Running a business is a huge responsibility, so putting a lot of thought and effort into your legal agreements is likely pretty low on your list of priorities. But giving short shrift to your agreements can cost you big time—and in more ways than one.
In order to save time and money, you may be tempted to use one of the many online legal document services like Rocket Lawyer® or LegalZoom®, rather than having a lawyer prepare—or at least review—your legal agreements. But taking the do-it-yourself (DIY) route can put your company in serious jeopardy.
Before you put everything you've worked so hard to build in your life at risk, consider these 4 ways cutting corners with your contracts can put your business in peril.
1. Agreements Are The Heart Of Your Business
Business agreements are designed to protect your company's most essential elements: your personal liability, personal and professional relationships, intellectual property, and trade secrets to name just a few. Moreover, legal agreements govern the rights and responsibilities of every party you do business with: clients, vendors, employees, and contractors.
Are you really going to trust generic, fill-in-the-blank forms you find online to protect such vital parts of your business? Using great agreements and having an integrated agreement process shows you care—and not just about the deal at hand, but about the other party and your business as a whole. Having well-drafted, well-structured, and well-presented agreements demonstrates that you believe in yourself and the people you work with, and these documents can greatly strengthen your business and relationships at every level.
2. Presentation Matters
Beyond putting your company in legal jeopardy, relying on cheap DIY legal documents you download off the internet can make you look amateurish—and even incompetent. In fact, if you don't take the time to ensure your agreements are well prepared and properly presented, you risk losing out on lucrative deals that might otherwise be a sure thing.
To demonstrate how easily this can happen, consider the following true story about how a poorly written contract cost a software developer a $25,000 deal. While the following events are entirely true, the names have been changed for privacy protection.
Ted was a successful entrepreneur, and he was planning to invest $25,000 to hire a developer to create an app. He found a software developer named Annie, who he felt confident he would hire, got his money ready, and was anxious to get started.
Then, Annie sent over her agreement. It was so confusing and poorly written that Ted decided not to hire Annie after all. It was simply going to take him too long to review the agreement she sent to make sure it was a win/win for both of them. Ted didn't want to spend money on a lawyer—he wanted to get an app developed.
Had Annie's contract been clearly and simply presented, and had she pointed out in the document how Ted could make payment, and how the agreement was a win/win for both of them, Ted would have moved forward—and Annie would have been $25,000 richer. Instead, likely because Annie wanted to save money on hiring a lawyer, she lost the deal entirely.
As this story illustrates, just having a valid contract is often not enough. Annie's agreement may (or may not) have been legally sound, but that didn't matter. It was so poorly written and presented that Ted dismissed the deal on the spot—and for good reason.
If your contracts are shoddy and unpolished, what's to say you won't be just as careless and unprofessional with other aspects of your business? Indeed, the quality of your agreements is representative of the overall quality of your business.
Given how important contracts are for your business, you should work with a lawyer like us, who understands not just the legal parts of the agreement, but how to structure the agreement to build confidence in you and your services. Make sure you work with a lawyer who understands that your agreements—and their presentation—are a key part of your enrollment process. If not, you'll most likely be leaving loads of money and clients on the table.
3. Agreements Are Vital To Your Hiring Process
When it comes to onboarding a new team member, whether they are an employee or an independent contractor, it's fairly common to have the relationship not turn out quite the way you had hoped it would. This occurs because the individual either doesn't provide the services you thought they promised they would provide, or they fail to live up to your expectations in some other way.
The cost of team-member turnover could be one of the highest expenses in your business, not just financially, but in terms of time and energy, too. In many cases, changing up your agreement process can ensure you are hiring the right people, who will be with you for a long time and grow alongside you and your business.
Most business owners have a standard employment agreement signed by all team members or no signed agreement at all. In either case, you may be setting yourself up for loss right from the start. Every single person you hire, whether as an independent contractor or as an employee, must sign an agreement, not because it's necessarily required by law, but because it's going to save you from big losses down the road.
Your agreement needs to be as specific as possible about your expectations for the relationship, establishing metrics for success and time frames for specific goals and objectives to be achieved. When you share these expectations, metrics of success, and time frames with your new hire, you are setting them up to succeed from the very start. And you are giving them an opportunity to clarify whether the expectations are clear and can be met. This is what sets the relationship up for success.
What's more, a trusted lawyer can customize your agreements to make them more personal, catering to your specific needs, style, and way of doing business. Having well considered and customizable agreements helps you make better hires because it forces you to be proactive and think through your expectations for the relationship ahead of time. It forces you to consider what kind of things will make the relationship a thrilling success, along with what could cause the relationship to fail.
4. Focus On The Long Term
Using online legal documents may seem less expensive than hiring a lawyer, but the cost in terms of lost business can be significant. By taking the DIY approach, you not only risk missing out on lucrative business deals, but you could end up paying tens of thousands of dollars in attorney's fees and court costs to untangle a poorly drafted agreement.
Or even worse, relying on DIY legal documents could cause you to go out of business entirely. Are you really willing to risk losing your business just to save a few hundred dollars?
Don't Do-It Yourself
As your Family Business Lawyer®, we specialize in creating legal agreements for small businesses like yours. With our guidance and support, your agreements will not only be legally sound, but their clear, concise presentation will wow potential clients and make you stand out from the competition. Whether you need new agreements created or want to review ones you already have—even those drafted by another lawyer—contact us, your Family Business Lawyer™ today. Contact us today to learn more.
This article is a service of a Family Business Lawyer™. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.
We offer a complete spectrum of legal services for business owners and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer you a LIFT Your Life And Business Planning Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. Schedule online today.