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 running a coaching business. We cover:
- Coaching licenses, certificates and accreditation
- Agreements you should get your coaching clients to sign
- Legal notices you should post on your website, and
- Setting up your coaching services business
The coaching market in Australian 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. So protect yourself from lawsuits and follow these straightforward suggestions.
Legal issues covered in this guide
Click on any of the questions below to jump to that section of this legal guide.
- Do Business Coaches or Life Coaches need a license or certification?
- Who regulates or accredits Business Coaches and Life Coaches?
- Should I use a Coaching Services Agreement with my clients?
- What clauses should my Coaching Services Agreement include?
- How can I be sure my client’s expectations match my Coaching service?
- Am I liable for the Coaching advice I give?
- In the event I am sued, how can I limit my liability?
- How can I protect my IP and coaching materials from being copied?
- Should my website include my coaching services Terms and Conditions?
- What Terms and Conditions should my website include?
- Should my website visitors “actively” agree to my Terms and Conditions?
- What business structure should I use to sell my Coaching services?
- Do Business Coaches or Life Coaches need insurance?
- Should I trademark my Coaching business name?
- Should I register my Coaching business for GST?
- What legal agreements or notices should I use in my Coaching business?
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.
Do Business Coaches or Life Coaches need a license or certification?
No. In Australia life coaching is generally unregulated and anyone can call themselves a Life Coach, Personal Coach, Business Coach, Professional Coach, Mentor, Holistic Health Coach, etc.
However, in order to differentiate themselves, the more professional coaches have taken courses and graduated 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?
There are two major international organisations that offer accreditation of 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.
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.
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:
- 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, it will also help manage your client’s expectations.
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. 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.
Make sure 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. 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 takes time.
Should my website include my coaching services Terms and Conditions?
Normally your website is for your general visitor and e-commerce 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.
What Terms and Conditions should my website include?
The Terms and Conditions you publish on your website should include clauses that cover:
- Your compliance with the Australian Competition and Consumer Act
- How your 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 download or checkout.
In general, there are 3 options for checkbox placement:
- A checkbox with 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 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
What business structure should I use to sell my Coaching services?
In Australia, there are generally 4 options for structuring your business:
- Sole trader
- Pty Ltd Company
- Partnership, and
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, 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, 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:
- Using a well-drafted Coaching Service Agreement with each of your clients
- Having robust Terms & Conditions on your website, and
- 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 it as a trademark with IP Australia.
Should I register my Coaching business for GST?
If your Coaching business has annual revenues of over $75,000 then you must register for GST. If you have annual revenues of less than $75,000 then talk to your accountant about your options.
What legal agreements or notices should I use in my Coaching business?
Here are the legal agreements and notices that we recommend you use in your Coaching business:
- Coaching Services Agreement: This 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 advice, etc.
- Website Disclaimer: Protects you from claims by website visitors for relying on information on your site and incurring losses. Additionally, you must include a copyright notice to protect your Intellectual Property.
- Terms & Conditions: To clarify service expectations with potential clients, show you comply with the latest Australian Consumer Law, protect you from frivolous lawsuits and show you’re a Professional organization.
None of these legal forms are 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.
We hope you found this legal guide for Life Coaches, Business Coaches and Mentors helpful.