The reality of obtaining a Professional Service Contract through a third party, for example, a Lead Consultant or Agent.
It is quite common for a consultant to be introduced to a client by a third party. For example a Lead Consultant who has a relationship with the client, will identify a client need and therefore an opportunity but not have either the resource or expertise to deliver the assignment personally. In this situation the Lead Consultant may engage an Associate or Subcontractor to deliver the assignment.
Similarly, an Agent may have a relationship with the client, and be retained by the client on an ongoing basis to source particular professional consulting expertise as and when required. In this circumstance the Agent has the lead relationship with the client and the consultant contracts with the agent, not directly with the end client.
How it works
In both circumstances the Lead Consultant or the Agent will make a margin (or 'take a cut') on the fees that are charged by the delivery consultant.
For example, a Lead Consultant might charge the client $2,000 per day for the delivery consultant's input and pass a percentage of this daily rate through to the delivery consultant. Typically the margin for the Lead Consultant would be anything up to 100% i.e. of the $2,000 Paid by the client; the Lead Consultant retains $1,000 and passes $1,000 through to the delivery consultant.
An Agent will typically charge a much lower rate, for example, he may simply mark up the daily rate charged by the delivery consultant, in this case $1,000, by a percentage such as 25%. Hence the client would pay $1,250 per day and the agent would retain $250 per day.
Some contractors resent the fact that others are making a profit from their hard work and professional expertise. When discussing this matter with peers, I simply make the point that the consultant has a simple choice, namely does he want 50% of $2,000.00 per day or 100% of nothing? Typically this raises a smile and an acknowledgement that were it not for the introduction by either the Lead Consultant or the Agent, then there simply would be no opportunity whatsoever to work with that client.
You will have a Professional Service Contract with the Agent or Lead consultant. He, in turn will have a separate Professional Service Contract with the End Client.
To get a fuller understanding of the range of different types of relationship that are possible, I suggest you review my page that summarises the main operating models and contactual options . This information will help you to identify the Professional Service Contract that will be best suited to the situation.
Summary and a few words of caution
In summary, if you get the opportunity to secure a Professional Service Contract through a third party then it could well prove to be a highly profitable assignment. However, be cautious, and I would recommend that you sense check the following two points:
1. Challenge the Lead Consultant to demonstrate that the work has not been 'Oversold' - at the end of the day it will be YOU who will be accountable for delivering what the Lead Consultant has sold to the client within the budget that has been agreed. Therefore it will be YOUR reputation on the line if the assignment is Oversold i.e. not realistic or achievable.
Check out the page on
how to avoid Overselling
for more information.
2. If you secure an introduction to a new client and a Professional Service Contract via a third party such as an Agent or Lead Consultant, then you need to accept from day 1 that you do not own that relationship. You will assume the role of Subcontractor or Associate. Check out my page on Subcontractors and Associates and NEVER be tempted to try to poach that relationship from your introducer.
Jump back from Working Through Agencies & Lead Consultants (sourcing a Professional Service Contract) to Contracts & Agreements