Contract Review Service Defined
A contract review service is a professional service designed to help businesses and individuals understand the terms, language, responsibilities, and obligations outlined in their agreements. These services are provided by contract lawyers who have a deep understanding of contract law and can assess whether the terms are in the client’s best interest. This is important because rarely is a contract set up with the purpose of being beneficial to both sides; that’s what negotiations are for. So the level of risk one might be putting themselves into must be carefully reviewed by someone with an objective view that can identify vulnerabilities, gaps, and know what to expect as far as consequences should any provision be violated.
Many startups and small businesses have templated agreements or purchase their contracts off of the internet. These are not necessarily bad contracts and even many larger companies use forms. But a template that has provided some security in the past does not mean it will provide security in the future . This is especially true in highly regulated industries or when dealing with consumer transactions where a breach of contract is more likely to lead to an agency investigation or lawsuit by the consumer. Likewise, templates are mostly general purpose and not written with the specific objectives of your company or industry in mind. For example, disagreements over warranties or a breach of confidentiality may be perfectly reasonable for the other party to require but could have a devastating impact on your company and should be carefully assessed before signing anything.
It is fundamentally important to your business that you have good written agreements and use them to protect your interests. A contract review service can help you ensure you have the right agreements for your needs along with an attorney who can advise you on whether you should walk away from something that seems unacceptable or renegotiate a term that might be changed with very little impact on the other side.
Benefits of a Contract Review Service
A contract review service provides an invaluable resource for any individual or business that wants to safeguard themselves against future disputes. When you enter into an agreement, you are legally obligated to fulfill the terms of it unless there is a valid reason to terminate it before the full term. If a dispute arises and no grounds exist to break the contract, you may have to resort to legal action in order to receive the fulfillment of its terms. Most companies have contracts with its employees, vendors, and other businesses, all of which are usually legally enforceable. In order to avoid dealing with costly litigation down the road, it or you should try to get your agreements reviewed by a professional to ensure that it will stand up in court or otherwise be honored as intended. The primary benefit of contract review services is that it is easier to have the contract reviewed before it is signed. An attorney may be able to spot ambiguities and provide suggested changes to clauses that can save a great deal of time and money later on if those clauses turn out to be unenforceable in court. Enforcing vague contractual terms is an uphill battle for even the most seasoned lawyers. If you have already signed an agreement and overlooked a clause that isn’t legally enforceable, it is not too late to call in the lawyers. They may be able to create a modification to the contract that both parties can agree to. Contract review services also help you to ensure that you are in compliance with the law. Not all states have the same laws regarding contracts, and an attorney can help ensure that you are in compliance within the jurisdiction that the contract will be performed. A contract may not be enforceable if it is legally invalid within the state where it is performed. In addition, contract review services ensure that the right legal language is used. Any contract that involves unique trades, particularly those related to employment or trade secrets, may need different contractual language than a typical contract. If contract review services are used, it can help to ensure that any special wording is appropriate for that specific agreement. Lastly, contract review services help protect your interests in a legal agreement. Whether you are entering into an agreement as an individual or as a business, the review service helps to ensure that the contract is as clear and precise as possible, in the best interests of the parties. Many contracts protect the weaker party in a negotiation, but a good review service can catch problems before they become issues in the relationship. In addition, the review service may even be able to suggest alternative ways of phrasing that still protect the weaker party while also giving you a more balanced agreement.
Types of Contracts Requiring Review
A group of lawyers gets together to form a law practice. How will they keep their costs down? They decide to have one of them draft the contracts that govern how they will interact. After all, they know how to do it and were educated for this purpose. That should be OK, right? The answer is probably: "Not necessarily." The ability to draft contracts does not guarantee that the lawyer knows the right outcome to achieve for the client, that she has the client’s best interests at heart and that she doesn’t have a conflict about a term of the contract that needs to be negotiated.
When it comes to the potential landmines for small businesses, contract review provides an essential safety net to make sure the agreements you enter into are "resistant to bulldozers", as the old real estate adage goes. But that doesn’t mean that a contract can never be reviewed by someone in-house who can keep things moving. For small business owners, the combination of cost and expediency requires a practical business determination that makes sense for the contract under review.
Contracts that typically need review by a contract attorney may include:
• Employment agreements, including non-competition agreements, severance agreements and buyouts of equity in the company upon termination.
• Lease agreements for real estate (including retail space), machinery, equipment, vehicles, computers, software, servers, or any other tangible or intangible property.
• Purchase and sale agreements for tangible and intangible property, including inventory, stock, and any other asset needed by the business to operate.
• Loan agreements for money, securities, capital contributions to a corporate entity (or similar legal entity), lines of credit, business credit cards, mortgages and other debt instruments.
• Equipment/Inventory financing agreements that encumber tangible and intangible property to secure payment of the loan.
• Bank account agreements with financial institutions.
• Insurance policies with insurance companies, bonds, self-insurance agreements and any other contractual relationship with an insurance company.
• Employee or sales person incentive agreements that provide for stock options, profit sharing, performance-based bonuses and/or commission arrangements.
• Vendor agreements and supply agreements with suppliers who provide inventory, raw materials, packaging, licenses and other things "without which" a business cannot function.
• Bequest contracts, buy-sell agreements, estate planning and trust agreements for the owners of a closely-held business entity.
