<PAGE>
                                                                   EXHIBIT 10.19
 

                              CONSULTING AGREEMENT
                              --------------------

This Consulting Agreement (the "Agreement"), effective as of July 13, 1998 is
entered into by and between DATA RACE, INC., a Texas corporation (herein
referred to as the "Company") and LIVIAKIS FINANCIAL COMMUNICATIONS, INC., a
California corporation (herein referred to as the "Consultant").

                                    RECITALS
                                    --------

     WHEREAS, Company is a publicly held corporation with its common stock
traded through the NASDAQ National Market System; and

     WHEREAS, Consultant has experience in the area of investor communications
and financial and investor public relations; and

     WHEREAS, Company desires to engage the services of Consultant to assist and
consult with the Company in matters concerning investor relations and to
represent the company in investors' communications and public relations with
existing shareholders, brokers, dealers and other investment professionals as to
the Company's current and proposed activities;

     NOW THEREFORE, in consideration of the promises and the mutual covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:

1. Term of Consultancy. Company hereby agrees to retain the Consultant to act
   -------------------                                                       
in a consulting capacity to the Company, and the Consultant hereby agrees to
provide services to the Company commencing immediately and ending on March 15,
1999.

2. Duties of Consultant. The Consultant agrees that it will generally provide
   --------------------                                                      
the following specified consulting services through its officers and employees
during the term specified in Section 1.:

     (a) Advise and assist the Company in developing and implementing
appropriate plans and materials for presenting the Company and its business
plans, strategy and personnel to the financial community, establishing an image
for the Company in the financial community, and creating the foundation for
subsequent financial public relations efforts;
     (b) Introduce the Company to the financial community;
     (c) With the cooperation of the Company, maintain an awareness during the
term of this Agreement of the Company's plans, strategy and personnel, as they
may evolve during such period, and advise and assist the Company in
communicating appropriate information regarding such plans, strategy and
personnel to the financial community;
     (d) Assist and advise the Company with respect to its (i) stockholder and
investor relations, (ii) relations with brokers, dealers, analysts and other
investment professionals, and (iii) financial public relations generally; 
     (e) Perform the functions generally assigned to investor/stockholder
relations and public relations departments in major corporations, including
responding to telephone and written inquiries (which may be referred to the
Consultant by the Company); preparing press releases for

                                      1.
<PAGE>
 
the Company with the Company's involvement and approval or reviewing press
releases, reports and other communications with or to shareholders, the
investment community and the general public; advising with respect to the
timing, form, distribution and other matters related to such releases, reports
and communications; and consulting with respect to corporate symbols, logos,
names, the presentation of such symbols, logos and names, and other matters
relating to corporate image;
     (f) Upon the Company's approval, disseminate information regarding the
Company to shareholders, brokers, dealers, other investment community
professionals and the general investing public;
     (g) Upon the Company's approval, conduct meetings, in person or by
telephone, with brokers, dealers, analysts and other investment professionals to
advise them of the Company's plans, goals and activities, and assist the Company
in preparing for press conferences and other forums involving the media,
investment professionals and the general investment public;
     (h) At the Company's request, review business plans, strategies, mission
statements budgets, proposed transactions and other plans for the purpose of
advising the Company of the investment community implications thereof; and,
     (i) Otherwise perform as the Company's financial relations and public
relations consultant.


3. Allocation of Time and Energies. The Consultant hereby promises to perform
   -------------------------------                                   
and discharge well and faithfully the responsibilities which may be assigned to
the Consultant from time to time by the officers and duly authorized
representatives of the Company in connection with the conduct of its financial
and investor public relations and communications activities, so long as such
activities are in compliance with applicable securities laws and regulations.
Consultant shall diligently and thoroughly provide the consulting services
required hereunder. Although no specific hours-per-day requirement will be
required, Consultant and the Company agree that Consultant will perform the
duties set forth hereinabove in a diligent and professional manner. The parties
acknowledge and agree that a disproportionately large amount of the effort to be
expended and the costs to be incurred by the Consultant and the benefits to be
received by the Company are expected to occur upon and shortly after, and in any
event, within two months of the effectiveness of this Agreement. It is
explicitly understood that Consultant's performance of its duties hereunder will
in no way be measured by the price of the Company's common stock, nor the
trading volume of the Company's common stock. It is also understood that the
Company is entering into this Agreement with Liviakis Financial Communications,
Inc. ("LFC"), a corporation and not any individual member of LFC, and with such,
Consultant will not be deemed to have breached this Agreement if any member,
officer or director of LFC leaves the firm or dies or becomes physically unable
to perform any meaningful activities during the term of the Agreement, provided
the Consultant otherwise performs its obligations under this Agreement. The
Company shall have the right to request that any of Consultant's employees or
outside independent contractors, if any, not perform any services for the
Company contemplated hereunder on behalf Consultant.

