Professional Services Agreement

Jump to Section

Need help with a legal contract?

CREATE A FREE PROJECT POSTING
Post Project Now

What Is a Professional Services Agreement?

A professional services agreement (PSA) is a form that firms or consultants can use to create a contractually binding arrangement with a highly skilled business or individual. These agreements usually cover single projects with defined scopes or timelines. As a legally binding contract, a PSA provides protection for both the consultant and the business that requests the services.

A PSA typically lists the services that the consultant will perform, the compensation that the business will provide, and the time frame for the contract. Because many PSAs also detail procedures, terms, and requirements for the service, they can be several pages long.

Who Needs a Professional Services Agreement?

Because PSAs tend to be detailed and lengthy, most organizations use them only when contracting a consultant to provide highly technical professional services. The “professional” aspect of a PSA can refer to two different definitions of the term:

  • Professional license: Service providers may have required business licenses that legally allow them to offer skilled services in a designated region.
  • Professional approach: Consultants may have specific qualifications, such as advanced certifications, a predetermined amount of high-level experience, or certain technical capabilities.

What Type of Services Can a PSA Cover?

Professional services typically cover intellectual deliverables rather than physical products. For example, a PSA wouldn't be appropriate for an organization providing manufacturing, labor, or construction services. However, your organization may need a PSA if you contract a consultant to provide services like:

  • Auditing
  • Cost estimation
  • Data analysis
  • Environmental studies
  • Laboratory analysis
  • Land surveys
  • Management consulting
  • Market research or analysis
  • Project or campaign planning
  • Program evaluation
  • Software development
  • Technical support
  • Translation
  • Web design or development
  • Writing or editing

Here is an article with more examples of professional services.

When Should You Use a Professional Services Agreement?

Most organizations use PSAs for projects with clearly defined requirements, such as limited time frames or specific tasks. However, some PSAs cover ongoing services that require advanced technical skills, certifications, or licenses. PSAs can even serve as blanket agreements that allow a business to contract a consultant or firm for a set period of time.

No matter what your PSA covers, your organization should always prepare one before starting to work with a consultant. By signing a PSA before services commence, you can establish the scope of the project, the workflow, the time frame, the rate, and other key details.


Get Free Bids to Compare

Leverage our network of lawyers, request free bids, and find the right lawyer for the job.

Get Bids Now

What Information Goes Into a Professional Services Agreement?

You can customize a PSA to include almost any necessary stipulations or protections. However, most PSAs include a few standard sections:

  • Purpose: States the general nature of the contract, such as the organization engaging the consultant to perform services as defined in an attached document, often labeled Schedule A
  • Services or Duties: An attached document often labeled Schedule A that includes a description of the project, the scope of the work, and the deliverables that the consultant will provide
  • Term: Specifies the start and end date of the PSA or the number of days, weeks, or months the agreement lasts
  • Timetable: An attached document often labeled Schedule B that includes the dates by which the consultant will reach major project milestones
  • Compensation: States the exact or maximum amount the organization agrees to pay the consultant and may include an attached document often labeled Schedule C that features a timetable for periodic payments
  • Personnel: An attached document often labeled Schedule D that lists the individual consultants who will provide the stated services
  • Relationship Between Parties: Establishes that the consultant remains an independent contractor and is not employed by the organization
  • Confidentiality: Confirms that the consultant agrees to keep any data or other information involved in the project confidential
  • Rights: Clarifies which party owns any data or intellectual property (IP) collected or produced as part of the project
  • Indemnification: Confirms whether the consultant or the organization can be held liable for any damages that arise from the project
  • Insurance: Lists the types of insurance coverage the consultant must have throughout the project, such as statutory workers' compensation, commercial general liability insurance, property insurance, automobile liability insurance, professional liability insurance, or crime insurance
  • Compliance: Maintains that the consultant will adhere to any federal, state, or local laws and regulations that apply to the project
  • Assignment: Confirms whether the consultant has the discretion to assign the agreement to another consultant or subcontractor
  • Termination: States how, when, and under what circumstances the organization can terminate the PSA as well as whether the consultant will continue to receive compensation

Image via Unsplash by sctgrhm

How Do a Professional Services Agreement and a Subcontract Differ?

Subcontracts and PSAs are both binding agreements that outline the services a firm or consultant will provide for another organization. However, an independent contractor or subcontractor carries out the services included in a subcontract, while a vendor provides the services detailed in a PSA.

A subcontractor:

  • Has a more involved business relationship with the organization
  • Takes responsibility for important decisions regarding the project
  • Is expected to reach performance goals related to the project
  • Must follow project-specific rules established by the organization
  • Receives payment for implementing a program or project
  • Provides ongoing services over a period of months or years

A vendor:

  • Provides services that aren't specific to a project or its unique requirements
  • Has a number of competitors who provide the same or similar services
  • Offers services that support the organization's programs
  • Is not required to meet performance goals or internal metrics

What Other Types of Business Agreements Do Consultants Need?

In addition to PSAs, consulting firms and independent consultants often need a range of contracts and legally binding documents. As a consultant, you may have to prepare:

  • Consulting Agreement: When consulting for another organization, many firms prepare a simple contract that states the scope of work, the time frame, and the consequences of breaching the agreement.
  • Limited Liability Company (LLC) Articles of Organization: If you start a consulting firm, you may opt to form an LLC. In most states, you have to file articles of organization to register your LLC with the Secretary of State. Many LLCs must also create an operating agreement, which is an internal document.
  • Nondisclosure Agreement: When working with confidential information, consultants often have to sign an NDA, preventing you from sharing proprietary information.

