As business lawyers who sometimes act as in-house counsel, we answer many questions about business and corporate contracts.
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While contracts are incredibly different depending on the subject matter and the parties involved, we tend to get many of the same questions over and over.
Some of these questions are:
- When during contract negotiations should we bring in an attorney? Right away. It’s essential that you have your attorney participate early in negotiations, so that they can help you look out for any loopholes or potential areas of legal concern. You also want to be aware of legal clauses that may impact negotiations and will need to be incorporated into your contract. Sometimes companies think it’s a good idea to just have an attorney review a contract at the end of the negotiation, but this never works well. Attorneys usually find issues, which can then end a deal, as the company now has to go back on terms they negotiated. This can tarnish relationships with other companies, create headaches on both sides, and complicate a deal. It can also force negotiations to start from scratch. If you are worried about efficiency, involve the attorney from the beginning.
- Should we use their “standard” agreement? While you may use their standard agreement as a starting point, no deal is ever really standard. You want to make sure you fully negotiate a standard agreement so that it covers your concerns, needs, and protects your interests. You also want to be aware of potential legal traps or consequences in standard agreements. Often, standard agreements are very one-sided and have very unfavorable terms for the other party. The provisions may include clauses that might not look harmful, but could result in high costs to you, such as dispute resolutions, indemnification, auto-renewals, and more.
- How many pages should the contract be? The length of the contract is totally dependent on the nature of the deal. Some clients think that they need a long and complex contract to protect their interests, but this is often not the case. Long contracts can often lead to confusion and issues down the line. Contracts should be short and simple, covering the obligations of both parties and incorporating other necessary terms.
- How much does it cost to hire an attorney? This depends. The answer to this question changes largely depending on the attorney, their familiarity with your organization, the complexity of the negotiation and more. However, failing to hire an attorney can lead to costly disputes, misunderstandings, and consequences down the line. Hiring an attorney up front is much more cost effective than getting into a legal dispute.
- If it’s for a small company, we don’t need an attorney. Right? WRONG. One poorly drafted contract could put a small business out of business. No matter the size of your business, it’s essential that you take contracts seriously, as the consequences of poorly drafted or ambiguous contracts can be devastating to a business of any size.
Make sure to meet with your attorney well in advance of any contract dealings. Explain your concerns and needs so that your attorney can fully advocate on your behalf.
We never recommend entering into a contract without the help of an attorney.
If you did enter into contracts without an attorney, it might be a good idea to review those agreements with an attorney today.
If you have any questions about your contracts or business needs, call Rickard & Associates today!
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