Consulting Guidelines

The University of Alabama encourages faculty to participate in outside professional activities through consulting arrangements that contribute to their profession, to the broader community, and to the University’s public service mission. Engagement with the outside community is also an important component of the academic enterprise and one way in which faculty and other researchers maintain contact with research directions and priorities that exist in the private sector. This knowledge also guides faculty in preparing students for careers in the private sector.

Outside organizations that desire to obtain consulting services from University faculty will typically require the execution of a consulting agreement. These agreements may contain terms that conflict with the obligations of the faculty member to the University. In addition, such agreements may contain terms that affect the future efforts of the faculty member at the University, create personal liability for the faculty member, or impose other obligations on the faculty member that he or she may not be willing to assume. Therefore, these agreements should not be signed before careful review of their terms and the obligations they create.

Ideally, the faculty member should talk with their personal attorney before executing an agreement with a commercial firm, to ensure that their personal interests are protected and that the terms of the agreement do not conflict with their employment obligations to the University. The faculty member also should make the company aware of their obligations to the University.

In order to help faculty members identify the issues that may arise from entering into a consulting agreement and to provide some suggested methods of managing those issues, the University offers the following information for consideration.

1. The consulting agreement should be in writing, signed by the company, and include a clearly defined scope of work. Consulting activities should be performed in a relatively narrow and well-defined field. Avoid broad definitions such as “Company Business”.

2. Avoid or use caution in accepting exclusive consulting arrangements. Consider the ramifications of agreeing to consult with only one company in a broad field.

3. Carefully consider the term (duration) of the consulting agreement. Ideally, the agreement should be terminable after reasonable notice and without having to give a reason.

4. Carefully review any representations and warranties, especially with regard to intellectual property issues. Avoid accepting “fiduciary” duty or responsibility. Consultants required to accept “fiduciary” responsibility should be covered by insurance protection provided by the company.

5. Consulting agreements between faculty and outside entities are personal agreements to which the University is not a party. The University does not provide any insurance or other indemnity for the benefit of the faculty member in the performance of their consulting responsibilities. A consultant should strongly consider obtaining personal insurance for any liabilities that may arise from the consulting relationship. The University will not be responsible for providing legal help or for payment of any claim arising from a dispute with the company.

6. It is the responsibility of the University faculty member engaging in outside consulting to make it clear to the client that the consultant does not represent the University of Alabama in the performance of the work. Use of University letterhead or logo on any document related to the consulting activity is prohibited.

7. Consider including the following language in all Consulting Agreements clarifying the personal, non-institutional nature of such services:

Notwithstanding anything herein to the contrary, Company agrees that CONSULTANT serves Company under this Agreement in his individual capacity, as an independent contractor, and not as an agent or representative of the University of Alabama (“Institution”), that Institution exercises no authority or control over CONSULTANT while acting in such capacity, that Institution receives no benefit from such activity, that CONSULTANT and/or Company cannot and will not make use of Institution resources or Institution managed funding in acting in such capacity, that Institution is not a party to this Agreement, and that Institution makes no representations or warranties under this Agreement and assumes no liability or obligation in connection with any such work or service undertaken by CONSULTANT. Company further agrees that any breach, error, or omission by CONSULTANT acting in such capacity or otherwise under this Agreement, shall not be imputed or otherwise attributed to Institution. Moreover, nothing in this Agreement shall be read or understood to encumber, in any way, any intellectual property that Institution claims ownership of through the Institution’s Intellectual Property Policy as such may be amended from time to time.

8. A faculty member cannot use University facilities, equipment or resources to perform personal consulting activities unless the faculty member reimburses the University for the use of those University resources at the standard market rate under a permissive agreement with the University. The incidental and de minimus use of a University computer for routine correspondence is excluded from this prohibition.

9. It is the faculty member’s responsibility to be aware of their University-related contractual or grant obligations in dealing with external parties and to ensure that they take no action that violates any of their contracts or agreements in place at the University.

