What is Attorney Contract Review?
What is Attorney Contract Review? It’s when a lawyer reviews a contract or agreement before the contract is signed. It’s intended to make sure that that contract, or agreement, is either acceptable to and in the best interest of the client. It would be like getting a second pair of eyes, such as an attorney’s eyes, on a legal document, like an employment agreement, an employee handbook, a company employee policy, an independent contractor agreement, an office lease, a home purchase, etc.
Attorney contract review is designed to help the client, whether the client is an individual, or a business, get a better understanding of the contract or agreement, and help the client understand the risks associated with the contract, and make recommendations for changes to be made to the contract, and/or changes based on the contract.
On a frequent basis , I review contracts and agreements for clients, and I make changes and recommendations. Sometimes I recommend changes to the contract in order to help the client to avoid certain types of liability down the road. Sometimes I recommend changes to the client, before they sign the contract, and based upon my review of the contract, or the agreement, I might suggest that the client does not sign the contract. Or, I will recommend that changes be made to the contract by the other party, before the contract is signed, which would then address the concerns I would have, based upon my understanding of the contract.
Attorney contract review, like so many legal matters, requires an understanding and knowledge of state and federal laws, and regulations. Which is why a business and/or individuals should hire an attorney, and not a "business consultant" to perform a contract review.
Why Retain an Attorney for Contract Review
When faced with the potentially difficult situation of having to review a contract yourself, you have three options: Read the contract yourself without seeking outside help, have a friend read the agreement and advise you on it or hire an attorney to review the agreement and discuss it with you.
If all other things were equal, the right answer here might seem like the first option. However, contracts are difficult, and they are particularly difficult if you don’t regularly deal with them. The fact is that attorneys spend years honing their ability to read contracts (by completing law school and practicing) and there is a reason for that: contracts are complex. Contracts are one of the most fundamental things that businesses do. Because of the importance of contracts, and because contracts are hard to read, no matter how you feel about the legal profession, you should be hiring an attorney to review contracts.
The answer to this question is really two-fold and somewhat related.
The first is that, quite frankly, you are likely to miss something important that an attorney would catch. You may have an idea of what you want to happen and, as such, when reading the agreement, you may only focus on the section or two that pertain to you. An attorney isn’t going to be so focused on one or two items. Rather, an attorney’s job is to get the whole picture and to ensure that the whole agreement makes sense. This means that an attorney will be focused on more aspects of the agreement, which means that an attorney is much more likely to notice things that are problematic.
Second, you may miss something simply because you don’t have the experience to find it. For example, if your home was damaged in a flood or from an ice or wind-related problem, you may easily miss that the insurance company’s attempt to settle with you was improper. That said, an attorney most likely does have the background to catch the problem and to file a lawsuit against the at-fault party.
Many problems show up on the back and forth between the parties and not in the contract itself. For example, if there is a dispute over who is going to control the project, the positions of the parties may become evenly split. An attorney will have enough experience in that arena to be able to sort the issues out and to give you good advice.
As a business lawyer, I see a lot of mistakes being made on a daily basis. These mistakes make it harder for my clients to get deals done, no matter how large or how hard. A case in point here is the following scenario: several years ago, before opening my firm, I was working for a different organization. We were in negotiations with a very large and well respected organization to purchase their goods from vendors (quite similar to the deal that Amazon currently has with Proctor & Gamble). The tiny detail that we added into our agreement, after about five months of hard and long work, was that we were going to use our smaller system, rather than the system the large organization wanted to use (because that system was clunky and would have cost us a lot of money to use). As a result, we were able to get an agreement that would be a big benefit to my then-employer and huge benefit to the clients we were serving. We even had Amazon in mind as we structured the deal, and it worked out quite well for them as well. That said, if we had signed the documents, most likely we would not have done so nearly as successfully. The fact is that each and every agreement is different, and simply signing an agreement is not going to make a deal come to life.
Attorney Review of Specific Contract Features
In any contract, there are certain elements and clauses that are of particular concern to an attorney. Understanding what these are, allows someone looking at their contract to appreciate what an attorney might be looking at, and how that might ultimately impact the entire contract.
First element that most contracts have some sort of liability clause, which is meant to limit the liability of one or both contracting parties in the event that something goes wrong with the contract. For example if a party delivers $75,000 worth of goods to another party, and those goods are subsequently destroyed, liability could range from the entire value of the goods, to some fraction of that value, to no liability at all! The point here is that when a contract has any sort of liability limitation clause, an attorney will almost certainly make sure that limitation clause will definitely meet the expectations of their client.
Next element is termination, which will specify the conditions under which one or both parties are able to terminate the contract. If one party needs to terminate the contract without cause, the contract will specify how much notice must be given to the other party (typically in writing). In addition it can specify conditions under which a party may terminate with just cause (failure to keep agreements in the contract, criminal conduct, default on payments etc.) Termination clauses should also specify what conditions exist for unwinding a contract when it is terminated. Parties don’t really appreciate this, but a contract never really just ends, the obligations identified in the contract must either be performed, or satisfied.
Another thing that lawyers routinely look for when reviewing contracts, and that can have a huge impact on how a contract works, are boilerplate clauses. These terms and phrases have been included in contract after contract for so long that the language is often assumed to mean something very specific in legal contexts. For example a "severability clause" means if any part of the contract is found to be void or unenforceable, the entire contract is not void, only the offending clause or section. So if you or a party you’re contracted with has a clause that seems out of place, or too vague, or otherwise off, you need to know how that might impact the rest of the contract.
