To handle your commercial contracts, you may need to retain counsel outside of your organisation. Whether you need them because your firm lacks in-house legal counsel or because in-house lawyers are too busy with other projects, outside counsel may save you money and time, as well as help you avoid expensive litigation down the line.
The following are frequent errors and oversights that businesses should avoid when engaging contract management lawyers.
1. Determine if your appointed attorney need any further information in order to fully examine the contract.
Make it clear to them what sort of assessment you want from your outside counsel: high-level concerns only or a comprehensive “scrub.” If your lawyer does a full scrub when you simply wanted them to check for high-level concerns, you may end up spending more time (and money) than necessary.
It is also critical to discuss any background information or past experience with the corporation on the opposing side of the transaction with your attorney. Open lines of contact to ensure they have all they need to thoroughly evaluate the contract — they may have questions, need backup documentation, and so on.
2. Let them know whether you want a high-level assessment or a complete cleanse.
Obtaining this instruction is critical. It informs counsel of how much time we should devote to evaluating your contract. For example, a corporation may have a non-disclosure agreement that they want assessed for high-level concerns only, and they just want it done.
In contrast, they may request that I do a comprehensive assessment and cleaning for a high-value contract. Although a thorough cleanse takes longer, I don’t want customers who need it to feel as if anything has been ignored. I never want to overlook anything that may develop into a huge problem later on.
3. Have any earlier agreements been made?
For instance, I was requested to examine and draught a contract for a customer who was hiring an IT training and services firm. The agreement was long and badly worded, and I expected a lengthy review and negotiating process.
I questioned the customer whether they had any history with this firm, and it came out that there was a previous negotiated agreement when they examined their files (on a different form). I utilised it as a starting point for the new contract, and it saved me time and money for the customer.
4. Do you have any reservations regarding this contract based on your previous experiences?
A former customer, for example, was concerned about data privacy. Personal information was collected as a fundamental component of their business, and a firm with which they contracted to collaborate utilised the personal data for their own gain. This was in violation of the non-disclosure/non-use agreement.
This data was not only confidential, but also commercially valuable, and the hired business was exploiting it for free. When they requested me to draught a new contract with a firm that provides comparable services, I made certain that all of the bases were covered to answer the client’s concerns, particularly data security.
5. Is there anybody else who needs to review?
Will this contract be exclusively between counsel and the contractor? Or do sales and company managers need to go over it again?
For clients that don’t have in-house counsel, I’ll often work with other departments, such as sales or marketing, to ensure the contract corresponds with their objectives and business conditions.
6. Are the terms of the transaction negotiated, or may counsel offer suggestions?
For example, I’m an expert in licencing agreements for technology and consumer goods. A licensee offered a suggested licencing agreement to a prior customer. The agreement conditions favoured the licensee rather than my client.
The transaction conditions had previously been negotiated on the front end (as is frequently the case when a contract arrives to my office), but I was able to convince the client that it was worthwhile to push back on some of the terms. At the conclusion of the process, I was able to secure the client a better offer than the one they had negotiated, making the legal expenses look even more worthwhile to the client!