Contractual agreements between associations and their partner association management companies require thoughtful consideration of roles and responsibilities, which is why it’s important for both sides to go in with realistic expectations and knowing what their goals and priorities are. This is especially the case if an AMC is working with an association that is not transitioning to a full-service AMC model.

“To start with, don’t underbid the contract,” said C. Michael Deese, an association and AMC attorney at Howe & Hutton. “The amount of work needed to transition the workload is more than you expect.”

Also, Deese says to always make sure there’s a period of time when the association is paying two staff teams: yours and the team from which the association is departing.

In addition, Deese advises AMCs to avoid being overly general on the one hand or too specific on the other. Success is based on mutual understanding of what is going to be done and the resources needed to do it. This includes addressing how to handle demands over time that are outside of the agreed-upon scope of service as the organization grows.

One common misunderstanding is that if there are additional services requested then a new contract is needed. In fact, an addendum is sufficient.

One common misunderstanding is that if there are additional services requested then a new contract is needed. In fact, an addendum is sufficient.

As the hybrid model with an independent executive director grows in popularity, it also presents some challenges, especially as it relates to authority over AMC staff. One thing to do is ensure that this is addressed in the indemnification clause of the contract. Your AMC should not be responsible for obligations related to a lawsuit incurred as a result of something the association’s employee has done.

Make sure to have a mutual noncompetition agreement indicating that your AMC won’t manage a competing organization at the same time as the association in question. Similarly, the association must agree not to hire any AMC staff for the term of the contract and a period thereafter. The AMC should have a similar noncompete clause in the employment agreement with senior-level staff.

In addition, conduct an annual performance review that is distinct from the contract scope of service and compensation review.

When it comes to GDPR compliance, it is important to note that the association—not the AMC—is responsible for ensuring the protection of personal data. Even so, it’s important that AMCs carefully review their insurance coverage because many policies omit this.

In the end, any contract needs to be based on the mutual benefit of both the AMC and the association. Associations and AMCs get into trouble if there is a contract biased in one party’s favor because it erodes the trust in the relationship, which is a dangerous position to be in.