Collaborating With Other Consultants

©2004, Johanna Rothman

This article was originally published in Diamond Harvard Business Review, May 2003.

- I’m so busy, I barely have time to think. I don’t have enough money to hire on someone full time, but I’d like to get off the merry go-round.

- I wish I had more business.

- How can I take on jobs with more challenge?

- I’m lonely. I don’t want to keep working alone.

Consultants have problems like these all the time: living through the feast/famine cycle, inadequate knowledge to take on new work, and loneliness. If you’re suffering through any of these problems it’s time to consider changing how you collaborate with others.

Collaboration can take many forms:

• Refer other consultants
• Write with another consultant
• Present with another consultant
• Refer a consultant for a fee
• Work with one other consultant
• Create a consulting partnership

Review the collaboration steps and see where you can improve your collaboration to create an even more healthy consulting business.

Refer other consultants
Make a practice of referring other consultants to perform work you no longer perform. When I started my business, I taught test and development techniques to technical staff. I now focus my business on project management and people management, so I refer the testing and development work to other consultants.

Refer work you no longer perform, even if you’re desperate for money. A colleague, Fred, had this story:

“I had a slow period, and at the end of three months, I was worried about making the next mortgage payment. I took a contract to develop a system like some I’d developed as an employee. My first mistake was taking a full-time contract. Without making time to market, I couldn’t find new clients. My second mistake was taking development money instead of management consulting money. This client refused to hire me later at my management consulting rates because I’d performed development work.

What I didn’t realize was that I could have suggested a good contractor or offered to manage the project for them. If I’d done that, the client would have seen me as a management consultant. As a management consultant, they wouldn’t have expected me on site for a full workweek. I would have performed the consulting I enjoyed, not the development work I did to put food on the table. I wish I’d thought of more alternatives.

I don’t work for that company anymore, because they don’t believe I’m a management consultant. I can’t seem to break them of their initial impressions. I don’t use them as a reference. When the current management leaves, I might be able to consult to them, but for now, I cut off a client by taking work at a lower level.”

Fred violated most of Weinberg’s Laws of Marketing :

1. A consultant can exist in one of two states; State I (idle) or State B (busy).
2. The best way to get clients is to have clients.
3. Spend at least one day a week getting exposure.
4. Never let a single client have more than one-fourth of your business.

Fred had more alternatives to taking on the development work. He could have:

• Recommended a fellow consultant to the client for no money
• Suggested that he take over the project and run it for a fee
• Coached the people performing the work
• Referred the work to someone who wanted the work and received a finder’s fee

If Fred had suggested another consultant for the work, he would not have made any money just then. However, he would not have been too busy to market; he would have had time to obtain more exposure; and he would not have allowed this one client to have all of his time.

Referrals help you build your network. Clients respect you more when you define which work you will perform and which work you won’t perform. When you are helpful with clients and refer them to others, you are consulting—just not for money now. The money will come later.
Consultants give advice. Some advice we give for ?free,? such as when we speak or write publicly, or when we refer. But when you offer limited free advice, such as referring other consultants, you make life easier for your clients. They will remember and ask you to consult for money later.

Fred learned this painful lesson, and during the next slowdown, he contacted everyone in his network. He talked to some of his best clients, asking them about their business, suggesting books and papers to read. He noticed when local associations put on programs that were of interest to his best ten clients even when other consultants were speaking, and let them know about them. He became a resource, and after only two months of “free” advice, Fred landed his largest consulting engagement yet. His client said, “You know our business and our problems. We know you have our best interests at heart. We want you to help us solve these problems. With your connections, we know you’ll do a good job.”

Referrals help your clients see that you have an active and substantial network. A consultant with a large network is an asset to a client. Referrals create immediate business for others. The people to whom you refer work will remember you and refer other work to you, increasing your network and reputation.

Discretion counts when it comes to referrals: a large network by-and-of-itself isn’t always an asset — anyone can say they have a “large network.” What matters is knowing when and how to use it to add value to the client rather than adding value to you.

Write with another consultant
Once you’ve created your reputation, try writing with another consultant to explore a subject in different ways. Once you’ve explored the subject, you’ll know how you’d like to work with this person again.

I wrote an article with Karl Wiegers about project retrospectives . Karl and I have completely different writing styles, so it was both pleasurable and frustrating to write together. Pleasurable for seeing how the article became a combination of both of us. Frustrating because we don’t approach writing the same way.

However, the benefits of writing the article with Karl were:

1. We learned how each other writes. If we ever choose to write together again, we’ll both know to write better faster.
2. Each of us brings a different readership. By sharing my readership with Karl, and with him sharing his readership with me, we each gain an entrée to a different potential client base.
3. Each of us had specific perspectives on the topic. During the writing, we each learned from the other, to provide better retrospective services to our clients. If we ever chose to facilitate a retrospective together, we could provide a rich environment for the client.

