Legal Guide for Life Coaches, Business Coaches and Mentors

Last updated: 17 October 2024

Legal Guide for Life Coaches, Business Coaches and Mentors – This step-by-step guide outlines everything you need to know, from an Australian legal standpoint, about being a Life Coach, Business Coach or Mentor and starting a life coaching business. We cover:

• Life coaching regulations in Australia
• Agreements you should get your coaching clients to sign
• Legal notices you should post on your website, and
• How to start a life coaching business in Australia

The life coaching market in Australia is booming. Awareness of the benefits of using a Life Coach or Mentor is becoming more widespread. And organisations that offer Life Coaching training and accreditation seem to be popping up everywhere.

But being a Life Coach or Mentor is not without its legal risks. To protect yourself from lawsuits, follow these straightforward suggestions.

And below is a quick video answering the Top 3 Legal Questions we get from Life Coaches:

• Do Life Coaches need a license or certificate?
• Should I use a Coaching Services Agreement with my clients?
• Am I liable for the coaching advice that I give?

Click on any of the questions below to jump to that section of this legal guide.

If after reading this guide you still have a question, get in touch as we’d love to keep adding your questions to this comprehensive guide.

Legal Requirements for Life Coaching

Do Life Coaches need a qualification, certificate or license?

The answer depends on the risk level of your services. Generally speaking, the higher the risk level, the more legal requirements you need to meet:

• For low-risk services, such as personal coaching, business coaching, job advancement and professional coaching, productivity coaching, finance and budgeting coaching or mentoring, no qualifications or certificates are necessary as general coaching is not regulated in Australia.
• For high-risk services, such as holistic health coaching, diet coaching, wellness coaching, mindset coaching, mental health coaching, counselling, psychotherapy, ADHD coaching, PTSD coaching or trauma coaching, qualifications or certificates are required for each therapy or treatment offered, with up-to-date certificates and association memberships.

In addition, life coaches who want to appear more professional also take courses and graduate from coaching programs that are accredited. Then to maintain these credentials and keep up-to-date, these coaching programs dictate that their coaching graduates must also undertake continuing education courses that they run.

Who regulates or accredits Business Coaches and Life Coaches?

Two major international organisations offer accreditation for life coaching programs:

• International Coach Federation (ICF – Australasia) with 27,000 members worldwide and 1,200 members in Australia
• International Association of Coaching (IAC) with 13,000 members worldwide

ICF-accredited coaching programs are offered by a number of organisations in Australia, including:

• Life Coaching Institute
• The Life Coaching Academy
• Australian Institute of Professional Coaches
• Institute of Executive Coaching & Leadership

Graduates of these ICF-accredited programs are awarded ICF coaching credentials and can become members of the ICF organisation.

Life Coaching Legal Issues

How can I be sure my client’s expectations match my Coaching service?

Misunderstandings between you and your clients can easily arise, particularly regarding exactly what you are delivering or your client’s expectations of results. The best way to avoid mismatched expectations is through full and frank discussions with your client. Then follow up these discussions with an email clarifying any key points.

Remember, a paper trail might be helpful down the road if your engagement does not go as planned!

Am I liable for the Coaching advice I give?

Yes. As a Coach or Mentor, you are vulnerable to claims where clients may rely on your information or “advice”. Clients may claim that they relied on your advice and suffered financial loss, emotional distress, adverse health effects, made detrimental decisions based on your “advice”, etc. and claim you are responsible.

You need to ensure that you are not considered to be providing “advice” unless it is intended to be relied upon. This is particularly important if you are offering any group sessions.

In the event I am sued, how can I limit my liability?

You need to have a signed Coaching Services Agreement with your client that includes a ‘Limitation of Liability’ clause. In the unfortunate event a claim is made against you, a well-written clause should limit your financial downside. This is particularly important where you are a Sole Trader. To limit your liability further, you should consider setting up and running your services under a ‘Pty Ltd’ company.

In addition, your website should have a Website Disclaimer and you should not promise any results, cures or treatment (unless you are a licensed medical or health practitioner). You cannot control how some website visitors may read and rely on your written content – and a Website Disclaimer will limit your liability in such circumstances.

How can I protect my IP and coaching materials from being copied?

If you’ve spent time developing your coaching materials and intellectual property, you need to protect them from being copied, shared, used or sold by your clients, or other coaches, without your permission.

Ensure that your Coaching Services Agreement has suitable intellectual property protection clauses. So your client is aware that your coaching materials belong to you and should not be shared, published or used in a manner you have not authorised. If you run online courses, make sure all your course materials have a Content IP Policy prominently displayed. This should dissuade your online students from copying your course content.

In addition, active monitoring of the Internet can catch any plagiarism or unauthorised use of your materials. But you’ll need to be vigilant and follow up with Copyright Infringement Notices and Google take-down notices, etc. – all of which take time.

Coaching Services Agreements

What legal documents should I use in my Coaching business?

