Reasons to Hire a Commercial Contract Lawyer
Contracts are the lifeblood of a company, big or small. Agreements bind employees to their employers, customers to their service providers, govern co-packing relationships and create exclusivity for suppliers. As with any integral piece of a business, it’s crucial to have the right people involved in the management of agreements. While it may not be immediately clear as to why it’s so important to have a commercial contract lawyer on your team, the risks of poor contract management outweigh the costs.
Residential lease agreements are often signed without the aid of a lawyer, under the assumption that they are boilerplate forms. But this perception couldn’t be further from the truth. Their complexity is one reason that some landlords, real estate developers and brokers advise that a rental agreement really isn’t worth much until it has been reviewed by a commercial contract lawyer.
Trying to save a few dollars by managing your own contracts may cost you a lot more down the road. Companies that fail to take a professional approach to their contracts are risking the long-term success of their operations. They’re also putting themselves at risk of lost revenue, lower efficiencies and a damaged reputation. Some of the more common mistakes made during contract management include failure to:
Even if your agreements aren’t vague by nature, you take on significant risks by failing to hire a commercial contract lawyer . The person who drafts a contract is going to have their own preferences, what do you think is going to happen to the agreements that are drafted by your legal counsel? Absent unforeseen circumstances, the company will benefit when a lawyer uses their years of training and expertise to draft an agreement that clearly communicates each party’s obligations.
Lawyers ensure that agreements are unambiguous and clearly allocate risk and responsibility. They help avoid future disputes and make the enforcement of rights and obligations easier and more effective. Experienced lawyers have tried and lost cases over poorly managed contracts so they know what works best to avoid costly mistakes.
Using a commercial contract lawyer isn’t necessarily about avoiding future litigation, though. A commercial contract lawyer can also help you develop and improve your contract management strategies. They’ll be able to help you develop a plan based on the type and number of agreements your organization manages. The more complex and numerous your contracts, the more pressing the need is to have your agreements reviewed by a lawyer.
The benefits of hiring a commercial contract lawyer is that they review and prevent or lessen the severity of risks to your business. Even a poorly worded clause can produce unwanted or ambiguous outcomes. But these issues can be prevented through a contractual evaluation.
Expectations From a Commercial Contract Lawyer
A commercial contract lawyer’s primary role is to ensure that your business’s interests are protected from any legal standpoint. That means that they’re able to handle negotiations of any type of contract, as well as the drafting of such documents, their examination after they’ve been drafted, and, ideally, litigation in case your company’s interests are affected in a way that is damaging. Some of the key roles that a commercial contract lawyer will play may include:
-Drafting contracts for your business. While the law allows for informal contracts to be enforced in some jurisdictions, there’s no getting around the fact that the vast majority of business contracts by their nature require documentation. A commercial contract lawyer will help you to draft a contract that meets your needs one hundred percent, avoiding any language that could be open to interpretation and would leave you in a bad position later on.
-Negotiating with other parties. Even if you’re satisfied with how a contract is currently worded, it is possible that the party you’re in the process of doing business with could ask for its own changes to be made. Your commercial contract lawyer is very familiar with the legal requirements of establishing binding contracts, and can work with the other party to make the concessions they may demand without leaving you in a bad position.
-Reviewing contracts from other parties. There are some agreements, even among businesses, that do not need to be documented. If this is the case when you’re establishing a business relationship with another, you may still wish to have a commercial contract lawyer examine the bare-bones agreement that was reached just to ensure that there aren’t any loopholes, omissions, or other issues that could cause problems down the line.
-Setting up commercial transactions. Some business dealings are, by their very nature, complex and may require extensive negotiations about the particulars of the deal. In these cases, your commercial contract will outline the specifics of the transaction, including scope, costs, timelines, and mutual expectations. Your lawyer can ensure that you’re protected by each part of the transaction.
-Litigating improperly written contracts. The worst-case scenario for any business, of course, is that a contract they’ve entered into with another entity is written in a way that leaves them open to significant financial or legal liability. If this occurs, you will want an experienced and capable commercial contract lawyer that can not only spot the issues at play but can help to navigate your way out of the problem. They can either deal with the other party on your behalf to void the contract or litigate in court if necessary.
