How to choose the right contracts adviser
It’s often a challenge for businesses, especially science and technology companies, to find the ‘right’ contracts adviser in a specialist field. Someone who ticks all (or at least most) of the boxes. This is particularly so when it comes to finding a professional who can not only review and draft commercial contracts but do so with industry knowledge and commercial awareness.
There’s no shortage of businesses willing to take your custom – both traditional law firms and independent consultancies. Science and technology work is highly prized as quality work. Impressive reviews and testimonials abound but so do horror stories and high charges.
So, when you’ve looked at websites and shortlisted a few businesses to call, how do you decide? What should you be asking them? Here are four pointers:
Does the firm understand your industry?
They’ll no doubt claim to, otherwise you wouldn’t have shortlisted them. But don’t be afraid to ask them about the types of work they’ve undertaken that are relevant to you.
If you’ve created some online software, for example, you’ll need a professional contracts adviser who is competent in drafting Software as a Service (SaaS) agreements. Ask them how many they’ve drafted in the last six months and for which types of client. Get them to explain to you some of the challenges that clients have faced and how the adviser helped them overcome them. They’ll usually be happy to talk at length on this but, if you find them struggling to answer basic questions, they may not be the right firm for you.
Assuming all is well, take a more detailed look at the firm’s website. Find any relevant case studies and see whether the outcomes achieved match your expectations. Look for testimonials. But go a stage further. Call the client! Check that the testimonial is genuine and see if the client is willing to provide any other information that could sway your decision one way or the other.
Who will do the work?
Surely it’s the person you speak to, right? Not necessarily.
You may be impressed by a partner in a large commercial law firm who has over twenty years’ experience in working with clients in your niche. What you need to know is whether that partner will be drafting the agreement for you – or whether they will pass it over to a more junior fee earner (perhaps even a trainee) and simply ‘sign it off’ at the end. If you’re happy for work to be done by someone else, that’s fine. However, you shouldn’t be paying partner rates when 90% of the work is done by a trainee. More on costs below.
How will they do the work?
Expect to be asked questions. Lots of them.
A competent contracts adviser will, at the beginning, put the legal stuff to one side. Instead, they will want to know all about the transaction. They may not necessarily understand the technicalities but will be interested in what’s going on. They’ll also ask you about the outcomes you expect to achieve and the risks as you see them. It’s only by gathering that information that they can begin to draft an agreement that will work for you.
If, on the other hand, the adviser shows little interest in understanding the details of the transaction but instead simply sends you a ‘first draft’ with plenty of gaps in for you to complete, be alarmed! It’s highly likely that they’ve pulled something from a precedent bank (or, worse still, the results a Google search) and made a few tweaks.
Ask previous clients, who have provided testimonials, how the process was for them. Did the adviser show interest in obtaining all the details or did they seem more eager to rush through the transaction to get it off their desks? Did they explain the legal risks and they steps that they took to mitigate them?
How much will the work cost?
Price. The all-important question?
Don’t decide purely on price as rates vary considerably. The cheapest option may not always be the wisest. However, it doesn’t necessarily follow that the most expensive option will carry significant additional value over less expensive alternatives. Legal services providers have traditionally been shy about discussing costs. That is beginning to change but, if the adviser doesn’t say anything about costs during your initial chat, make sure you raise the subject!
What you should look for is transparency in the pricing structure. Firms that offer only a traditional hourly rate option should generally be avoided. The transaction that should take seven hours from start to finish can easily double in length (and cost) if there are a few hiccups along the way. And you really don’t want to feel you can’t phone your adviser to discuss a pressing issue because there’s a meter running in the background.
Go for a fixed fee option. But make sure that there are no hidden costs. The letter of engagement should set out the full scope of the services that are included. If anything is missing or unclear, pick up the phone before signing.
Choosing a professional contracts adviser can be challenging for science and technology companies. However, the decision can be made much easier by ensuring that the firm you choose understands your industry, you’re clear about who will be doing the work, you’re happy with the way they’ll do it and the cost is fixed.
Technical Terms provides in-depth legal advice on drafting commercial contracts. If you require further information, please contact us on 07985 146111.