Is Your Coaching Career Protected From Legal Action? Why Coaching Contracts are Vital to Success

Is your coaching career safe from the effects of a potential lawsuit? It is estimated that more than “40 million lawsuits [are] filed every year in the United States” (OneLegal, 2019). Lawsuits cost both the plaintiff and defendant greatly. Not only do they take up valuable time, but they can also cost thousands of dollars in legal fees, fines, and travel costs (CaliforniaBusinessJournal, n.d.). In the words of Janet Malcolm, “a lawsuit is to ordinary life, what war is to peacetime.”


Lawsuits can pose financial hardships for coaches and create challenges for future success and client acquisition. To mitigate the risk of a lawsuit and the damage they cause, coaching contracts are highly encouraged. This insight article dissects why executive coaches should invest in coaching contracts and what leading coaching organizations recommend when drafting them.



*In this article, we do not provide legal advice. Rather, we surface key items to discuss with your own legal advisors when drafting or enhancing your coaching contracts.


Benefits of a coaching contract


“Where there’s a will, there’s a lawsuit.” - Addison Mizner

Legal protection

Well-made and clearly defined coaching contracts protect executive coaches from potential lawsuits. By clearly stating the roles, expectations, and potential outcomes associated with executive coaching before starting a coaching relationship, executive coaches reduce their risk of being sued for false advertising, failing to deliver a return on investment, breach of contract, or various forms of tort (Kornblet, n.d.).


Executive coaching contracts give both coaches and clients a reference point of what services the coach will provide and what role the client will have in the coaching relationship. By using contracts as a reference point, executive coaches can (i) ensure they provide the agreed upon services and, (ii) have comfort in the protection that contracts provide in the case a coaching client does not actively participate in the coaching process.


“Clarity and simplicity are the antidotes to complexity and uncertainty.” - General George Casey

Clarity

Coaching contracts clarify the “coaching relationship, process, plans, and goals…for the overall coaching engagement as well as those for each coaching session” (ICF, n.d.). According to the International Coaching Federation (ICF), coaching contracts clarify what “is and is not appropriate in the relationship, what is and is not being offered, and the responsibilities of the client and relevant stakeholders” (ICF, n.d.). A key area where defining what “is and is not,” is the difference between coaching and counseling—a common misconception amongst potential coaching clients.


By using a coaching contract, executive coaches can correct misconceptions about what the potential client may gain through coaching. Coaching contracts clarify the purpose of the executive coaching relationship and prevent any potential misconceptions between the coach and the client.


Legitimacy and trust

By having a coaching contract, executive coaches—especially those new to the coaching industry—legitimize their coaching practice and build trust with prospective clients. By contracting specific services, explaining how ROI will be measured, and having clear guidelines, executive coaches send the message that they are professional, organized, precise, dedicated, and trustworthy (Zhou, 2021). Furthermore, research from Malhotra and Murnighan indicates that contracts increase interpersonal trust (2002). Having a coaching contract starts the coaching relationship on the right foot and builds a foundation of legitimacy and trust.


What should be included in a coaching contract

In order for a coaching contract to be effective and beneficial in the ways discussed above, it must be carefully created. The International Coaching Federation (ICF), International Association of Coaching (IAC), and European Mentoring and Coaching Council (EMCC) all have recommendations for executive coaching contracts and code of ethics. Below we examine what each of these leading organizations includes in their contracts and code of ethics.


“It is impossible to unsign a contract, so do all your thinking before you sign.” - Warren Buffett

ICF: Sample Coaching Agreement

The ICF has an “ICF Sample Coaching Agreement.” In the sample contract, they have categories that review the: definition of coaching, coach-client relationship, services the coach will provide, schedule and fees, coaching procedures, confidentiality, information release, cancellation policies, record retention policies, termination, limited liability, entire agreement, dispute resolution, severability, waiver, applicable law, and binding effect. The ICF states that their sample guide is “intended to serve as a reference or guide only” and that they recommend working with “your legal counsel for additional input.”


IAC: Code of Ethics

The IAC has several categories within their “code of ethics.” They include general standards of their coaches including ethics code, law, professional relationship, competence, expertise, services, respect, discrimination, harassment, conflict, progress, misuse of coaches’ influence or work, conflict of interest, bartering, exploitative relationships, referrals, third-party requests, delegation, records, fees, accuracy in reports, and referral fees. They also have sections regarding advertising, the coaching relationship, privacy and confidentiality, coaching training, and coaching research and publishing. Their code of ethics covers all the bases of their coaching services and those who coach within their organization.