Skills of a Commercial Contract Lawyer
A successful commercial contract lawyer must possess a unique combination of practical skills and legal knowledge. Such lawyers must be "deal-doers" who can use sound legal knowledge to help their clients reach their business goals and objectives, but who are also able to provide the legal protection necessary for those clients to minimize their exposure to liability as a result of the deal terms. The following skills are especially important for a commercial contract lawyer: Negotiation – The ability to negotiate appropriate legal terms that meet both sides’ business goals and mitigate each party’s legal risks is essential for an experienced commercial contract lawyer. This requires the ability to assess what’s being offered by the other side and whether it’s acceptable. This requires not only the ability to read between the lines and listen actively, but also to describe your business goals clearly and persuasively without tipping your hand or compromising your own goals. Understanding of the Client’s Business – Experienced commercial contract lawyers understand that the best deals are done when both sides win. This requires that each lawyer involved have an understanding of the business involved and how the deal in question benefits and exposes that business to risk. In some cases, such as mergers or acquisitions, a commercial contract lawyer would even push clients to consider alternative deal structures if those alternatives are financially or operationally a better fit for a client’s overall business goals and objectives. Legal Knowledge – A commercial contract lawyer must be knowledgeable about a wide range of relevant legal concepts and how they affect commercial contracts. This goes beyond simply having a good grasp of contract law. Commercial contract lawyers must also be familiar with how different types of contracts function and how certain types of transactions are structured. Such contracts include:
When to Hire a Commercial Contract Lawyer
Commercial contract lawyers are more than merely drafters of agreements. They can help you to efficiently and effectively consummate a particular transaction or position the business for success in the future.
Litigation Prevention
A competent commercial contract lawyer will see issues in a transaction or agreement that a business person will not see, and the presence of these issues can result in significant risks that could come back to haunt you later. Prudent planning and drafting by experienced legal counsel can mitigate these risks.
Due Diligence
For the purchase of a business or a merger, you will have the opportunity to determine what you are really getting and what issues exist that you need to address in the transaction. Your commercial contract lawyer should be the one to help you identify these issues. Good planning and negotiating at this stage , with the right counsel, can save you thousands of dollars later.
Mergers & Acquisitions
There are specific legal requirements in mergers and acquisitions that require not just the attention of a commercial contract lawyer, but also the management of due diligence efforts, negotiation strategies, and potentially litigation down the road. It is important to use an experienced commercial contract lawyer throughout a merger and acquisition to ensure that you have no regrets in the long run.
Partnership or Joint Venture Agreements
Entering into a new partnership or joint venture can be a great way to expand your business. However, if you don’t get it right, it may lead to problems that could threaten the very continued existence of your business. Consulting a skilled commercial contract lawyer to draft or negotiate the arrangement can help save you money and grief in the future.
How to Choose the Best Commercial Contract Lawyer
Once you have and understand the basic contracts you need, you will want to find an attorney to help you manage your general corporate matters. Finding the right commercial contract lawyer for your business can be a daunting task. The good news is that there are many reputable and capable attorneys around. There are three categories of attorneys with which you should consider working: in-house counsel, a solo practitioner and general small business law practice. In-house counsel are lawyers who work at a company and are employed by that company on a full-time basis. For small business this not a practical option, but for a large business with employees that are dedicated to managing contracts, it is very helpful and efficient. Practically speaking, many large businesses have in-house contract attorneys who manage their internal contracts and bid out external contracts for launch and negotiation by one of their outside counsel.
A solo practitioner is just what it sounds like; it is a lawyer working for himself or herself as their primary source of income. Solo practitioners tend to be the most affordable, but they also tend to offer the lowest level of service because of the costs associated with running a general office staff and dealing with multiple clients. For small contracts and simple contracts, it may be a good choice. It’s important to note that what is a "simple" contract for some may be very complex for others – it depends on the business and the specific contract.
Many small business law practices offer the same pricing structure as a solo practitioner, but tend to carry a larger caseload. For contract negotiation and management, however, many large firms won’t have the flexibility to give your individual matters the time and attention they require due to more regular, predictable work being handled by the firm. An exception to this rule is a firm that specializes in the industry with which you are dealing. For example, PatPkg specializes in contract negotiation for packaging companies, so it focuses its staff’s time on this industry. For this reason, it can negotiate contracts with vendors at a very high level without a large overhead.
Common Problems Addressed by a Commercial Contract Lawyer
Commercial contract lawyers routinely help their clients deal with several common contractual issues. Breach of contract is one of the most frequent challenges that these attorneys see. When one party to a contract breaks the terms of the contract, the other party retains the right to sue for damages.
Misrepresentation is another problem that commercial contract lawyers often help their clients to resolve. If one party to a contract has intentionally made a false statement that is relied upon by the other party in the making of the contract , then liability for that misrepresentation may rest in the hands of the party making the false statement. This may also be known as the Tort of Inducement.
Those contract disputes which revolve around whether a contract is valid or not are called invalid contract disputes. These types of contract disputes usually involve issues concerning a contract that may have lacked the proper elements to be considered binding under law. One common example of these invalid contracts is a contract entered into by a minor. Minors lack the legal authority to enter into contracts, and therefore any contract signed by a minor is considered invalid.