AI clauses in a consultancy agreement

A consultancy agreement sells judgement, and the clauses have to keep it human while letting the consultant use the tools that make the work faster: the permitted use and the client's right to restrict it, confidentiality that treats a tool provider as a third party, ownership of deliverables with generated elements, a warranty that the analysis and recommendations are the consultant's own, the flow-down to associates, and a liability and insurance position that reflects generated content, all without disturbing the consultant's self-employed status. I deliver the agreement's AI provisions, drafted or reviewed, in five working days for a fixed £595.

Who this is for

Consultants and consultancies in England and Wales using AI tools in client work, and clients engaging consultants who want to know what the tools will see and what the deliverables will contain.

What matters in AI clauses for a consultancy agreement

The consultant's permitted use and the client's restrictions

The agreement permits the consultant to use AI tools in the engagement on stated conditions (business terms, no training on the client's information, limited retention, security, outputs reviewed by the consultant), lists the categories of tool, gives the client the right to restrict or prohibit use on stated matters at the outset (with the fee adjusted), and treats a restriction imposed later as a variation; the consultant's standing disclosure of its tools in its terms of business is the client's agreement, and a client with its own AI policy for suppliers attaches it as a schedule rather than relying on the consultant to have guessed it.

Confidentiality, the client's information and the tools as third parties

the business's trade secrets, confidential information and clients' data must not be put into tools that may retain inputs or train on them, which is what the reasonable-steps requirement in the Trade Secrets (Enforcement, etc.) Regulations 2018 and the business's confidentiality obligations demand; the confidentiality clause is amended so that processing the client's information in a tool meeting the stated conditions is a permitted use rather than a disclosure to a third party, so that everything else remains prohibited, and so that the consultant removes client identifiers before material goes in where the engagement allows; under the UK GDPR, personal data in an AI prompt is personal data being processed, so the business needs a lawful basis, a notice, an Article 28 data processing agreement with the provider and, where the use affects individuals, an Article 35 impact assessment, and the data processing terms between client and consultant must authorise the tool as a sub-processor.

Deliverables, intellectual property and the generated element

section 9(3) of the Copyright, Designs and Patents Act 1988 assigns authorship of a computer-generated work to whoever made the arrangements, untested on modern tools, and the Act's protection extends only to original works, so the intellectual property clause assigns the consultant's own work and the rights it holds in generated elements, licenses the rest, carves out the consultant's pre-existing materials, methodologies, prompts and tools (the consultant's stock in trade, which a full assignment would otherwise capture), and states that generated elements may be unprotected; where the client instead takes a licence rather than an assignment, the clause is adjusted accordingly.

The judgement the client is paying for and the warranty that protects it

The consultant warrants that the analysis, conclusions and recommendations in the deliverables are its own professional judgement applied to the client's circumstances, that generated content has been reviewed and that sources it cites have been verified, that the deliverables are its own work save as disclosed, and that it has complied with the client's restrictions; it does not warrant that generated elements are free of error beyond that review or that they are original in the copyright sense; the client gets a warranty it can enforce on the thing it is paying for, the consultant gets a warranty it can meet, and the engagement's reliance and limitation clauses are updated to match.

Subcontractors, associates and the flow-down

The agreement requires the consultant to impose the same conditions on any associate or subcontractor who works on the engagement (approved tools, confidentiality, the client's restrictions, disclosure), makes the consultant responsible for their compliance, and gives the client a right to know who is working on its matter and with what; an associate pasting the client's data into a consumer tool is the consultant's breach, and the consultant's own associate agreements should carry the clause, which the AI use policy for contractors in this series provides.

Liability, insurance and the status question the clauses must not disturb

Liability for generated elements sits within the agreement's cap, the consultant's indemnity for infringement is limited to its own work and the generated elements it has checked and disclosed, the consultant's professional indemnity insurance is confirmed to cover AI-assisted work (some policies now exclude it), and the clauses are drafted to control what the consultant does with the client's information and what it delivers rather than how it works day to day, because a client that dictates a consultant's working methods affects the employment status analysis under the tests HMRC's CEST tool applies; the clauses can be drafted for the consultant's standard terms or for the client's engagement letter, and reviewed where the other side has sent its own.

What it costs

AI provisions in a contract, £595. Review or draft AI-specific terms in a supply or customer agreement. Five working days.

AI use policy, £995. Internal policy plus the accompanying contract provisions. Five working days.

Email me at geoffrey@caesar.co.uk with what you need and any documents, and I will confirm the scope and the fee in writing, usually the same working day.

What you get

• An internal AI use policy your staff will follow, rather than a document that bans everything and is quietly ignored
• Contract provisions covering output ownership, training data, confidentiality and liability
• A defensible position to give customers who ask what your AI governance looks like
• Review of your AI suppliers' terms, including what they reserve the right to change
• Practical guidance on what to permit, what to restrict and what to prohibit outright
• One round of amendments

What is not included

• Technical AI assurance, model testing or bias auditing
• Sector-specific regulatory approval
• Advice on non-UK regulatory regimes beyond flagging where they apply
• Ongoing regulatory monitoring

Questions I am often asked

Our client's NDA prohibits disclosure to third parties. Can we use AI tools on their material?

A tool provider is a third party unless the agreement says that processing in a tool meeting stated conditions is a permitted use. The clause says so, and removes identifiers where the engagement allows. Without it, the NDA is breached.

Can the client ask us not to use AI at all?

At the outset, yes, with the fee adjusted; later, as a variation. The clause gives the client the right and the consultant the mechanism, and a client with its own supplier policy attaches it as a schedule.

Will AI clauses affect the consultant's self-employed status?

Not if they control what the consultant does with the client's information and delivers, rather than how the consultant works. The clauses are drafted on that side of the line.

Related guidance and services

• AI contracts and AI use policies, £595, the service this page describes
• SaaS and technology contracts, £995
• Data protection agreements and privacy terms, £795
• AI use policy for a consultancy
• AI and confidentiality in a consultancy engagement

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.