4. Remuneration. As full and complete compensation for services described in
   ------------                                                             
this Agreement, the Company shall compensate LFC and Robert B. Prag, Senior
Vice President of LFC (herein referred to as "Consultants") as follows:

                                      2.
<PAGE>
 
4.1      For undertaking this engagement and for other good and valuable
         consideration, the Company agrees to issue and deliver to the
         Consultants a "Commencement Bonus" payable in the form of 1,875,300
         shares of the Company's Common Stock ("Common Stock"). This
         Commencement Bonus shall be issued to the Consultants immediately
         following execution of this Agreement and shall, when issued and
         delivered to Consultants, be fully paid and non-assessable. The Company
         understands and agrees that Consultants has foregone significant
         opportunities to accept this engagement and that the Company derives
         substantial benefit from the execution of this Agreement and the
         ability to announce its relationship with Consultants. The 1,875,300
         shares of Common Stock issued as a Commencement Bonus, therefore,
         constitute payment for Consultants' agreement to represent the Company
         and are a nonrefundable, non-apportionable, and non-ratable retainer;
         such shares of Common Stock are not a prepayment for future services. 
         If the Company decides to terminate this Agreement prior to March 15,
         1999 for any reason whatsoever, it is agreed and understood that
         Consultants will not be requested or demanded by the Company to return
         any of the shares of Common Stock paid to it hereunder. 1,406,475
         shares of Common Stock issued pursuant to this Agreement shall be
         issued in the name of Liviakis Financial Communications, Inc. and
         468,825 shares of Common Stock issued pursuant to this Agreement shall
         be issued in the name of Robert B. Prag ("Prag"). The Company agrees
         that all shares issuable to Consultants hereunder shall carry
         "piggyback registration rights" whereby such shares will be included in
         the next appropriate registration statement filed by the Company. The
         Company further agrees that it will file a registration statement in
         which the Consultants are permitted to participate by December 1,
         1998. Consultants agree that neither will sell or transfer during the
         term of this Agreement any of the 1,875,300 shares Company's stock
         issued to Consultants hereunder.

4.2      Consultants acknowledge that the shares of Common Stock to be issued
         pursuant to this Agreement (collectively, the "Shares") have not been
         registered under the Securities Act of 1933, and accordingly are
         "restricted securities" within the meaning of Rule 144 of the Act. As
         such, the Shares may not be resold or transferred unless the Company
         has received an opinion of counsel reasonably satisfactory to the
         Company that such resale or transfer is exempt from the registration
         requirements of that Act. In addition, Consultant agrees that, during
         the term hereof neither it, nor its officers or affiliates shall
         directly or indirectly, acquire or dispose of any securities of Company
         without the Company's written consent.

4.3      In connection with the acquisition of Shares hereunder, the Consultants
         represent and warrant to the Company as follows:

         (a) Consultants acknowledge that the Consultants have been afforded the
         opportunity to ask questions of and receive answers from duly
         authorized officers or other representatives of the Company concerning
         an investment in the Shares, and any additional information which the
         Consultants have requested.

         (b) Consultants' investment in restricted securities is reasonable in
         relation to the Consultants' net worth, which is in excess of ten (10)
         times the Consultants' cost basis in the Shares. Consultants have had
         experience in investments in restricted and publicly traded securities,
         and Consultants have had experience in investments in speculative

                                       3.
<PAGE>
 
         securities and other investments which involve the risk of loss of
         investment. Consultants acknowledges that an investment in the Shares
         is speculative and involves the risk of loss. Consultants have the
         requisite knowledge to assess the relative merits and risks of this
         investment without the necessity of relying upon other advisors, and
         Consultants can afford the risk of loss of his entire investment in the
         Shares. Consultants are (i) accredited investors, as that term is
         defined in Regulation D promulgated under the Securities Act of 1933,
         and (ii) a purchaser described in Section 25102 (f) (2) of the
         California Corporate Securities Law of 1968, as amended.

