Fighting the Temptation to Draft Your Own Business Contracts

How Using a Form Contract Can End Up Costing Your Business More

By guest blogger Karen R. Cashion

Otherwise savvy businesses often draft their own business contracts. And now, with the easy availability of free and low cost contract templates on the Internet, many businesses are succumbing to the temptation of downloading form contracts that they customize themselves, rather than turning to an attorney for advice and drafting. Using a form contract may appear to be an up-front cost savings for your company. But retaining a lawyer to draft your company’s business contracts on the front end is a smart risk management strategy that can potentially save your company tens of thousands of dollars later.

Whether your business sells products or professional services, you’ve developed your particular niche expertise that you apply to successfully running your business. And while you wear many hats in order to run that business, you know when to hire an expert. So you’ve hired an accountant to handle your books, an IT company to manage your company’s IT, and an HR professional to oversee hiring and human resources. But your company needs a business contract. Maybe it’s a master services agreement and statement of work. Maybe it’s a consulting contract, or a partnership agreement, or a parts supply contract. Whatever the nature of the need, since you have an old vendor agreement in the file with some standard terms and conditions in it, wouldn’t it make sense just to copy that contract, make a few changes to the names, title and pricing, and save the company the time and cost of hiring an attorney to draft it? Or, since this is the age of Legal Zoom and other websites offering a la carte legal forms, why not just download a contract form from the Internet, something recent and similar to what you need, and customize that contract yourself? The short answer is, don’t do it. Unless you have an IT background, you shouldn’t try to manage your company’s IT. And unless you’re a lawyer, you shouldn’t try to draft your company’s legal agreements.

It’s important to remember that business contracts are not a “one size fits all” proposition. They are deal and fact-specific, custom legal documents crafted to protect your company’s own interests. A well-drafted contract will convey the terms of the deal with precision. It will clearly and concisely describe each party’s obligations, and the applicable timetable for fulfillment of those obligations. It will effectively protect your company’s intellectual property, provide a framework for resolving disputes, and limit your company’s potential exposure and liability.

An experienced and well-credentialed attorney knows the law and understands how to best protect your business. He or she has been trained to identify and counsel you regarding legal issues that can affect your company, and to draft a precise and effective contract for you. While your company will have to pay to hire an attorney to craft its contract, your company will receive the benefit of that attorney’s experience and education-a well-drafted, custom agreement that can help prevent contract-related disputes and limit your company’s legal exposure. Moreover, the price tag doesn’t have to be excessive. There are many outstanding attorneys in smaller and solo law practices who offer rates far lower than what the big firms charge. You can check your city, state or county bar association’s online directory to find these attorneys, you can Google corporate attorneys in your area, or you can seek a word-of-mouth recommendation.

Many of my business clients succumbed to the temptation of drafting their own contracts or downloading contract templates prior to coming to me. Some are newer business owners who initially drafted their own company contracts in order to reduce startup costs, and subsequently asked me to review these documents. Others came to me after they had already become embroiled in costly contract-related business disputes with their customers or business partners, disputes which arose from poorly-drafted contracts. Contract-related business disputes and litigation aren’t inexpensive. In fact, they can cost your company tens or even hundreds of thousands of dollars in legal fees and lost work time- far more than the cost of hiring an attorney to draft your company’s agreement in the first place. So, the next time you’re tempted to use a form contract and skip the attorney, remember that outsourcing your contract drafting to an attorney is the smarter, and ultimately more cost-effective, risk management strategy.

Karen Cashion is an experienced business and technology lawyer who runs her own law practice, Cashion Law, LLC, (www.cashionlaw.com), in Alpharetta. A graduate of Duke Law School, Karen was a law firm partner in Atlanta and Assistant General Counsel for EarthLink prior to starting her own firm.

About Mary

Mary is the CEO of LAN Systems. She is an electrical engineer who feels her greatest strength is the ability to connect with people. LAN Systems provides IT managed services and solutions to growing companies and non-profit organizations. You can contact Mary at mary@lansystems.com.

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