What does a professional services agreement cost? You may ask this question if you need to hire an experienced consultant. Let’s explore this question and review some general information about professional services agreements and how they work.
How Much Does a Professional Services Agreement Cost?
A professional services agreement, often abbreviated as a PSA, is a legally binding contract used when a party hires an experienced consultant for a specific period of time.
Professional services agreements are often executed between business entities and professionals who assist the business with a unique service.
Some common professional services that may require a PSA include:
- Software development services
- Web design services
- Auditing
- Data analysis
- Program evaluation
- Writing or editing services
Professional services agreements are typically used for a one-time service. Still, they can be drafted for continuing services agreement or master agreements. These agreements will describe the type of work or service the professional provides, the contract's duration, and compensation terms.
When faced with needing a professional services agreement, many business owners turn to an experienced lawyer to draft the agreement.
A contract lawyer familiar with professional services agreements will know what the document needs to include to protect the business’s and the contractor’s interests and be legally binding and enforceable.
Based on ContractsCounsel’s marketplace data, the average cost of a project involving a professional services agreement is $690.00.
What’s Included in a Professional Services Agreement
Service agreements are used in various industries for various business purposes. These contracts are highly customizable but should include the following key elements:
- Parties. A detailed description of the two parties entering the professional services agreement. This should include each party's name, business name, and contact information.
- Services provided. The services that the contractor will provide should be detailed and specific. This can include a description of the project, the scope of work, and any deliverables that will be provided.
- Compensation. The cost of the services and a payment terms agreement should be included in the professional services agreement.
- Duration. Some PSAs are executed for a single service, while other contracts are for long-term projects. Therefore, the duration of the contract, including start dates, end dates, and a proposed work schedule with project milestones, should be included in the agreement.
- Liability. Some services carry inherent risks. The liability clause in a professional services agreement will specify which party is responsible for these risks if damages occur during the business transaction.
- Insurance. Some service providers and professionals must carry insurance policies to cover the type of work they perform. Common types of insurance include worker's compensation, commercial general liability, and end property insurance.
- Confidentiality clause. In certain situations, professionals like human resource professionals or information technology professionals will encounter sensitive information. A confidentiality agreement in the professional services agreement will protect any private information the service provider learns while working with a company.
- Relationship between parties. The professional services agreement should specify that the professional providing services are a 1099 independent contractor, not an employee.
- Compliance. The professional consultant agrees to follow all laws that apply to the professional services.
- Termination clause. It lays out how either party can end the agreement and if there are any penalties for ending it before the specified term.
- Signatures. Both parties must sign the contract.
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Professional Services Agreement Drafting
Professional services agreements are important documents that establish a working relationship between a business entity and a professional consultant who provides specialized services.
Without a well-written professional services agreement, either party could be at risk if one party fails to uphold their end of the contract.
Many businesses hire an attorney to draft a professional services agreement with professional consultants. A lawyer will ensure that the professional services agreement is drafted correctly and follows all applicable laws.
An experienced lawyer will know what the contract needs to include to ensure that the business and the professional consultant are protected throughout the consulting project.
Professional Services Agreement Review
You may want to have an attorney review the contract before moving forward with a business agreement if you have a professional services agreement or are asked to sign a professional services agreement.
If you have a professional services agreement, you may want a lawyer to look it over to ensure it includes all necessary terms and conditions and that the information is up to date and follows state and local laws.
Suppose you are faced with signing a professional services agreement. In that case, having a lawyer look over the contract is a good idea to ensure it is fair and fully protects your interests. Contracts are typically drafted with the drafting party’s needs in mind, so the agreement could be one-sided or fail to protect both parties equally.
A contract lawyer can review the terms of your professional services agreement and ensure that it is fair and legally enforceable. In addition, your lawyer will be able to explain the contract to you, so you are fully aware of all your obligations.
Professional Services Agreement Drafting Cost
You will incur legal fees if you hire a lawyer to draft a professional services agreement. In addition, a lawyer will charge for the time it takes to draft the agreement, and may include additional fees for consultations, office staff work, and communication.
ContractsCounsel’s marketplace data shows that the average professional services agreement drafting costs $640.00 across all states and industries.
Professional Services Agreement Review Cost
Suppose you choose to draft your professional services agreement or you have been presented with a contract that you want to be reviewed. In that case, you can also hire a lawyer for document review services. A lawyer will charge for their time reviewing the contract, but the fees are typically less than drafting fees.
ContractsCounsel’s marketplace data shows that the average professional services agreement review costs $750.00 across all states and industries.
How Do Lawyers Charge for a Professional Services Agreement?
Hourly Rates for Professional Services Agreements
Hourly rate fee structures are a common way for lawyers to bill clients. Under an hourly rate, the lawyer will keep track of their time working on the project and then bill the client for the total number of hours at a predetermined hourly rate.
This fee structure ensures that the lawyer is paid for their time even if the project takes longer than expected.
ContractsCounsel’s marketplace data shows that the average hourly rate for a professional services agreement lawyer ranges from $200 - $350 per hour.
Flat Fee Rates for Professional Services Agreements
When a lawyer is hired for a specific project, like drafting or reviewing a professional services agreement, they may choose to charge a simple flat fee rate instead of keeping track of their hours.
Under this fee structure, the lawyer will provide their client with a flat fee quote for legal services. The client is typically required to pay this fee upfront and usually will not incur additional fees unless additional legal work is completed.
ContractsCounsel’s marketplace data shows that a professional services agreement's average flat fee rate is $690.00.
Get Help with a Professional Services Agreement
Do you need help with a professional services agreement project? If so, post a project in ContractsCounsel’s marketplace to receive flat fee bids from contract 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.
