A Management Consulting Agreement governs advisory or professional services engagements. This playbook explores fee structures, confidentiality, and limitation of liability provisions.
Why This Matters: Absent clear dispute processes, conflicts can escalate into protracted and expensive legal battles under uncertain jurisdictional rules.
Negotiation strategy
If you're the Company:
Ensure the dispute resolution clause aligns with the company's preferred jurisdiction and includes arbitration to minimize litigation costs.
If you're the Client:
Negotiate for a neutral jurisdiction and consider mediation as a first step to resolve disputes amicably.
Essential elements
1
Governing Law
Defines applicable legal framework.
2
Jurisdiction
Specifies court location for disputes.
3
Arbitration
Outlines arbitration process details.
Action framework
ACCEPT
Propose edits if the jurisdiction is not favorable or if arbitration rules are unclear.
EDIT
Reject if the clause imposes unfair jurisdiction or lacks confidentiality provisions.
ADD
Add mediation as a preliminary step before arbitration to encourage settlement.
PRO TIP
Always verify the enforceability of the chosen jurisdiction and arbitration institution.
Example clauses
FAVORABLE
Comprehensive Dispute Resolution Clause
"This Agreement shall be governed by and construed in accordance with the laws of [State/Country], without regard to its conflict of law principles."
NEUTRAL
Basic Jurisdiction Clause
"Each party irrevocably agrees that the courts of [State/Country] shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Agreement."
UNFAVORABLE
Unclear Arbitration Terms
"Arbitration shall be conducted under rules to be agreed upon by the parties, with no specified location or language."
Fallbacks
International Contracts
For international contracts, ensure the clause specifies a neutral jurisdiction and international arbitration rules to avoid bias.
High-Value Transactions
In high-value transactions, include detailed arbitration procedures and a panel of arbitrators to ensure thorough dispute resolution.
Long-Term Partnerships
For long-term partnerships, mediation can be a valuable first step to preserve relationships before escalating to arbitration.
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