Tech Transfer eNews Blog

Take steps to avoid traps and pitfalls in faculty consulting agreements


By Jesse Schwartz
Published: January 13th, 2021

A detailed article on minimizing the COI and legal risks in faculty consulting agreements appears in the December issue of Technology Transfer Tactics. To subscribe and access the full article, as well as the publication’s 13+ year archive of best practices and success strategies for TTOs, click here.

Faculty consulting agreements are full of potentially serious issues involving conflicts of interest, legal liability, and ethical considerations. Unfortunately, the faculty entering into these agreements are often inexperienced with such matters and can find themselves embroiled in serious consequences down the road.

The university can be dragged into those problems, so tech transfer leaders should educate and help guide faculty members through these agreements even when the university is not a party, says K. Lance Anderson, JD, member and deputy CEO with the law firm Dickinson Wright in Austin, TX.

The increase in entrepreneurial opportunities such as start-ups, as well as growth in university-industry engagement activity, creates a large danger zone for faculty consulting agreements, Anderson says.

The sheer number of consulting agreements is on the rise with both individual faculty and institutions, he notes. That puts more pressure on agreement negotiators, since these deals often involve private sector entities that don’t understand how to work with universities, Anderson says.

“It’s amazing what you will hear as far as the expectations of some of these [companies], which completely disregard things like public policy or research integrity or things like that,” he observes. “They simply don’t understand some of the motivations or the risks that come along with working with institutions.”

Their contracting positions will often include elements that may not be workable given the faculty member’s current position or relationship with the institution, which may have its own state laws to worry about, Anderson says. Conflicts of interests can arise, and the private sector party may enter into an agreement with unrealistic expectations, he says.

When conflicts related to faculty consulting hit the headlines, they usually involve research integrity, Anderson says. Typically, this would involve a faculty researcher who is accused of having a significant financial interest that could sway the outcome of certain research.

These cases can often be avoided with a properly structured consulting agreement, he says, which can address both conflicts of interest for faculty and for the institution.

Institutional review needs to happen in advance of a faculty member entering into these consulting agreements, Anderson says. The university may not be party to the agreement, but it could require a rider where it can clarify certain provisions or ensure that the agreement does not conflict with the faculty member’s other obligations, he adds.

Intellectual property rights are another key area of concern. Typically the commissioning party starts with trying to make the arrangement a work for hire and the parties work backwards from there, Anderson says.

However, “that would conflict with a vast majority of the intellectual property policies of these institutions, particularly if that consulting agreement is involving the same subject matter that the faculty is involved in at the institution, which would be most of the time,” Anderson explains. “Then there’s the actual or potential conflicts of interest which would really boil down to financial interests or other upside relationships based on the outcome of certain performances under that consultant agreement.”

For example, if faculty is granted equity as part of the consultant agreement, that’s going to trigger a potential conflict of interest, Anderson says. Use of institutional property is another potential problem. “You don’t want private use manifesting via these consulting arrangements, and you want your policy to establish this as well,” he says.

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Anderson spoke at the recent webinar “Faculty Consulting Agreements: Mitigating COIs while Supporting Faculty Inventors,” sponsored by Technology Transfer Tactics. The session is available in on-demand video, DVD, and print transcript. Click here for details.

Posted under: Tech Transfer e-News

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