I’ve written with other consultants. I’m in the midst of writing a book with Esther Derby about making the transition to management. Our writing collaboration has resulted in a more thorough exploration of the subject matter and in better consulting for our clients.

Present with another consultant
I enjoy speaking even more than I enjoy writing, so I’ve chosen to collaborate with Esther, Naomi Karten, and Elisabeth Hendrickson on speaking and workshops.

Collaborating with Naomi helped me bring more humor into my speaking. Naomi combines humor effectively with her message (in both the presentation and handouts), so I was able to learn how to observe her lightheartedness and adapt her style to my speaking and workshops.

When Elisabeth and I decided to collaborate on a workshop, we chose a subject (communicating with management) that we’d each written about and presented before our collaboration. Because we each had significant knowledge and experience about the topic, we were able to incorporate interactive activities in the workshop. The attendees loved the workshops.

When Esther and I developed and presented our first public “Making the Transition to Management” workshop, we learned how we each develop material and how to integrated our different speaking styles. Our attendees tell us that they appreciate our different perspectives and styles. They learn something different from each of us. Esther and I have presented many presentations and conference tutorials together. Since we trust each other and know how to work together, we’re comfortable and can be spontaneous with each other and the audience.

I learned these lessons from my collaborations with Esther, Naomi, and Elisabeth:

1. The other consultant has a valuable perspective I can choose to share with the audience. I can acknowledge it and explain when that viewpoint is useful when I’m presenting with the other consultant or at another time.
2. Presenting with others requires more presentation design, role clarification (who does what when), and practice. It’s worth it. The audience loves seeing multiple perspectives on the same topic.
3. I learned alternative techniques to explain concepts and integrate humor into my presentations. Since presentations are part performance and part education, I’m a better presenter for it.
4. Each consultant can reach more people together than they can separately. Especially if you’re considering presenting public workshops, you can more easily acquire the minimum number of participants when you speak with another consultant.
5. Working with new people keeps me fresh, and nothing works better than positive energy in front of an audience.

I learned a different lesson from presenting with another consultant, Jerry Weinberg. At the first AYE conference, my co-presenter was ill. Jerry filled in and gave me the support I needed to create an outstanding experience for the participants. Our presentation was different from the original planned presentation, and it was just as good. I gained more self-confidence from that presentation, and have since asked Jerry to review other presentation designs.

When you choose to write or present with another consultant, choose someone who complements your expertise. Discuss how you’ll develop the material and who’s responsible for what (initial editing, article submission, presentation submission, and so on). Then have fun!

Refer a consultant for a fee
There are ways to make money while you work with other consultants. One technique is to refer business to another consultant and charge a finder’s fee, a referral fee.

When you recommend people, you recommend for free. The client is free to take your advice, and the other consultant is free to reject the engagement. You have no obligation to the consultant or to the client, aside from wanting to see the client happy with your recommendation.
When you refer for a fee, you’ve defined an engagement between you, the client, and the consultant. You’re not employing the consultant, but you make money every time that consultant works for that client, depending on how you’ve arranged the agreement.

It’s possible to have a successful consulting referral business. I’m listed with a local Boston-area consulting referral group, the Consulting Exchange, www.cx.com. Geoffrey Day, the owner, does not charge the client for the referral. Instead, Geoffrey takes a percentage of the fee for the specific referral. When the initial engagement is complete, Geoffrey takes a smaller fee for ongoing business for up to three years.

Geoffrey has set up his business congruently, taking the client, the consultant, and his needs into account. His fees are fair. His fees from ongoing work from the initial engagement have an end-date. Geoff realizes that the more consultants he has in his network, the more money he can make with his referrals. If he tries to gouge his consultants, or have them work forever for a substantial fee, he will win the contract and lose the business. Geoff has chosen to make money over the long term, by developing ongoing relationships with consultants and clients, treating each fairly.

Day does something else that few do: consultants set their own rates, working directly for the client. And he works only on specific projects, making sure that the consultant retains flexibility for existing clients and that crucial marketing time. This attracts a better type consultant and eliminates many problems common with agency type referrals.

The CX and organizations like it can also help you enhance your own business. While we all have active networks, it is common to run into a situation where you don’t know the right person. Maybe you are in a new city, working in an industry where you haven’t a lot of contacts, or just not happy with your immediate network.