         (c) Consultants are acquiring the Shares for the Consultants' own
         account for long-term investment and not with a view toward resale or
         distribution thereof except in accordance with applicable securities
         laws.

5.  Financing "Finder's Fee". It is understood that in the event Consultant
    ------------------------                                               
introduces Company, or its nominees, to a lender or equity purchaser, not
already having a preexisting relationship with the Company, with whom Company,
or its nominees, ultimately finances or causes the completion of such financing,
Company agrees to compensate Consultant for such services with a "finder's fee"
in the amount of 2.5% of total gross funding provided by such lender or equity
purchaser, such fee to be payable in cash. This will be in addition to any fees
payable by Company to any other intermediary, if any, which shall be per
separate agreements negotiated between Company and such other intermediary. It
is also understood that in the event Consultant introduces Company, or its
nominees, to an acquisition candidate, either directly or indirectly through
another intermediary, not already having a preexisting relationship with the
Company, with whom Company, or its nominees, ultimately acquires or causes the
completion of such acquisition, Company agrees to compensate Consultant for such
services with a "finder's fee" in the amount of 2% of total gross consideration
provided by such acquisition, such fee to be payable in cash. This will be in
addition to any fees payable by Company to any other intermediary, if any, which
shall be per separate agreements negotiated between Company and such other
intermediary. It is specifically understood that Consultant is not nor does it
hold itself out be a Broker/Dealer, but is rather merely a "Finder" in reference
to the Company procuring financing sources and acquisition candidates.


5.1      It is further understood that Company, and not Consultant, is
         responsible to perform any and all due diligence on such lender, equity
         purchaser or acquisition candidate introduced to it by Consultant under
         this Agreement, prior to Company receiving funds or closing on any
         acquisition.

5.2      Company agrees that said compensation to Consultant shall be paid in
         full at the time said financing or acquisition is closed. Moreover,
         said compensation, will be a condition precedent to the closing of such
         financing or acquisition and Company shall execute any and all
         documents necessary to effect said compensation.

5.3      As further consideration to Consultant, Company, or its nominees,
         agrees to pay with respect to any financing or acquisition candidate
         provided directly or indirectly to the Company by any lender or equity
         purchaser covered by this Section 5. during the period of

                                       4.
<PAGE>
 
         one year from the date of this Agreement, a fee to Consultant equal to
         that outlined in Section "5" herein.

5.4      Consultant will notify Company of introductions it makes for potential
         sources of financing or acquisitions in a timely manner (within
         approximately 3 days of introduction) via facsimile memo. If Company
         has a preexisting relationship with such nominee and believes such
         party should be excluded from this Agreement, then Company will notify
         Consultant immediately of such circumstance via facsimile memo.

6.   Expenses. Consultant agrees to pay for all its expenses (phone, mailing,
     --------                                                                
labor, etc.), other than extraordinary items (travel required by/or specifically
requested by the Company, luncheons or dinners to large groups of investment
professionals, mass faxing to a sizable percentage of the Company's
constituents, investor conference calls, print advertisements in publications,
etc.) approved by the Company prior to its incurring an obligation for
reimbursement.

7.   Indemnification. The Company warrants and represents that all oral
     ---------------                                                   
communications, written documents or materials furnished to Consultant by the
Company with respect to financial affairs, operations, profitability and
strategic planning of the Company are accurate and Consultant may rely upon the
accuracy thereof without independent investigation. The Company will protect,
indemnify and hold harmless Consultant against any claims or litigation
including any damages, liability, cost and reasonable attorney's fees as
incurred with respect thereto resulting from Consultant's communication or
dissemination of any said information, documents or materials not designated by
the Company to the Consultant as "confidential" or "Company private", excluding
any such claims or litigation resulting from Consultant's communication or
dissemination of information not provided or authorized by the Company.

8.   Representations. Consultant represents that it is not required to maintain
     ---------------                                                           
any licenses and registrations under federal or any state regulations necessary
to perform the services set forth herein. Consultant acknowledges that, to the
best of its knowledge, the performance of the services set forth under this
Agreement will not violate any rule or provision of any regulatory agency having
jurisdiction over Consultant. Consultant acknowledges that, to the best of its
knowledge, Consultant and its officers and directors are not the subject of any
investigation, claim, decree or judgment involving any violation of the SEC or
securities laws. Consultant further acknowledges that it is not a securities
Broker Dealer or a registered investment advisor. Company acknowledges that, to
the best of its knowledge, that it has not violated any rule or provision of
any regulatory agency having jurisdiction over the Company. Company acknowledges
that, to the best of its knowledge, Company is not the subject of any
investigation, claim, decree or judgment involving any violation of the SEC or
securities laws.