10. Likewise, it is the responsibility of a University employee to ensure that the terms of a consulting agreement do not conflict with their University research and teaching obligations and that they are consistent with University employment obligations regarding disclosure and assignment of inventions to the University.

11. All inventions made by a University employee must be disclosed to the University,
including inventions made on weekends, on leave, at home “in the garage,” or during paid or
unpaid consulting work. Disclosure is a legal obligation of employment at the University.

12. The process of determining the University’s rights in any potentially patentable invention made by a University employee is initiated with the disclosure of an invention, typically on a Record of Invention form. The University may assert its right to an invention: (1) which is the result of research carried on by or under the direction of any employee of the University and/or having the costs thereof paid from University funds or from funds under the control of or administered by the University or (2) which is made by an employee of the University and which relates to the inventor’s field of work at the University, or (3) which has been developed in whole or in part by the utilization of University resources or facilities belonging to the University.

13. Consulting agreements often have language that requires assignment of patentable discoveries and/or other intellectual property to the company. The agreement may also prohibit publication of research results, may have overreaching confidentiality demands, or may impact the rights of other University colleagues or students in related research activities and thus stand in direct conflict with a faculty member’s employment obligations already made to the University and possibly with the University’s obligations already made to sponsors or supporters of University research activities. Faculty should also be aware that consulting contracts that inappropriately assign intellectual property to an outside entity may be challengeable and/or unenforceable.

14. University employees are strongly encouraged to include a provision in their consulting agreements acknowledging that the University employee has preexisting obligations to disclose all inventions to the University and to assign to the University any intellectual property resulting from activities that involve University research funds or facilities, University commitments to others, or that fall within the employee’s scope of employment. This is most typically accomplished by stating: Company acknowledges that consultant is an employee of the University of Alabama and that disclosure and assignment of intellectual property arising under this consulting agreement is subject to pre-existing obligations to the University.

15. The academic or research activities of students should not be included in the faculty member’s consulting activities and a faculty member should not hire or supervise a University student as part of his or her consulting activities if he or she serves as an advisor or committee member regarding the academic or research activities of the student.

16. Great care must be taken not to compromise future research funding. Although consulting agreements are personal, if such agreements are not properly formulated, they can complicate future University research programs and related funding, and may affect other researchers at the University. Companies employing consultants may desire commercial access to inventions made during the course of the consulting arrangement and often will seek rights to future yet-to-be-developed inventions that have a relation to the consulting activity. (Faculty, of course, cannot legitimately grant such rights.) Any “agreement” to provide such rights to future research results would create a cloud on the ability of the University to provide comparable rights to other companies that sponsor future University research. Most potential research sponsors would refuse to fund research if access to resulting inventions is complicated by prior obligations made through a consulting arrangement.

17. It is not uncommon for a company to disclose proprietary information to a consultant. In doing so, the company will want assurances that this information will be kept confidential. Maintaining confidentiality can be a tricky proposition for a researcher who has similar obligations to other sponsors of University research. Confidential information acquired as part of a faculty member’s University responsibilities cannot be used for the benefit of a company hiring that faculty member as a consultant. Maintaining the required distinctions between University and personal confidential information is a difficult proposition under the best of circumstances. Furthermore, any disclosure of proprietary information, either intentionally or unintentionally, may be actionable under both criminal and civil law. Therefore, it is essential to limit the amount of confidential proprietary information received when consulting, to agree in advance to receive it, and to have the company agree to clearly identify such proprietary information by marking it as “confidential.” Consulting agreements should, if possible, include a
“no-fault/no liability” statement regarding unintentional disclosures.

18. Consultants are normally asked to provide advice to the company, which may or may not be accepted. Usually the consultant has no control over how such advice may be applied in practice. Therefore, agreements should limit the consultant’s potential liability to negligent acts on his or her part only.