If you choose to set up referrals for your business, make sure you’ve considered your short-term and long-term profits. A consultant who was referred by another referral company had this experience:

“I’ve been on contract to this client for over a year. They still need me, but I’m not being paid enough. The referral company increased the rate they bill the client, but the referral company took my entire raise. I can’t keep working for these idiots. If I quit, I can’t go back and work for the client, or even talk to them for two years. Because I’ve been working full-time, I haven’t been marketing. I can’t keep working like this—it’s slavery.”

This consultant made an innocent mistake—signing up with an unethical referral company. If you choose to refer consultants and make money from their client work, here are some guidelines for success:

• Be fair to everyone. Don’t be greedy. Set up your fees so that you encourage each client and consultant to work with you over the long term.
• Charge a small enough amount that the consultant will want to continue working with the client, and not drop the client if a more lucrative engagement comes along. If you’re underpaying the consultant, they have no incentive to complete the work, especially on a long-term contract.
• Place a limit on the time a consultant can work with the client and still owe you a referral fee. You may have made the initial introduction, but after a few years, the client and consultant have maintained the business relationship without you.
• If you bill the client, pay the consultant on time even if the client hasn’t paid. If the consultant bills the client, make sure you see a copy of the invoice so you know that you’re being paid according to your agreement.
• Build this into the legal agreement: Make sure that when it’s time to change the fee, everyone has to agree to the fee change.
• Make sure a lawyer looks at the agreement and that the agreement is fair to all.

In my business, I choose not to make referrals for a fee. I leave that to the professionals whose strategic direction for their companies is referrals, like Geoffrey Day.

Work with one other consultant
Instead of referring for a fee, I prefer to either recommend other consultants to the client without charging a referral fee, or to accept the consulting engagement myself and collaborate with another consultant.
When you work with another consultant, make sure you avoid these traps:

1. Taking care of another consultant.
2. Creating a master/slave relationship with the other consultant.
3. Ignoring early signs that your styles don’t mesh.

John’s client wanted John to teach more students than John could teach in a workshop. John explained that the client could either have two workshops or one workshop with two instructors. The two-instructor workshop would cost the client a premium over the cost of two workshops. The client agreed, and John asked a colleague, Jack, to co-teach. Jack asked for half the entire workshop fee. John agreed — a big mistake. John had completed the initial marketing and selling work—without which Jack would not have known about the project. Additionally, John provided extra services to the client (organizing the workshop, making all the handouts, and billing the client) and to Jack (initial workshop draft, already-proven exercises, billing the client and payment to Jack). By the time John was done taking care of Jack and the client, John was exhausted. John was resentful of Jack, because John had taken care of everyone except John.

Unless you and the other consultant come to the negotiation with equal investment and abilities, don’t split the fee 50-50. If you’re the consultant managing the client, the billing, and the intellectual property, you deserve more than half the fee. Don’t leave yourself out of the list of people to take care of.

On the other hand, you needn’t create a master/slave relationship with a consultant. Early in my career, I agreed to perform an assessment with another consultant as a subcontractor. The primary consultant was concerned with my work, the time it took, and the results. He was even more concerned when the client appreciated my part of the assessment more than his. I had discovered the key piece of information in one week. The primary spent four months and had not discovered the key necessary for the client’s success.

The client asked us to help implement the changes based on my report. Even though I requested a change in fee, the primary consultant was unwilling to increase my fee. The primary paid me after he was paid. Since the client paid late, I was in the position of reporting to someone who didn’t understand the problem, paid me inadequately, and paid late. I finally decided to end my relationship with the primary consultant.
Fortunately, I did not have an agreement with the primary prohibiting me from working for the client. I explained to the client that I was not continuing to work for the primary, that they could choose to hire me by myself, they chose to.

I learned these lessons from that engagement:

• Negotiate each phase of the engagement separately. It made sense to have one fee for the assessment and for me to adhere to the primary’s style of reporting. It did not make sense to continue the same fee arrangements and reporting into both the client and the primary contractor when I was working independently after the assessment.
• If one consultant is billing the client, make sure the client understands how quickly they have to pay. In addition, set expectations for subcontractor payment.
• Make sure all parties believe the arrangements are fair. The client was unhappy about having to pay money for pieces of an assessment that were not useful. The primary was unhappy because his work was seen as second-rate. I was unhappy because my fees were too low for the ongoing work and I had to wait for the primary to bill the client.
• I hadn’t recognized the early indications that the primary consultant on the assessment was a controlling personality. If I’d paid closer attention to the pre-engagement activities, I would have recognized the signs, and managed our collaboration differently.

To create a successful collaboration, discuss the fee arrangements early, and decide how you’ll leverage each other’s network.

Discuss fee arrangements early
To create a successful collaboration, discuss who is responsible for which pieces of the engagement before you start the engagement.