9.   Legal Representation. The Company acknowledges that it has been represented
     --------------------                                                       
by independent legal counsel in the preparation of this Agreement. Consultant
represents that they have consulted with independent legal counsel and/or tax,
financial and business advisors, to the extent the Consultant deemed necessary.

                                      5.
<PAGE>
10.  Status as Independent Contractor. Consultant's engagement pursuant to this
     --------------------------------                                          
Agreement shall be as independent contractor, and not as an employee, officer or
other agent of the Company. Neither party to this Agreement shall represent or
hold itself out to be the employer or employee of the other. Consultant further
acknowledges the consideration provided hereinabove is a gross amount of
consideration and that the Company will not withhold from such consideration any
amounts as to income taxes, social security payments or any other payroll taxes.
All such income taxes and other such payment shall be made or provided for by
Consultant and the Company shall have no responsibility or duties regarding such
matters. Neither the Company or the Consultant possess the authority to bind
each other in any agreements without the express written consent of the entity
to be bound.

11.  Attorney's Fee. If any legal action or any arbitration or other proceeding
     --------------                                                            
is brought for the enforcement or interpretation of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection with
or related to this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs in connection
with that action or proceeding, in addition to any other relief to which it or
they may be entitled.

12.  Waiver. The waiver by either party of a breach of any provision of this
     ------                                                                 
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach by such other party.

13.  Notices. All notices, requests, and other communications hereunder shall be
     -------                                                                    
deemed to be duly given if sent by U.S. mail, postage prepaid, addressed to the
other party at the address as set forth herein below:

     To the Company:      Data Race, Inc.
                          Dr. Ben Barker, CEO
                          12400 Network Blvd.
                          San Antonio, TX 78249

     To the Consultant:   Liviakis Financial Communications, Inc.
                          John M. Liviakis, President
                          2420 "K" Street, Suite 220,
                          Sacramento, CA 95816.


      It is understood that either party may change the address to which notices
for it shall be addressed by providing notice of such change to the other party
in the manner set forth in this paragraph.

                                      6.
<PAGE>
 
14.  Choice of Law, Jurisdiction and Venue. This Agreement shall be governed
     -------------------------------------                                  
by, construed and enforced in accordance with the laws of the State of
California. The parties agree that Sacramento County, CA. will be the venue of
any dispute and will have jurisdiction over all parties.

15.  Arbitration. Any controversy or claim arising out of or relating to this
     -----------                                                             
Agreement, or the alleged breach thereof, or relating to Consultant's activities
or remuneration under this Agreement, shall be settled by binding arbitration in
California, in accordance with the applicable rules of the American Arbitration
Association, and judgment on the award rendered by the arbitrator(s) shall be
binding on the parties and may be entered in any court having jurisdiction
thereof. The provisions of Title 9 of Part 3 of the California Code of Civil
Procedure, including section 1283.05, and successor statutes, permitting
expanded discovery proceedings shall be applicable to all disputes that are
arbitrated under this paragraph.

16.  Miscellaneous Conditions. Company and Consultant each agree to the follow
     ------------------------                                                 
terms and conditions:

     a.) The Company shall arrange that all officers and Directors agree to a
one year selling lockup for the term of this Agreement, for as long as they
remain officers and directors.

17.  Complete Agreement. This Agreement contains the entire agreement of the
     ------------------                                                     
parties relating to the subject matter hereof. This Agreement and its terms may
not be changed orally but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.


AGREED TO:


"Company"                 DATA RACE, INC.



Date: 7-13-98             By: 
     ------------            ------------------------------------------
                              Gregory T. Skalla, V. P. Finance & CFO
                              & Its Duly Authorized Officer



"Consultant"              LIVIAKIS FINANCIAL COMMUNICATIONS, INC.



Date: 7-13-98             By: /s/ John M. Liviakis    /s/ Robert B. Prag
     ------------            ---------------------    ------------------
                             John M. Liviakis         Robert B. Prag
                             President                Sr. Vice President

                                       7.