an Adviser Agreement Include Clauses on Intellectual Property?

Yes, an adviser agreement can include clauses on Intellectual Property (IP) to protect innovations, creations, and knowledge shared or developed during the advisory relationship. 

These clauses typically specify the ownership of IP created, outline the rights to use such IP, and detail procedures for handling IP infringements. 

As a result, including IP clauses ensures that clarity on ownership and use, as well as it safeguards both parties' interests in the generated intellectual assets.

What Should I Do if a Dispute Arises Under the Adviser Agreement?

If a dispute arises under the advisor agreement, you should refer to its dispute resolution clause.

Adhering to the agreed-upon process helps you reach a fair and efficient resolution.


Ready to Get Started With Your Advisor Agreement Template?

Create all your advisor agreement templates in minutes. Pocketlaw offers a platform with AI-powered drafting support, a clever AI-powered contract management system, as well as access to searchable contract repositories, metadata tagging, document review and redlining, eSigning and much more.

Disclaimer:
Please note: Pocketlaw is not a substitute for an attorney or law firm. So, should you have any legal questions on the content of this page, please get in touch with a qualified legal professional.

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