Contract Review Process
The attorney will start by gaining a high-level understanding of the contract, often broken down into general categories. The key areas they will focus on will depend on the specifics of the document. Some of the specific components an attorney will touch on in their review include financial terms, possible disclosure requirements, intellectual property, import/export, and confidentiality. The attorney will generally go through all sections of the document and review them with the above sections in mind. An attorney may also read through the contract to see if it flows well. The attorney may give suggested edits that could be to correct some strange wording or for grammar.
During the first pass, the attorney will write down notes about potential issues as well as questions to the client. They will develop a list of high-level changes and notes. These changes are usually at a high level because they assume that the other party will act reasonably. As a contract reviewer goes into more detail, if they find that certain provisions appear unusual, this is noted, and the original language is copied and documented verbatim.
Once they finish reviewing the contract, the attorney will schedule a call with the client to review their notes and suggested edits. Typical questions might include: Once the attorney has explained their thoughts, they will typically set up a time to go over the contract with the other party. The attorney will generally be the one to communicate with them directly. The attorney will take the lead in communicating any changes with the other party, answer any questions, and document any changes that both parties agree to. Sometimes, the other party will request modifications to the modifications that were suggested; generally, these are fair and reflect a logical expectation. The beauty of a negotiated contract is that typically, a party will condense their feedback into only a few edits, since most provisions are fairly universal. With that being said, negotiations and redlines of contracts will go back and forth until there is final agreement and a contract is executed. The process can be long and tedious depending on the tone of the negotiation. Eventually, a contract will make it through all parties and be signed by everyone.
Common Contracts Review
Attorneys frequently review contracts for a wide variety of different matters. There are, however, some that seem to come up more than others. Listed below are a few of those that are fairly common.
Employment contracts are essential for individuals who work on a contract basis. These contracts are meant to protect the employer and outline all expectations. They can include compensation, hours worked, benefits, termination and more. An attorney examines these employment contracts closely for enforceability, compliance with law and best practices.
Lease agreements are usually handled by the landlord and real estate agent with no substantial involvement from the tenant . While a real estate agent has an obligation to act in the best interests of both parties, they are generally not legal representatives. Therefore, a comprehensive review by a licensed attorney is recommended.
Partnership agreements set forth the terms and conditions of a business partnership. Included are the assets contributed by each person and the equity position within the business. Lawyers review these contracts to ensure that tax issues have been addressed, liability has been limited and contingencies for dissolving the partnership are included.
Sales agreements are examined closely by a lawyer to limit liability for the seller. The lawyer seeks to ensure that the seller is protected from future claims by getting the buyer to agree to certain responsibilities.
Attorney Contract Review Selection
When the time comes to have a contract reviewed, working with an attorney who specializes in the relevant legal area can go a long way toward ensuring a positive outcome. To ensure the most accurate assessment possible, it’s crucial to work with a lawyer intimately familiar with the complex rules and regulations that govern virtually all contractual agreements. These individuals have an in-depth knowledge of contract law and aren’t just familiar with state and federal regulations, but with areas of the law that are specific to niche industries, including unconventional and emerging areas of the law such as Blockchain, cryptocurrency, digital transformation, and related technologies. Familiarity with these sectors allows them to fully understand the intricacies and complexities of the contract in question.
Once you’ve narrowed down a qualified list of potential candidates, it’s important to consider experience when choosing an attorney. No matter how educated or qualified an attorney might be, their credentials won’t matter if they don’t have the right experience. Look for an attorney who has handled cases similar to yours in the past. Request information about similar contracts they’ve worked on – and worked on recently. Consider the outcome of these previous assignments, if applicable. When speaking to references, don’t just ask if they would hire the lawyer again, seek information about their ability to communicate clearly and concisely, as well as their ability to listen carefully. If you don’t feel comfortable communicating with your attorney from the very start, it will only become more difficult as your case progresses.
Long, reliable careers are impressive, but they’re not the only indicators of extensive experience. If you’re interested in hiring a younger attorney, inquire about their mentorships and internships, and remember to ask for examples of their work. A younger lawyer may have access to experiences that older or more established professionals do not.
If you know any friends or family members who have recently worked with a contract attorney, ask them to refer you. If your connections haven’t worked with an attorney they’d recommend, but they were generally happy with the outcome, request a general referral for a lawyer with licensing to review contracts.
If you’ve never worked with an attorney before, research firms and their attorneys thoroughly online. Look for reviews from previous clients and information on the firm’s website. If you can’t find the information you need, schedule an initial meeting to find out more.
Attorney Contract Review Costs
The cost for hiring an attorney to review a contract can range from hundreds of dollars to several thousand, depending on the complexity of the agreement and the work necessary to analyze it. As a general rule, hourly rates tend to be less expensive for attorneys located in less major metropolitan areas. Flat fees are not typical, except for standardized non-complex contracts and agreements. In simple terms, the cost for reviewing a contract will be dictated by the hourly rate of the attorney doing the work and the amount of time necessary to conduct the review. It is common for a time estimate to be given upfront before work starts.
Contract Review Services – Future Trends
As technology evolves at an increasingly fast pace, so too do the emerging trends in the market. The use of artificial intelligence (AI) in conjunction with legal software is quickly becoming a reality. AI tools that are compatible with other forms of legal software will likely be the future of the contract review process. For example, software programs like PDF Reader can provide a more time efficient means of searching for certain clauses or terms. This, along with other software tools , could leave the manual review of contracts to be a thing of the past. Although these technological innovations may seem intimidating to practitioners who are used to more traditional means, adopting these new practices can provide a surprisingly efficient means of parsing through large swaths of information. It is also important to note that, although AI may be a game changer, those who use it must remain cognizant of the fact that it may not catch all errors and omissions if it is not designed specifically to do so.
