Contracts: Should I Download a Template or Hire a Lawyer?

I get it. Lawyers can seem expensive, especially if you're a young start-up with a tight budget. However, a more realistic way of approaching this question is to ask yourself whether you would rather pay £500 now, or £500K later.

You will find lots of template contracts online. The low cost (some may even be free) of pre-packaged contracts may seem attractive, but are they suitable for your needs? You won't truly know the answer to this question until the fateful day you are sued (or decide to sue the other party), and the contract you deemed an inconvenience is scrutinised.

I discuss five key reasons below as to why you should consider a lawyer for your contracts.

#1 - Pay £500 now -v- £500K later

This may sound dramatic, and it probably is for the vast number of private contract disputes, but this is the only question you need to ask yourself if you're considering whether a template is adequate. If you think this is an exaggeration then you only need to Google 'average legal costs in dispute' to understand how much a contractual dispute could end up costing you.

If there is any ambiguity in your contract, it is likely to lead to disagreement with another party to that contract. Whether you decide to bring a claim against that party, to enforce an element of the contract, or the other party decides to bring a claim against you to enforce their rights under the contract, it is going to cost you. If you are embroiled in a contentious dispute, there is no cheap solution and your lawyer will most likely charge an hourly rate.

The most cost-effective way of minimising your risk when entering into an agreement, is to hire a lawyer to advise you, and if necessary to draft a bespoke contract, or amend a template you already have. These pre-execution steps in managing the contract can be encapsulated by the term 'contract administration', which includes contract negotiations.

Whilst the findings of a 2020 Arcadis report related to construction disputes specifically, the report found that the majority of disputes across all sectors were caused by the administration of contracts, with 60% of respondents citing that proper contract administration would have the single largest impact in avoiding disputes.

#2 - Pitfalls

Some templates are great, and they are absolutely suitable for many situations, particularly if the nature of the agreement is not complex, and if it only involves low value transactions.

Problems can arise if your business is not quite run-of-the-mill, or if it involves any element to it where certain legislation, rules, or other regulations apply to it (such as data privacy, consumer protection, or distance selling). It might feel good that you've downloaded a free template and saved some money, but you won't necessarily be aware of the potential pitfalls to look out for.

You know your business better than anyone, and you may be tempted to try your hand at drafting a contract or policy yourself, but your lawyer knows the legal landscape and can help navigate you through the many potential pitfalls you may not have anticipated. A lawyer has many years of experience in commercial practice so they are more likely to be able to anticipate any future problems, and once they have identified potential problems they can help safeguard you and your business.

"We’re all throwing the dice, playing the game, moving our pieces around the board, but if there is a problem the lawyer is the only person who has read the inside of the top of the box.” – Jerry Seinfeld.

Remember, despite the often negative portrayal in dramas, lawyers are not out to fleece you. We just want to add value!

#3 - Legal Updates

The legal industry is a traditional industry set in its ways. Procedure and common practice prevails above all else however, the law is constantly changing. If you reuse an old contract, or an old template you find online, you run the risk of the contract being out of date.

Lawyers have access to multiple resources so that they can keep on top of the evolving legislation and regulations in their respective areas. By instructing a lawyer to check your contract you can rest assured the contract will be relevant to the prevailing law at the time. This is also why I always advise clients that they should revisit their existing contracts to ensure they are up to date, and remain effective.

#4 - Be Legal

By copying or downloading a template, you may not have the rights to use the content and you could be committing copyright infringement. Sites that sell their templates are usually the safer option, since by purchasing the template, you are probably also purchasing the rights to use the content.

As useful as some templates can be, contracts you find online will be specific for the purpose they were drafted. Construction contracts are a great example of templates which are frequently used in the construction industry; They often have standard terms incorporated which were negotiated by the industry (JCT; FIDIC; NEC etc) to ensure smoother transactions.

You may think that having any contract is better than having no contract at all, but if you have a contract which has no relevance to the transaction, it will not hold up in Court and could end up causing you more damage. I've seen clients using old template agreements where the jurisdiction clause names a US state, yet neither the client or the other party has any business or transaction taking place in the States, and when queried they had no idea why they had this clause.

#5 - Shifting the Balance of Power

DIY contracts, using old contracts, or downloading templates won't give you the flexibility you need to run your business efficiently. Businesses must be able to adapt and flex to market conditions at all times.

A lawyer can provide you with the flexibility needed to shift the balance of the contract in your favour, by incorporating more favourable terms into the contract. This means that you can proof your business against specific market conditions, design your own payment terms, cancellation terms, termination provisions, and dispute clauses, the combined effect of which gives you greater control.

Contracts are rarely a one-size-fits-all solution.

It's not just about saving money, or thinking that legal fees are too high. You should be thinking; how can a lawyer add value to my business? Hiring a lawyer to give you advice based on their experience, and helping you to negotiate and finalise a commercial agreement, will pay off in the long-term.

Contact me for a second opinion if you have any doubts about whether your current contract meets your needs.