Quick Guide to Outside Consulting for UC Berkeley Faculty

Outside Consulting Agreements

This guide to outside consulting agreements is designed as a tool to assist faculty at the University of California, Berkeley, with issues to consider when entering into personal outside consulting agreements. This guide is not to be taken as legal advice; faculty may wish to seek personal legal advice prior to signing any such agreement.

The University of California encourages its faculty to participate in activities that contribute to their profession and to the outside community. Consulting is a professional activity related to a person’s field that is undertaken with an outside party, usually for a fee-for-service. Although outside consulting arrangements are personal, language in consulting agreements can create conflicts with the obligations of a faculty member to the University. Faculty members and other researchers may engage in consulting with outside entities as long as University facilities are not utilized and the consulting activities do not interfere with teaching and research responsibilities to the University. Outside consulting activities are governed by Regents Policy 7303: Policy on Service Obligations and Leaves of Absence and the University Policy on Outside Professional Activities of Faculty Members (APM-025).

Risk of Conflicts and Litigation

All employees of the University sign a Patent Agreement/Acknowledgment as a condition of employment. Under the University Patent Policy, employees agree to disclose all inventions and patents to the University, and to assign them to the University, except those resulting from permissible consulting activities.

Often outside consulting agreements have language that requires assignment of patentable discoveries and/or other intellectual property to the company. Such a requirement might stand in direct conflict with obligations already made to the University and possibly with the obligations made by the University to sponsors of research. Thus, faculty who engage in consulting (or in summer or incidental employment outside the University) are advised to consider the terms of any proposed agreement with a company carefully to insure that no conflict exists with existing obligations. It is also recommended that the company be informed of faculty obligations to the University.

Compromising Future Research Funding

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 jeopardize future University research programs and related funding. 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 made at the University related to the consulting activity. An agreement to provide such rights to future research results would preclude the University from providing comparable rights to other companies that sponsor University research. Most potential sponsors would refuse to fund research if their access to resulting inventions were denied because of prior obligations made through a consulting arrangement.

Acceptance of Confidential Information

It is not uncommon that a company will disclose proprietary information to a consultant. In doing so, the company will want assurances that this information will be kept confidential. Confidentiality can be tricky for a faculty member involved in open, free exchanges of information in a public university setting. Disclosure of proprietary information, either intentionally or unintentionally, may be actionable under criminal as well as civil law. Therefore, it is essential to limit the amount of confidential information received when consulting and to have the company agree to clearly identify such proprietary information by marking it as “confidential.” Consulting agreements should always include a statement about the transmission of proprietary information and a no-fault statement regarding unintentional disclosure.

Liability

Consultants are normally asked to provide advice to the company that may or may not be accepted. Usually the consultant has no control over how the results are used in practice. Therefore, consulting agreements should limit the consultant’s responsibilities to negligent acts on the part of the consultant only. Under no circumstances should a consulting agreement include general liability or liability for any product produced based on the consulting. It is essential to have personal insurance for the liability exposure faced as a consultant. The University will not be responsible for providing legal help or for payment of any claim arising from a dispute with the company.

California State Law Provision

Most consulting agreements will indicate that the laws of a particular state or country will be used in a dispute, usually those of the state or country where the firm is located or where the consulting is taking place, and that the litigation of any dispute will physically take place in that state or country. As this could be very costly and disruptive, it is important to try to include a statement in a consulting agreement that in the event of a dispute California State law will apply.

Disclosing Financial Conflict of Interest

Under the California Political Reform Act of 1974, a Principal Investigator must disclose whether or not there has been any consulting activity with a company when accepting funding for research from that company. The National Science Foundation and the Public Health Service also require disclosure of consulting income under specified conditions. Thus, an existing or prior consulting arrangement might require that proposed funding be reviewed and approved by appropriate campus officials for possible financial conflicts.

Amount of Compensation/Allowable Consulting Days

The University does not set any cap on compensation from outside personal consulting arrangements. Full-time faculty members on a nine-month appointment may engage in compensated consulting activities for 39 days during the academic year. Full-time faculty members with fiscal-year appointments may engage in compensated consulting for 48 days for the entire year. Faculty members may consult full time during the summer months in which there is no other salary compensation from the University (such as work on sponsored projects).

Reporting Consulting Activities

Under University policy (APM-025), faculty are required to submit annual reports to department chairs on their outside professional activities which includes consulting.