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The legal documents you need depend on the type of coaching you offer:

Low-risk services: If you call yourself a Personal Coach, Business Coach, Job Advancement & Professional Coach, Productivity Coach, Finance & Budgeting Coach or Mentor and you offer guidance, resources, experiences, techniques, assistance or help to reach professional or personal goals then you need:

• Signed Coaching Services Agreement with each of your clients, including a Disclaimer to cover reliance on your services and any guarantee of results
• Website legal notices (Privacy Policy, Disclaimer, Terms & Conditions)

Moderate-risk services: If you call yourself an Instructor, Expert, Practitioner, Tutor, Educator or Team Leader and you offer an online course, program, self-guided lessons, training, instructions or a discussion forum to learn professional or personal skills then you need:

• Online Course Terms to cover the terms under which you offer your course, including a Disclaimer to cover reliance on your services and guarantee of results
• Content IP Policy to protect your course content and materials
• Website legal notices (Privacy Policy, Disclaimer, Terms & Conditions)
• Online Forum Rules, including conduct and confidentiality rules, only if you also run a group discussion forum

High-risk services: If you call yourself a Life Coach, Holistic Health Coach, Diet Coach, Wellness Coach, Mindset Coach, Mental Health Coach, Lifestyle Coach or Major Life Change Coach and you offer modalities, therapies or treatments such as psychotherapy, hypnotherapy, meditation, NLP, RTT, breathwork, spiritual guidance, psychic services or nutrition advice then you need:

• Signed Custom Coaching Services Agreement with each of your clients, including a strong Disclaimer to make it clear you are not a medical practitioner and your services are not a replacement for medical treatment or diagnosis
• General Health Disclaimer or Medical Disclaimer
• Website legal notices (Privacy Policy, Disclaimer, Terms & Conditions)

Very high-risk services: If you call yourself a Counsellor, Psychotherapist, ADHD Coach, PTSD Coach, Trauma Coach, Doula or work with children and you offer modalities, therapies or treatments for dealing with past and present psychological issues or birthing guidance and assistance then you need:

• Signed Custom Coaching Services Agreement with each of your clients, including a Waiver & Consent for Services with each of your clients
• General Health Disclaimer or Medical Disclaimer
• Privacy statement for the Collection of Sensitive Information (Health/Medical) and you must implement sensitive information compliance requirements
• Signed Parent/Guardian Consent Form if you work with minors
• Website legal notices (Privacy Policy, Disclaimer, Terms & Conditions)

None of these legal forms is complicated – and using them will show you’re a professional operator. Plus, as we said at the beginning of this guide, doing things right will help avoid legal issues and protect you and your business from lawsuits.

Should I use a Coaching Services Agreement with my clients?

Yes. You need to have a signed Coaching Services Agreement with each of your clients – this is the most important document you should use as a Coach or Mentor.

A Coaching Services Agreement clarifies the details of the coaching services you are providing, including payment terms, cancellation policy, intellectual property protection, limitation of liability, disclaimer for reliance on the advice, etc.

You need to make sure that your client has acknowledged and agreed to your terms. This is for your legal protection. They can acknowledge your terms with any of these methods:

• Signing your Agreement using an eSignature service
• Signing, then scanning/photographing your Agreement and returning by email
• Acknowledging your Agreement by email, or
• Acknowledging your terms by ticking a box during your online purchase process

Each of these methods offers a different level of protection. But if you have no proof of a contractual agreement, your terms may be invalid and not able to be relied upon to protect you.

What clauses should my Coaching Services Agreement include?

Your Coaching Services Agreement should include, at minimum, clauses that cover the following:

• Detailed description of the coaching services you are providing
• Payment schedule and term or length of your engagement
• Intellectual property protection for your own materials
• Confidentiality and privacy of personal information
• Termination, cancellation and refunds
• Dispute resolution
• Indemnity with Limitation of Liability, and
• Governing law

Your Coaching Services Agreement should be tailored to each specific client, detailing the services you are providing to them. A well-written Agreement will not only provide you with legal protection but will also help manage your client’s expectations.

Life Coaching Terms & Conditions

Should my website include my coaching Terms and Conditions?

Normally your website is for your general visitor and ecommerce Terms and Conditions. Your specific Coaching Terms are usually provided to clients only. You can still publish them on your website, but hide the link and only provide it to clients when they engage your services. You should also have an Agreement available that you tailor to your specific services and provide to your clients.

You need to make sure that your Terms are easily found and not hidden from website visitors or potential clients. The norm on the Internet is for your website legal notices (Disclaimer, Privacy Policy, Terms & Conditions) to be linked to from the footer of your website – and available from every page on your website.

What Terms and Conditions should my website include?

The Terms and Conditions you publish on your website should include clauses that cover the following:

• Your compliance with the Australian Competition and Consumer Act
• How do you handle returns and refunds
• Intellectual property protection and Copyright
• Indemnity with Limitation of Liability, and
• Governing law

Again, make sure that your Terms and Conditions are easily found by linking to them in the footer of every page on your website.

Should my website visitors “actively” agree to my Terms and Conditions?

To get extra protection, you can have users of your materials “actively” agree to your Terms. For example, if you have free (or paid) eBooks or courses available on your website, get users to tick a checkbox agreeing to your Terms before downloading or checkout.

