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What is a consulting agreement?
A consulting agreement is typically a formal agreement between a faculty member and an outside entity to engage the faculty member to provide expertise or guidance on a topical area. Consulting agreements should not utilize more than incidental use of institutional space or resources. In most cases, faculty members should pursue these agreements independent of the institution, on their own time.
Consulting services typically fall outside of the institution’s teaching and research mission, such as serving on an advisory board.
Examples of activities that may fall under a consulting agreement include, but are not limited to:
- Performing an evaluation or assessment of an external program, such as an educational or public health initiative
- Assisting a city government in urban planning
Successful consulting agreements can further contribute to a faculty’s expertise, a student’s educational development, and the reputation of the institution.
Who is permitted to undertake consulting activities?
This will vary by institution, but typically both faculty and staff are permitted to undertake consulting activities, provided they are discussed with their supervisor and reported to the institution.
In many cases, universities will have a faculty handbook and/or policy that specifies that external activities are allowed and, in some cases, encouraged so long as the commitment does not exceed a specific commitment (e.g., one day a week). Performing external consulting can strengthen industry relationships and provide public benefit, all of which are in line with most academic institutions’ mission and core values.
What is typically in a consulting agreement addendum?
The addendum is put in place to override any language within a contract that conflicts with institutional and/or federal policy. The types of concerns captured under the addendum include, but are not limited to:
- Conflicts of commitment with respect to either:
- The institution (i.e., ensuring the commitment does not exceed the time allotted to faculty); or
- US federal funding agencies or other external sponsors.
- Clarification of IP rights committed to or already owned by the institution.
- Perceived or real bias and influence on integrity of the institution’s related research.
- Anything that conflicts with institutional policies, including those related to Intellectual Property, Conflict of Commitment, Conflict of Interest, External International Engagements, Export Controls and Research Security.
- Making it explicit that the primary appointment and obligation is to the academic institution. Accordingly, faculty have an obligation and requirement to abide by institutional policy, including disclosing the existence of the arrangement to the institution, as well as federal funding agencies, as required by law or statute.
The addendum does not require any type of contract revision or negotiation. A number of academic, research institutions either recommend or require the inclusion of an addendum to cover these topics, so companies are increasingly familiar with the process.
How should faculty complete the consulting agreement addendum?
The addendum should be incorporated by reference into the consulting agreement and the consulting agreement and addendum signed by both parties. If the consulting agreement already covers the obligations set forth in the consulting addendum, there is no need to re-state these terms. Inclusion of the consulting addenda is recommended for all domestic and global consulting agreements.
Many institutions do not review consulting agreements, while others require review and pre-approval of all outside activities, and still others will review certain agreements and provide guidance (no legal advice), but not sign off on the agreement. Is there a best course of action?
No, the best way to handle consulting agreements will vary by institution. There are several complex factors that institutions could consider when deciding whether to offer or require review of consulting agreements, which may include:
- Available resources to review these arrangements: This will depend on the size and type of faculty (tenure-track, adjunct, etc.) at your institution, as well as the staffing in the applicable office reviewing the agreements. Especially if you require the review of consulting agreements and/or outside activities, you will need to have sufficient staff to review the agreements in a timely fashion to avoid straining faculty relationships.
- Institutional type: Public institutions should consider if receiving and processing this information will make it subject to open records act requirements. Information on remuneration is always a sensitive topic and faculty input should be sought.
- Tracking and record-keeping: Some funding agencies may require the upload of all international consulting and research agreements outside a faculty member’s institutional role (as of January 2024, this was only NIH), making it helpful to have some awareness of international consulting activities to facilitate compliance with this requirement. On the other side, tracking and maintaining records of all consulting agreements may prove burdensome.
- Liability: Some institutions will not review consulting agreements because they are concerned it could create liability issues for the institution. Review of such agreements should be carefully framed to ensure faculty do not interpret guidance as legal advice and that the company does not construe the institution as being involved in the transaction. Processes and procedures should be set up to mitigate potential liability.
- Ability to provide relevant disclosure/transparency guidance: Reviewing consulting arrangements is useful to help faculty understand transparency requirements for each funding agency. By being aware of all consulting agreements, it is easier to provide guidance on which ones may require disclosure to various federal funding agencies.
- Reporting: Institutions that do review consulting agreements should consider how to ensure that these reviews are not counted as activities carried out by or funds received by the institution. Consulting agreements should not be captured under other reporting obligations such as HERD survey or Department of Education 117 reporting.
- Faculty relationships: Reviewing or not reviewing consulting agreements will have an impact on faculty relationships that will vary from individual to individual. Some faculty will see the review as intrusive, while others will welcome the support. Institutions should consider discussing with their faculty senate or other advisory body to talk through the pros and cons of each approach.
The outcome of these conversations will vary from institution to institution. There is no “right” approach and an institution’s approach may need to shift over time to address emerging trends.
Resources and Sample Addenda
There are several good resources and exemplars for consulting addenda, as well as accompanying guidance, including:
Massachusetts Institute of Technology
University of Nebraska, Lincoln
For more information about these Consulting Addendum FAQs and additional resources, please contact the FDP Conflict of Interest (COI) Subcommittee at COI@thefdp.org.