Biomedical Consulting Agreements

Cover

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Title Page, Copyright

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Contents

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Acknowledgments

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pp. xi-

Ed Klees would like to thank his wife and children for their encouragement and especially for their patience when work on this book ate into family time. Bob Horvitz thanks his family and his many friends who have helped him learn about the world of biomedical consulting. Both...

Disclaimer

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pp. xiii-

This book is intended to give the reader information that is of general applicability. It is a guide about how to think about consulting contracts between academic scientists and companies in the biomedical field. This book is intended to provide only general, nonspecific legal and tax information...

1. Introduction

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pp. 1-6

We have frequently observed academic scientists who, while diligent to the point of compulsion when it comes to their research, are indifferent to the contents of the consulting contracts they sign. Whether you fit this phenotype or not, we hope this book will help you see that what...

2. Issues to Consider when Negotiating a Consulting Agreement

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pp. 7-16

As in many aspects of life, setting expectations is vitally important before commencing on a consulting project. If there are disappointments in a consulting relationship, there can be pain, hurt feelings, and anger. Not only could such a situation be uncomfortable, but a negative history also...

3. What Constitutes Consulting?

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pp. 17-27

Accordingly, consulting might include, for example, service on a corporate Board of Directors (BOD) or an SAB, founding a start-up, a presentation or attendance at a company seminar, acting as an expert witness, or giving advice to a venture capital firm. For these reasons, the...

4. Scope of Services

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pp. 29-30

Every consulting agreement should state the nature of the services to be provided. This provision can serve your interests if it is used to exclude sensitive areas of research or preserve areas of expertise for later negotiation with this or another company. And as stated in the Introduction...

5. Cash Compensation

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pp. 31-34

Compensation is often the issue of most immediate interest to a prospective consultant. A contract should be clear about the elements of compensation to avoid future misunderstandings or disputes. Some specific issues relating to cash compensation are discussed below (stock and...

6. Shares, Stock Options, and Taxes

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pp. 35-63

The issues relating to equity — shares of stock and stock options — can be complicated, and we encourage getting expert help in structuring this aspect of compensation. Some highlights follow. We do not address partnership or limited liability company (LLC) interests here. We also do not...

7. Confidentiality Obligations

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pp. 65-71

There are two directions in which confidential information can be disclosed in the course of a consulting relationship. One is the disclosure to you of the company’s trade secrets or of proprietary information furnished to the company by its clients, collaborators, or others and then...

8. IP Rights

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pp. 73-79

IP rights are a key provision of every consulting agreement, and in some cases there might be nothing of greater potential importance to you in a consulting agreement than the IP provisions. Improperly surrendering your rights in IP, whether current discoveries or those you make in the...

9. Noncompetition

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pp. 81-82

One way to handle a noncompetition clause is to say that you do not agree to them in any context — in other words, that you are not promising that your consulting will be in any way exclusive to the company. Taking this position can succeed if the company really wants your services or...

10. Time Commitment

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pp. 83-

University policy often limits the amount of time to be spent by faculty on outside activities such as consulting. We have already noted some of the more common time limits (see section 2.E.1). You should be sure that the time commitment in the consulting contract does not exceed...

11. Term and Termination

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pp. 85-

A consulting contract can be for a defined period such as a year, or it can renew automatically unless one or both parties determine not to continue (called an “evergreen ). Consulting agreements for start-up companies often have three to five-year terms and automatically renew...

12. Multiple Relationships with One Company

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pp. 87-

Multiple relationships between a professor and a company are not uncommon. You might not only be a consultant but also a founder, a collaborator, or a board member. Before wearing a second or third hat, though, you should consider university policy. For example, some institutions...

13. Start-Up Issues

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pp. 89-

As a founder of a start-up, you will probably have significant leverage to direct the terms of your deal, including such hot buttons as stock and stock options. The negotiation of an acceptable consulting agreement might be relatively easy, particularly if you are founding the company...

14. Other Clauses

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pp. 91-101

A company might ask you for an indemnity. An indemnity in consulting agreements typically cover any losses that the company might incur relating to your consulting services and ordinarily includes your promise to pay the company’s legal costs and damages if it should be sued or found...

15. Use of Consulting Entity

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pp. 103-

In other areas we are familiar with individual consultants setting up wholly owned companies and contracting their services through these wholly owned companies. So, for example, Jane Smith may establish Smith Consulting, LLC, and Smith Consulting, LLC would sign consulting...

16. Conclusion

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pp. 105-

For the most part faculty consulting agreements are pretty straightforward. Nonetheless, given the legal obligations involved, the need to comply with university policy, and the importance of guarding against possible negative outcomes, it is not sensible to enter into these agreements...

Attachment A: Basic Consulting Agreement

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pp. 107-112

Glossary

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pp. 113-115

Notes

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pp. 117-120

Index

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pp. 121-125