Choosing a Contract Review Service
When evaluating various contract review service providers, it’s essential to consider several key factors in order to establish which company specifically meets one’s individual requirements. Some of the most important points to take into account include the following:
The level of expertise
Experience in the niche
Price
Reputation
It’s true that not all companies will require the same level of expertise, however, it certainly pays to go with a contract review service provider that carries with it a high level of knowledge, even if a client doesn’t have a hugely complicated agreement to be checked.
The level of experience is also an important point to consider, as well as how many contracts the review service provider is able to review and return to a client in a specific time frame.
When it comes time to looking at prices, each of the companies you’re considering should be providing a free quote that offers an overview of the cost for your service.
The final step in the process to choosing the right contract review service provider involves looking into their reputation. Most people go online to research reviews for anything they’re looking to invest in these days and when it comes to looking for the right contract review service provider, you’ll want to do the same.
Know what you’re getting and what’s going to be delivered before you give a contract review service provider your business. That way, you can be sure to get the very best service possible with your investment.
Contract Review Process: What You Can Expect
While each contract review service will be slightly different in execution, there are some typical steps you can expect during one, and knowing what to anticipate can help you prepare for the process and give your attorney or consultant as much information as possible.
Once you’ve identified a contract that you would like an attorney or contract consultant to review, you will need to schedule an initial consultation. During this time, you will explain the situation surrounding the contract and the issues you’re experiencing with it, whether you are looking for a negotiation strategy, identifying potential problem clauses, figuring out how to interpret a particularly confusing line, etc .
You will then provide copies of the contract to your attorney or consultant. They will review the entirety of the document, or focus on the areas you have identified as problematic. They will mark up the agreement with any suggestions or changes and talk to you about what they found.
For the next step, the attorney or consultant will actually begin the negotiation process. This entails putting together a strategy and some proposal options. They may need to conference with you again, then reach out to the other side and begin "advocating" on your behalf.
Finally, the consultant or attorney will make recommendations for revisions to the other side’s contract or to your agreement based on the negotiations.
Contract Review Service Fees
Considerations for the Cost of Contract Review Services
Most contract review service companies don’t post their fees online. If they did, it would invariably give the impression that all contract reviews are the same and the pricing should therefore be roughly equivalent. However, as we’ve already seen, contract review services are a mixed bag. The anticipated cost of the service, then, will have a lot to do with the level of quality you desire.
Some entrepreneurs only need their contracts reviewed for obvious mistakes, while others need a fine-tooth comb job. For the low-end, basic contract review services tend to charge a per-page fee anywhere from thirty to one hundred dollars per page, depending on the quality of the service.
The high-end fees can jump into the thousands of dollars for more advanced services. Because the lower-end services sometimes don’t guarantee any work whatsoever for the fees charged, this is why business owners and individuals pay thousands of dollars for other reviews.
The average small or medium-sized business may review anywhere from fifty to one hundred contracts a year. A sensible approach would be to choose a contract review service that keeps fees reasonable for that volume of business, and makes guarantees about the quality of service it will provide.
If the fee is high, you may end up losing contracts because you won’t be able to afford the review services. As a result, you’ll go without a review (and pay the costs of not having your contracts accepted) or proceed with a less-reputable contract review service. If you go with a less-reputable contract review service, it could backfire on you.
Some services only provide e-mailed comments back to you about your contract. In those cases, you may find that you have to go through your entire contract to see what’s been scratched out, or whether any comments were even added. This can take a lot of time and effort.
Conversely, a good contract review service will add in corrections right where they belong in the document so you can see them, and will even submit the final corrected copy to the person or company you’re dealing with. Some contract review services even call the sequence of events with the person you’re dealing with, or visit them in order to negotiate a better contract for you.
Depending on the per-page price you’re paying, this could be a much better deal for you. You’ll have had the peace of mind of knowing that an experienced attorney with expertise in your field will have had final say over the negotiated contract. The bad news is that there aren’t many contract review services like this out there, and those that exist, charge a lot. But if you are paying a high fee for contract review services, this is the one thing you should look for.
Contract Review FAQs
Clients often have questions about the contract review process and what to expect from a contract review service. Here’s how we answer the most common ones:
What does a contract review service look for?
A contract review service looks for clarity and compliance. It identifies high-risk terms that may require further negotiation and makes sure the entire contract supports your business goals. A thorough legal contract review also highlights areas of concern that might affect your liability or ability to perform in full compliance with the contract.
How much does a contract review cost?
The model size of a legal contract review can have a huge impact on the price of the review – length, complexity and intention of the contract being the most important factors. Contract reviews can cost anywhere from $500 to over $2,500.
A flat fee for a contract review service can be an excellent idea . It will provide a sense of certainty about the cost of the review, and it also encourages the reviewer to take a thorough approach to the review.
Make sure to clarify your expectations from the legal contract review service so that you know what you’re getting for your money. Clarifying your expectations should also make sure that you are getting a contract review that is relevant to your needs.
Will you negotiate on my behalf?
It depends. If it outlines that you will negotiate on behalf of clients, we will make the necessary calls and advocate the changes you think are necessary. But a contract review is useful in itself regardless of whether the contract review service also provides negotiation services.
What starts with a contract review process?
The contract review process begins when we receive the contract. At that point, we will evaluate the contract and provide a thorough review for you as a client. After that, any specific services we provide will start based on the contract we have in place with you.
