Whether you’re a freelancer, head of a startup, or a seasoned small business owner, you’ve probably experienced a common headache: legal bottle-necks that seem to make closing deals take forever. You’re counting on that revenue to make payroll and pay your bills. How can you speed things up? Here’s five ways your business can more “legal ready.”
1. Decide How to “Lawyer-up”
Many of the simpler legal tasks can be handled on your own and are simply a matter of filling in some forms. This includes: naming your business, registering a trademark, and applying for licenses and permits.
While there are many DIY legal toolkits for businesses that you can find online, it’s always better to hire a lawyer if you can afford one. Often, the problem with “do it yourself” is that you don’t know what you don’t know.
Lawyers are known to be expensive. You can find online services that will help you get a qualified lawyer for less. Don’t be afraid to ask the right questions before you agree to use their services and negotiate the fees. Law firms are businesses too and often open to negotiation.
Consider whether you need a one off service or are willing to get into a retainer commitment. These factors, as well as the size of the firm you’re dealing with, may help determine the price.
If cash is very tight, here are some tips on how you can save money on legal services.
2. Have Contracts Ready
It’s surprising how many businesses don’t already have contracts in hand before they get their first customer. So when the customer says “send me your contract” they have to scramble to put one together – or find one on the internet that kinda, sorta fits.
The result is a rush job draft that may be sloppy or internally inconsistent. It may not really fit the deal, or it might create unjustified risks.
So part of the checklist for making your business legal-ready should be drafting the necessary contracts. Find out the 14 types of contracts you need for your business, and get them drafted them ahead of time.
3. Separate Between Legal and Business Issues
In any contract, there are legal issues, business issues, and some issues that have both legal and business aspects.
For example, the following are business issues:
- How much does the product or service cost?
- What are the product specs or what are the details of the service?
- When and where will the product or service be delivered?
- If there is revenue sharing, who gets what?
- Who covers what costs?
- How long will the contract last?
- How much insurance coverage do you need to have?
The following are legal issues:
- What state or country’s law will govern the contract?
- Will there be an arbitration clause?
The following are hybrid legal/business issues because they involve costs and risks with legal implications that could affect the company’s bottom line:
- Warranties (For how long and covering what?)
- Indemnification (Who’s covered for what risks? Are there any caps?)
It’s a waste of your lawyer’s billable time to be on a call where you’re just going over business issues. And if you can’t come to an agreement on business issues, there’s no point negotiating the legal issues.
So it often makes sense to work out the business terms on your own and then send your lawyer an informal memo on what you’ve agreed to. Then your lawyer can talk to the other lawyer and work the legal issues out without wasting your time and money.
4. Create Negotiation Fallbacks
When you’re negotiating similar contracts on a regular basis, it helps a lot if you think through what you’re willing to offer and what risks you’re willing to take.
For example, you could make a chart like this one that covers all the clauses you’re likely to negotiate:
|Software Warranty||No warranty that Software will operate uninterrupted or error-free.
Software may include defects.
Substantial conformance with documentation.
No viruses, Trojans, etc.
Customer must notify of any failures to conform within 90 days of installation.
|Same, but Customer must notify of any failures to confirm within 120 days of installation.||Software will be fit and sufficient for intended purpose as described in the Documentation.
This is especially useful to ensure consistency if you have multiple people in your business negotiating the same type of agreements, or if you don’t do them very often and might forget what you agreed to last time.
If you come up with more options in the course of negotiation, you can add them to the chart.
This might seem like over-kill but it will help you clarify for yourself what you’re willing to negotiate and what are your deal-breakers. A chart like this also provides clear guidance to your lawyer.
5. Never Sign Anything You Don’t Understand
When a customer’s presented you with a contract to review, the biggest obstacle to getting your B2B deal closed may be your lawyer’s overflowing in-box.
It can also take time for your lawyer to simply explain to you what the contract says.
You can make your lawyer’s life easier, and understand your contract faster, if you run it through LawGeex.
LawGeex will explain the legalese in plain English, show you what’s rare or missing, and provide negotiating tips.
You can use this initial feedback to come up with a list of questions for your lawyer. That will save your lawyer’s time – and your money. You can email a copy of our feedback directly to your lawyer along with your questions.
The five ideas we’ve shared should help your business be legal-ready in two ways: by reducing unnecessary costs and by improving turn-around time. If you have more ideas, please leave a comment below.