Weiss has a formula for revenue sharing that divides the sale, development, and the delivery of the project into thirds, and assigns relative proportions to each piece. Here’s how one consultant and I used that for one $10,000 engagement:

Person	Sale (1/3)	Development (1/3)	Delivery (1/3)	Percentage due	Fee split
Sally	100%	25%	0%	41.25%	$4125
Johanna	0%	75%	100%	57.75%	$5775

Sally made the original contact with the client and sold the engagement, so she deserves the total sale component. I developed the material, with substantial review from Sally. We decided to split the development, assigning 75% of the work to me. Then, I delivered the material to the client alone. If either of us receives follow-up work from this engagement alone, we own the follow-up work.

We could have split the money down the middle, and for this engagement, that would have been close. However, we’re business people. We don’t want to take care of each other, or take advantage of each other. We’re more likely to work together again because the relationship is built on a solid business foundation.

Leverage each person’s network
In this example, Sally’s network provided me the introduction to a new set of potential clients. My material offers Sally the chance to sell different kinds of consulting to her clients. Sally recognized I could provide a particular value to her clients, so she brought me in to perform a specific task. We both win—Sally learns how to perform another piece of the consulting, and I have access to new clients. In this case, Sally’s network is as much of an asset to me as the consulting work is to her.
When you create a congruent relationship with the client, the original consultant, and the additional consultant, everyone wins. If you ignore one piece of the relationship, it’s not sustainable, and will dissolve to everyone’s detriment.

Create a consulting partnership
If you’ve worked with a consultant on a contract or two and enjoy it, maybe it’s time to create a partnership. Avoid employing anyone who’s not a partner—non-partners are overhead that you provide for, not someone who adds value to the business. Partners bring complementary strengths and an additional client base to the business.

If you’re considering a partnership, use this checklist to make sure the partnership is appropriate:

• You trust this person with any of your clients
• You trust this person with your intellectual property
• This person has already succeeded independently performing the work they’ll do as a consultant
• If you’re already consultants, the other person has already succeeded as a consultant
• You have the same goals, including financial goals, for your business
• Together, you are worth more to a client than you are apart

The principals, Donna Johnson and Judi Brodman, formed a partnership, Logos International, about ten years ago to perform research for a government contract. Donna and Judi had each worked independently as consultants before they formed a partnership, and had worked together in limited engagements. They found that they could offer more as a partnership than each could alone. The partnership benefited them in these ways:

• They enjoyed having another person available to discuss ideas
• They could create other products based on their original work together
• They were able to bring their current clients more value
• They were able to bid on larger projects because they had more depth to their company

Donna and Judi were already successful consultants when they chose to create a legal entity to work together on projects for their clients and enjoy their partnership of equals.

I know of two other long-term successful partnerships. Both partnerships started when the people who’d performed the work inside companies chose to continue working outside their original employers.

One partnership, Process Enhancement Partners, Inc., started with two principals who had not been consultants originally, and added two more principals after a couple of years. The original principals realized that one of the two people did not have the same goals. The consultant with different goals left the partnership.

The other partnership, Process Group, periodically reviews their business — to make sure their individual and group activities continue push their strategic goals. They considered taking on employees to grow their business, and then decided against it. Adding employees would grow the company, but would not help them meet their individual goals of being able to provide services themselves to their clients.

Each of these partnerships has people with different strengths. Each partnership developed and continues because the principals have common business goals and a common work ethic.

When you create a partnership, decide if and the conditions under which each of you can take on work alone and how you’re going to dissolve the partnership, like a prenuptial agreement. If nothing else, one of you may want to retire. If so, what does that mean to the partnership?

Summary
Collaborating with other consultants helps you increase your expertise as well as your client base. Referrals help you maintain and grow your network. Writing and speaking helps you access other potential clients, as well as increasing your expertise.

When you refer others for a fee, or work with another consultant, remember to clarify who’s responsible for what, the compensation each of you receives, and when the arrangement is complete. When you’re ready consider a partnership arrangement to continue to capitalize on what each of you can bring to the client and the business.

None of us works entirely alone. Consider which options you want when, and your collaboration will provide you and your clients excellent service.

Acknowledgements
I thank the following people for their helpful review: Geoffrey Day, Esther Derby, Elisabeth Hendrickson, Naomi Karten, Jerry Weinberg.

References

Weinberg, G. M. (1985).
The Secrets of Consulting: A Guide to Giving and Getting Advice Successfully.
New York, Dorset House.

Weiss, A. (1998).
Million Dollar Consulting: The Professional’s Guide
to Growing a Practice.
New York, McGraw Hill.

Wiegers, K. a. J. R. (2001).
Looking Back, Looking Ahead.
Software Development. Feb 2001.