In general, there are 3 options for checkbox placement:

• A checkbox with a link saying “I agree” or “I have read” the Terms & Conditions next to your “Download” or “Add to Cart” link
• A popup window or page during the download or checkout process where a user can read and agree to your Terms
• Terms & Conditions that need to be agreed upon before entering your website

What Privacy Policy should I have if I collect personal information?

You will likely collect personal or confidential information about your prospects and clients. This means you will have to comply with Australian Privacy law and publish your Privacy Policy on your website.

Your Privacy Policy notice should include the following:

• What personal information you collect and store
• How the personal information is collected and stored
• Why you collect and how you use this personal information
• When is the personal information updated or destroyed
• When you might have to disclose this personal information
• If the personal information is shared with overseas recipients
• If the information is shared overseas, in which countries are the recipients
• Your business contact details

If you are a Counsellor, Psychotherapist, ADHD Coach, PTSD Coach, Trauma Coach or Doula or work with children your privacy obligations are greater. Your privacy statement should cover the Collection of Sensitive Information (Health/Medical) and you must implement sensitive information compliance requirements in your business.

And remember, you need to abide by your Privacy Policy. For example, if you say you purge your customer database every year of non-current customer information – then that is what you should do.

What can and can’t I say on my website?

In general, you should describe your life coaching services fully on your website. However, be careful about promising results. Your website can talk about the modalities and techniques you use to assist clients but don’t promise any results, cures or treatment unless you are a licensed medical or health practitioner.

How to Start a Life Coaching Business

What business structure should I use to sell my Coaching services?

When starting a life coaching business in Australia, there are generally 4 options for structuring your business:

• Sole trader
• Pty Ltd Company
• Partnership, and
• Trust

The best business structure for you will depend on your personal circumstances – and getting this decision right is very important. So talk to your accountant about the pros and cons of each option. Here’s a quick summary of each option.

Being a Sole Trader is the simplest and least expensive option. Designed for business owners who are the sole proprietors of their companies, this structure doesn’t give you much protection if things go wrong. Your personal assets are unprotected from any claims arising from your business.

Incorporation (i.e. forming a Proprietary Limited Company) effectively makes your business a separate legal entity from you. This structure involves quite a bit of paperwork and can be more expensive to maintain but it offers your personal assets protection from liability. Only your company assets are at risk in the event of any legal actions and company debts.

Creating a Partnership allows you to go into business with multiple people and share income. Partnerships are easier and less expensive than Companies to set up. However, all partners together are personally responsible for business debts and actions against the Partnership. And each partner is individually liable for debts incurred by the other partners. This means you have unlimited liability, unlike a Company structure.

A Trust isn’t an organisation at all, but instead a legal structure to hold assets. For example, you might set up a Trust to hold your business assets and then appoint a Trustee to manage them. Commonly, the Trustee is a Company and the Trust provides asset protection and limits liability from operating the business. Trusts are very flexible for tax purposes. However, a Trust is a complex legal structure and establishing a Trust costs significantly more than a Sole Trader or Partnership.

For more detailed information on each of these business structures, see our feature article: How to Choose the Right Business Structure in Australia.

Do Business Coaches or Life Coaches need insurance?

An option for protecting your business and personal assets is to buy professional indemnity/liability insurance. However, it’s difficult to find specialist insurance policies that properly cover Coaches and Mentors in Australia or Australian policies that cover overseas clients. Insurance policies can also be expensive and very difficult to make a successful claim from.

If you do choose to buy insurance, make sure you read the policy carefully and ask your insurance broker to answer specific queries about your coverage in writing. It’s a good idea to list your business services and any risks you are concerned about and ask your broker to confirm that your policy will cover you for these eventualities.

Your best protection will come from the following:

1. Using a well-drafted Coaching Service Agreement with each of your clients
2. Having robust Terms & Conditions on your website, and
3. Operating under a ‘Pty Ltd’ company structure

A ‘Pty Ltd’ company limits your personal liability and any claims to the assets of the company. It may also be less expensive than maintaining professional indemnity/liability insurance.

Should I trademark my Coaching business name?

Just because you set up a ‘Pty Ltd’ company or registered your business name with ASIC, this does not mean you ‘own’ your brand name. Any business could start using your brand name!

This concept is one of the most misunderstood aspects of starting or running a business. And business owners frequently contact us because someone is using their brand name. The only way to protect your brand name and restrict its use is to register your trademark with IP Australia.

Should I register my Coaching business for GST?

If your Coaching business has annual revenues of over $75,000, you must register for GST. If you have annual revenues of less than $75,000, talk to your accountant about your options.

We hope you found this legal guide for Life Coaches, Business Coaches and Mentors helpful.

About the Author: Vanessa Emilio

Vanessa Emilio (BA Hons, LLB, ACIS, AGIA) is the Founder and CEO of Legal123.com.au and Practice Director of Legal123 Pty Ltd. Vanessa is a qualified Australian lawyer with 20+ years experience in corporate, banking and trust law. Click for full bio of Vanessa Emilio or follow on LinkedIn.

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