The Importance of Having a Lawyer Draft and Negotiate Contracts

A situation that is all too common for lawyers whose practice involves contract law, is the client who comes to the lawyer for the first time after the contract has already been signed because a problem has arisen between the parties. Typically, such a client is now in a frenzied panic, asking the lawyer, “can you get me out of this deal” or “please tell me I can get my money back” or something along those lines. Unfortunately, in many cases, since the client did not seek legal advice before signing the contract, it becomes a much harder and sometimes more expensive process to try to remedy the situation.

There are a number of reasons why someone may decide to avoid seeking legal advice before signing the contract:

(1) “The parties initially “trust” each other.” The sad truth is that once money and business get involved, people, feelings, attitudes, and intentions can change. There are many “sharks”, “snakes”, and other, less appropriate terms, out there who prey on others who are too quick to trust and enter into a deal without really knowing what they are getting into. To make an analogy, while no one likes to think about divorce at the beginning of the marriage, the reality is that divorce happens quite often, and so a client must protect itself from the beginning of the “marriage”, even if it seems like everything will be fine. Even if from the onset the parties intend to work together forever with no conflicts, things don’t always go as expected, and when the money starts rolling in or running out, things change. Either way, it is always better to account for the improbable (in writing) at the onset while everyone is friendly, has good intentions, and respects one another.

(2) “A lawyer will cost too much.” While there are some lawyers whose fees may not be accessible to young entrepreneurs, there are many lawyers out there who are hungry and waiting for a client’s business at a reasonable price. Most lawyers will even offer a free or reduced fee initial consultation to discuss issues and pricing. Further, think about the situation where the client has lost a significant amount of money from a bad deal. Imagine how much could have been saved if the client had spent initial money on a lawyer to make sure the client was protected? An initial up-front investment can often save you twice as much in the long run. As they say, cheap can sometimes be expensive.

(3) “Don’t want to “scare off” the other party by bringing a lawyer into the mix.” For many, even mentioning the word “lawyer” can give them the “heebie-jeebies”. Maybe there was a bad past experience or just a worry that the lawyer will overcomplicate things. However, most lawyers are actually extremely nice people who truly want to do good in the world and help resolve issues, not create new ones. It is also important that the client have a great relationship with its lawyer and explain its intentions. For instance, if the deal is something that the client is very keen on moving forward with, the lawyer should only be there to facilitate the deal while protecting the client as much as possible, or at least making the client aware of the risks when entering the deal. Further, having a lawyer at the beginning of a deal can be a sign of business sophistication that causes the other party to act more fairly and reasonably. Anyone who wants to enter into a business deal, but is opposed to having a professional review of the documents, should be cause for alarm.

(4) “Using a template found online.” In today’s day and age, the internet has made so much more information accessible. However, this also comes with some information that can be incorrect, incomplete, or not applicable in every situation. Many of these template contracts that can be found online only cover basic terms, may have been drafted in a way that favors one party over the other, don’t account for the nuances of a particular deal or individualized issues, and they are oftentimes outdated and no longer in compliance with the law. Without extensive experience drafting and reviewing a contract, a client could mistakenly use a template that is missing important terms to help protect them or includes terms that aren’t in their favor. Often times a template contract can miss opportunities to make additional money, such as preventing future uses of work which could result in future earnings and more.

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So, how can a lawyer actually help a client before entering into a contract?
First, a great lawyer will take into account the business negotiation as a whole. They may advise on additional considerations and other relevant issues. The lawyer can do a full review of the contract and advise on what the legal jargon translates to in plain English. The lawyer can confirm whether certain deal points are as discussed between the parties and whether there are any unfavorable terms that the client should not agree to, or at least be aware of.

Additionally, based on the review, the lawyer can add or revise certain provisions to make it more favorable. In some cases, there may be a provision missing that the client thought should be there, or the lawyer may have a suggestion that the client never even thought about, but which could greatly improve a client’s position.

Lastly, the lawyer can be an intermediary who helps negotiate with the other party to reach a fairer agreement. A lawyer can advocate on behalf of the client with the other party and make sure that they are presenting the best arguments for their position, while the client focuses on making sure they continue to make great products. Not every negotiation has to be contentious, although there is a time and place for that. A good lawyer is meant to be the client’s biggest ally fighting for the client while still ensuring that its end goal is met in the most favorable position possible.