I'm revising my standard engagement agreement and want to tighten up the termination language. Currently I have a simple 30-day written notice clause, but I've had a couple of situations where clients terminated after I'd done significant upfront work but before finding any major savings. Alabama Power customers seem particularly quick to pull the plug if they don't see immediate results. What termination provisions do you all use to protect yourselves?
Standard termination clause language - what do you use?
Albert, I use a 60-day notice period with a minimum fee provision. Client has to pay for all work completed plus 25% of the remaining estimated fee if they terminate in the first six months. After six months, they just pay for work completed. This protects you from clients who get cold feet after you've invested time in data gathering and preliminary analysis. Entergy customers down here have been pretty reasonable about this structure.
I include a clause that makes the client responsible for all costs incurred up to the termination date plus any non-cancellable commitments I've made (like ordering specialized metering equipment). The key is defining "costs incurred" clearly - I include travel expenses, research time, and any third-party services I've engaged. Pennsylvania utilities generally accept this language without pushback.
Sylvia's point about non-cancellable commitments is important. I learned that the hard way when a client terminated right after I'd ordered $3,200 worth of power quality monitoring equipment for their facility. Now I always get client approval in writing before making any significant purchases and include language making them responsible for those costs regardless of termination timing.