Do You Need an Attorney for a Professional Services Agreement?

Whether you need to customize a standard PSA or you want to create an agreement from scratch, it's important to have a lawyer draft the document. When you contract an attorney, you can benefit in a few key ways:

  • Language: An experienced attorney understands how to interpret legal terms and what language to include to create a legally binding agreement.
  • Customization: If you need to include an extra element like an NDA or a customized version of a standard component like a timetable, a lawyer can ensure that your PSA covers your unique project.
  • Protection: An attorney can make sure a PSA offers protection for both parties involved. Most PSAs protect consultants from liability while providing adequate compensation, and they ensure that organizations receive the services as stated.
  • Review: Before you sign the other party's PSA or agree to their requests to revise yours, a lawyer can review the document and ensure that it provides sufficient protection.

Here is an example of a standard PSA.

No matter what type of PSA you need, the ContractsCounsel team is at your service. Get a free proposal and take the first step toward creating a customized professional services agreement today.



Explore Our Network of Lawyers

We recruit and onboard great lawyers so you can find and hire them easily.

Browse Lawyers Now

Meet some of our Professional Services Agreement Lawyers

ContractsCounsel verified
Partner / Attorney at Law
13 years practicing
Free Consultation

Creative, results driven business & technology executive with 24 years of experience (13+ as a business/corporate lawyer). A problem solver with a passion for business, technology, and law. I bring a thorough understanding of the intersection of the law and business needs to any endeavor, having founded multiple startups myself with successful exits. I provide professional business and legal consulting. Throughout my career I've represented a number large corporations (including some of the top Fortune 500 companies) but the vast majority of my clients these days are startups and small businesses. Having represented hundreds of successful crowdfunded startups, I'm one of the most well known attorneys for startups seeking CF funds. My engagements often include legal consultation & advisory roles, drafting of NDAs, TOS & Privacy Policies, contracts and corporate law, business strategy advice & consulting, in-house counsel, Founder & entrepreneur guidance and other roles as needed by my clients. I hold a Juris Doctor degree with a focus on Business/Corporate Law, a Master of Business Administration degree in Entrepreneurship, A Master of Education degree and dual Bachelor of Science degrees. I look forward to working with any parties that have a need for my skill sets.

ContractsCounsel verified
Managing Partner
23 years practicing
Free Consultation

Seasoned technology lawyer with 22+ years of experience working with the hottest start-ups through IPO and Fortune 50. My focus is primarily technology transactions with an emphasis on SaaS and Privacy, but I also provide GC services for more active clients.

ContractsCounsel verified
Founder
6 years practicing
Free Consultation

I am a California-barred attorney specializing in business contracting needs. My areas of expertise include contract law, corporate formation, employment law, including independent contractor compliance, regulatory compliance and licensing, and general corporate law. I truly enjoy getting to know my clients, whether they are big businesses, small start-ups looking to launch, or individuals needing legal guidance. Some of my recent projects include: -drafting business purchase and sale agreements -drafting independent contractor agreements -creating influencer agreements -creating compliance policies and procedures for businesses in highly regulated industries -drafting service contracts -advising on CA legality of hiring gig workers including effects of Prop 22 and AB5 -forming LLCs -drafting terms of service and privacy policies -reviewing employment contracts I received my JD from UCLA School of Law and have been practicing for over five years in this area. I’m an avid reader and writer and believe those skills have served me well in my practice. I also complete continuing education courses regularly to ensure I am up-to-date on best practices for my clients. I pride myself on providing useful and accurate legal advice without complex and confusing jargon. I look forward to learning about your specific needs and helping you to accomplish your goals. Please reach out to learn more about my process and see if we are a good fit!

ContractsCounsel verified
Contract and IP Attorney
3 years practicing
Free Consultation

I am a NY licensed attorney experienced in business contracts, agreements, waivers and more, corporate law, and trademark registration. My office is a sole member Law firm therefore, I Take pride in giving every client my direct attention and focus. I focus on getting the job done fast while maintaining high standards.

ContractsCounsel verified
Attorney
25 years practicing
Free Consultation

A twenty-five year attorney and certified mediator native to the Birmingham, Alabama area.

ContractsCounsel verified
Attorney
11 years practicing
Free Consultation

Longtime corporate real estate counsel with specialities in commercial leasing, contracts, corporate governance, and general small business/startup/entrepreneurship legal issues.

ContractsCounsel verified
Attorney/Owner
10 years practicing
Free Consultation

I absolutely love helping my clients buy their first home, sell their starters, upgrade to their next big adventure, or transition to their next phase of life. The confidence my clients have going into a transaction and through the whole process is one of the most rewarding aspects of practicing this type of law. My very first class in law school was property law, and let me tell you, this was like nothing I’d ever experienced. I remember vividly cracking open that big red book and staring at the pages not having the faintest idea what I was actually reading. Despite those initial scary moments, I grew to love property law. My obsession with real estate law was solidified when I was working in Virginia at a law firm outside DC. I ran the settlement (escrow) department and learned the ins and outs of transactions and the unique needs of the parties. My husband and I bought our first home in Virginia in 2012 and despite being an attorney, there was so much we didn’t know, especially when it came to our HOA and our mortgage. Our real estate agent was a wonderful resource for finding our home and negotiating some of the key terms, but there was something missing in the process. I’ve spent the last 10 years helping those who were in the same situation we were in better understand the process.

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call