EMCC: Global Code of Ethics for Coaches & Mentors

The EMCC’s global code of ethics consists of 4 key sections: terminology, working with clients, professional conduct, and excellent practice. They cover topics such as context, contracting, integrity, confidentiality, inappropriate interaction, conflict of interest, termination, reputation, equality and diversity, breaches of professional conduct, legal obligations, ability to perform, ongoing supervision, and continuing development.


EMCC: Contracting Guidance

The EMCC created the “Contracting Guidance” document to cover the “key ingredients of a good contracting conversation when internal coaches are engaging with their clients.” They explain that their suggestions “are not intended to be prescription but are the sorts of things that could be covered.” Their suggestions are organized into 2 sections: roles and responsibilities and the process of coaching. Within the roles and responsibilities section, the coach’s obligations, client’s obligations, sponsor’s obligation, confidentiality, boundaries, and the global code of ethics are included. Their second section about the process covers the meeting with the coach, client, and sponsor as well as the coaching approach and methodologies that plan to be used.


Common themes in coaching contracts

Common themes in all of the above coaching contracts and code of ethics include: (i) defining the coaching program, methods, and process, (ii) setting expectations for the coach and client, and (iii) outlining termination policies, conflict policies, confidentiality, and fees.


Most importantly, these leading organizations utilize sections within their coaching agreements. Fielder and Starr of The International Journal of Coaching in Organizations support this organization method and state that “coaching is complicated” and that “there are many parts which when summed produce the whole.” Because of this, when constructing a contract, coaches and their legal teams should “identify the parts” of their coaching practice and list them in “categories” (Fielder & Starr, 2008).


A note on professional liability insurance

Like many professionals in service industries, professional liability insurance can be a form of legal protection against legal claims of “negligence, malpractice, or misrepresentation” (Kagan & James, 2021). Because executive coaches have the power to make massive impacts on businesses ranging from small businesses to billion-dollar enterprises, it is wise to protect one’s coaching practice from claims of coaching negligence or malpractice. For information on what forms of liability insurance are best for your specific coaching needs, please consult with your financial advisor and/or your preferred insurance professionals.


Creating your coaching contract

When creating your coaching contract, we highly recommend working with your own legal advisors—keeping the resources discussed above in mind as a reference point.


“The first law of business: make the rules or your rivals will.” - G Richard Shell

*In this article, we do not provide legal advice. Rather, we surface key items to discuss with your own legal advisors when drafting or enhancing your coaching contracts.


References

CaliforniaBusinessJournal. (n.d.). Lawsuit Basics: How Much Does It Cost to Sue Someone? https://calbizjournal.com/lawsuit-basics-how-much-does-it-cost-to-sue-someone/#:%7E:text=It’s%20difficult%20to%20come%20up,will%20be%20much%2C%20much%20higher.


EMCC. (n.d.). Ethics – EMCC Global. European Mentoring & Coaching Council. https://www.emccglobal.org/leadership-development/ethics/.


IAC. (n.d.). Ethics. International Association of Coaching. https://certifiedcoach.org/about/ethics/.


ICF. (n.d.-a). ICF Sample Coaching Agreement. International Coaching Federation. https://coachfederation.org/app/uploads/2017/11/SampleCoachingAgreement.pdf.


ICF. (n.d.-b). The Gold Standard in Coaching | ICF - Core Competencies. International Coaching Federation. https://coachingfederation.org/core-competencies.


Kagan, J., & James, M. (2021, May 28). What Is Professional Liability Insurance? Investopedia. https://www.investopedia.com/terms/p/professional-liability-insurance.asp.


Kornblet, S. (n.d.). How Coaches Get Sued. . .and How to Protect Yourself. Destination Legal. https://destinationlegal.com/blogs/resources/how-coaches-get-sued-and-how-to-protect-yourself.


Malhotra, D., & Murnighan, J. K. (2002). The Effects of Contracts on Interpersonal Trust. Administrative Science Quarterly, 47(3), 534–559. https://doi.org/10.2307/3094850.


Montemarano, A. (2020, February 21). When Life Coaches Get Sued - Amy Montemarano. Medium. https://amymonte.medium.com/when-life-coaches-get-sued-b6c7d3af515e.


OneLegal. (2019, April 3). Top court filing statistics from around the country. One Legal. https://www.onelegal.com/blog/top-court-filing-statistics-from-around-the-country/.


Zhou, L. (2021, December 9). How to Create a Coaching Contract in 2022. Luisa Zhou. https://www.luisazhou.com/blog/coaching-contract/#why.


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