As a freelancer and entrepreneur, if I don’t work I don’t get paid. But sometimes, even if I do work, I don’t get paid.

This happened to me, once, when I worked on a consulting gig for a national parcel company. The person I engaged with was a ‘friend of a friend’ and the work was informally agreed, because why do all that boring stuff when it ain’t needed, right?


This gig cost me over $15,000 in revenue – that’s money that would have found its ways into my back pocket (and food on the table and kids in shoes.) This cost me big time.

The reason why it cost me bad was not:

  • because we had an agreed scope of the work in an email;
  • because I worked extra hours and weekends to deliver on time;
  • because the client’s senior manager changed the scope of the work mid-project;
  • because the client was disorganized and resistant to the very change I had been brought into enable.

No, not any of those reasons. It was because I did not put into place a consulting agreement.

My mistake was that I started work based on just trust. And I was bitten in the ass later, when structural changes were made and senior objectives were re-aligned. I was left high and dry. I had no recourse to hold the client to pay the agreed fee, because there was nothing formal in place.

As it turned out, it was my word against theirs. My friendship counted for nothing as this person moved onto another role elsewhere in the organization.

So put something formal in place, for Pete’s sake.

No matter how much trust, mutual respect or goodwill there is in place, always put a formal agreement – or call it a a contract – in place. Period.

It covers your ass, and saves you from a lot of pain and lost revenue in the future. Friendships, as fragile as they are, won’t replace this, or protect you from lost income – as in my case.

Also, if you have business insurance (and if you don’t – why not?), such as Professional Indemnity Insurance – you’ll need a contract to make sure that your work is protected by the cover. Otherwise, the premium will be more money lost from your pockets.

(By the way, I don’t start any gig now without PI Insurance in place! Particularly as I work in the Financial Services sector, so the cost of any mistakes on my part could be in the millions or more!)

You have no excuse!

Writing contracts and all that legal stuff sounds scary – don’t it? Companies like McKinsey spend millions on legal fees for these things, but you don’t have to. It’s much easier than you might think because there are loads of online resources that are either free or inexpensive. You can find resources for a consulting agreement right here – take a look – there’s even a free template.

Putting this protection in place at the start of an engagement, for both consultant and client, will enable you to focus on delivering quality work rather than what might or might not have been agreed.