What does an independent contractor agreement cost? Many independent contractors ask this question when they start doing business and obtain new clients. Let’s explore this question and review some general information about independent contractor agreements.
How Much Does an Independent Contractor Agreement Cost?
An independent contractor agreement is a formal legal agreement, sometimes called a contractor or subcontractor agreement. This agreement is between an independent contractor and a client. It is executed before the independent contractor begins working on a project.
Independent contractors can perform various tasks for clients depending on their field of work. An independent contractor agreement protects both parties throughout the business relationship. Both parties are accountable and carry out their end of the deal.
Some topics that may be discussed in an independent contractor agreement include:
- Work to be done
- Compensation for the work
- Schedule of the job and payments
- Release from liabilities
These clauses will ensure that the contractor completes the work agreed upon promptly and that the client pays the contractor what is owed.
Many independent contractors choose to hire an attorney to draft their agreement. This document is vital to the success of an independent contractor’s business and must be drafted correctly. Any missing clauses or provisions could leave an independent contractor vulnerable to a lawsuit.
A lawyer will ensure that the contract adheres to local and state laws that regulate business contracts and securely protects both the contractor and the client throughout the business relationship.
Based on ContractsCounsel’s marketplace data, the average cost of a project involving an independent contractor agreement is $460.00.
What’s Included in an Independent Contractor Agreement
The purpose of an independent contractor agreement is to protect both the contractor and the client throughout the business relationship. The provisions included in the agreement serve this purpose.
Depending on the industry, confidentiality can be a big concern for clients. For example, one type of independent contractor is an IT consultant. It is common for IT consultants to be exposed to private client lists or intellectual property while working with a company. In this situation, the independent contractor agreement will include a confidentiality clause that prohibits the contractor from sharing company information.
Independent contractor agreements are only for external freelancers. Company employees do not operate in the same way as independent contractors and thus do not require these agreements.
Other information that is often found in an independent contractor agreement includes:
- Deadlines. Dates when work is expected to be completed and when the client is expected to pay.
- Scope of Work. The services the contractor is providing for the client.
- Compensation. How much the client has agreed to pay for services and a schedule for payments to be made.
- Termination. How the contract ends and grounds for either party to terminate the agreement early.
- Release of liabilities. A provision that releases the contractor from liability for any damages caused during the scope of work and contract duration.
Independent contractor agreements can be as simple as the contractor desires but still, need to be drafted correctly. For example, if the agreement leaves out key provisions, the contractor could be left unprotected from legal action.
What is an Independent Contractor?
Independent contractors, also called freelancers, subcontractors, or consultants, are self-employed individuals or businesses and do not work as employees for a company.
The IRS states that a person is an independent contractor if “the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.” This means that the services performed by an independent contractor are not controlled by an employer. Instead, the contractor decides how and what work will be completed and pays the client directly.
An independent contractor must complete a 1099 tax form and do not receive any employment benefits like company employees are offered. This means that independent contractors are responsible for their own health insurance, liability insurance, and retirement.
Examples of Independent Contractor Agreement Projects
Independent Contractor Agreement Drafting
An independent contractor agreement must be drafted correctly to protect both the contractor and the client. A lawyer familiar with the way independent contractors work will know what needs to be included in this important contract.
Drafting an independent contractor agreement will typically start with legal consultation. The lawyer will want information about the business and services provided to tailor an agreement to the needs of the contractor.
Drafting services may also include revisions, additional meetings, and ongoing consulting. Still, many lawyers will charge more legal fees for other services.
Independent Contractor Agreement Review
There are many templates available for independent contractor agreements. While some contractors may believe that a boilerplate contract is sufficient for their business, they should proceed with caution. Depending on the type of work completed for clients, contractors may need specialized clauses added to the agreement for protection.
Even if a contractor finds a good contract template, they should still meet with a lawyer to review and revise the contract before using it for business practices. A contract lawyer will make sure the contract includes all necessary clauses, fits the contractor's needs for the services provided, and complies with all applicable laws.
Independent Contractor Agreement Drafting Cost
Independent contractor agreement costs can vary based on length, complexity, and how many custom provisions must be included in the document.
ContractsCounsel’s marketplace data shows the average independent contractor agreement drafting costs are $526.25 across all states and industries.
Independent Contractor Agreement Review Cost
Hiring a lawyer to review an independent contractor agreement will also incur legal fees because the lawyer will need to go over the contract and make necessary revisions.
ContractsCounsel’s marketplace data shows the average independent contractor agreement review costs are $354.00 across all states and industries.
How Do Lawyers Charge for Independent Contractor Agreements?
Hourly Rates for Independent Contractor Agreements
Hourly rates are one of the most common fee arrangements used by lawyers. If a lawyer uses an hourly rate fee structure, they will bill their client for the number of hours a case or project takes at a set hourly rate. The client is informed of the hourly rate and must agree to this fee structure before the attorney begins work. Under this agreement, clients are usually billed periodically throughout the duration of the case.
The marketplace data for ContractsCounsel shows the average hourly rate for a contractor agreement lawyer ranges from $200 - $350 per hour.
Flat Fee Rates for Independent Contractor Agreements
Flat fee billing structures are becoming more popular for contract drafting projects like an independent contractor agreement. Lawyers will provide the client with a flat fee for the requested services. If the client agrees, they will pay the fee upfront before the lawyer begins working.
The benefit of flat fee billing is that it provides certainty to the client on the project's total cost. However, it is important to ensure the client knows what’s included with the fee before starting the project, as it may not involve rounds of revisions or consultations.
ContractsCounsel's marketplace data shows the average flat fee rate for contractor agreement costs to be $460.00.
Get Help with an Independent Contractor Agreement
Do you need help with an independent contractor agreement project? If so, post a project in ContractsCounsel’s marketplace to receive flat fee bids from business lawyers to handle your project. All lawyers on the ContractsCounsel’s platform are vetted by our team to make sure you are provided with top tier service.