Have you ever contacted your attorney to prepare what you think will be a simple contract, only to get snared in a situation that feels like an episode of the Twilight Zone?
You know what I’m talking about. You’re imagining it as a simple 2-page contract, only to have it turn into the 17-page, 9-point font “contract from hell.”
Over at the Build a Solo Practice website, I have a 2-part guest post where I talk about a (sometimes) sore topic we small business owners face.
Contracts are necessary to protect our interests.
But sometimes they can be unnecessarily complex from a business person’s perspective.
So I gave my feedback to lawyers about writing business-friendly contracts, pointing out some features that make a contract into a “contract from hell.” Among them: writing in legalese. It is terribly frustrating to non-lawyers.
And, by the way, I am NOT ganging up on attorneys. Some of you may know that I used to be an attorney. The practice of law is a worthy calling, and without the law our society could not function. And we could not build businesses unless we were assured of the rule of law to protect those businesses.
It’s just that I have experienced the situation from both sides. I’ve been an attorney in the past. These days I’m just the client.
And thinking back, I now realize there were times as an attorney when I prepared contracts that could have been more user friendly. The process could have been a lot more efficient. That’s especially true early in my career, before I knew better. Of course, I learn best from making mistakes. 🙂
Go read the articles (Part One and then Part Two). Then share your experiences. Tell us your idea of the contract from hell.
More importantly, from your perspective, tell us: what is the ideal contract? How long should the ideal contract be? What should the back-and-forth collaboration process with your attorney be like?
And when you’ve had good experiences working with your attorney, what made them good?
Excellent post Anita.
Assumptions cause more problems than anything else, IMHO. After my first bad experience, I learned to ask my attorney how complex the contract might become and if there a way to keep it simple.
My first experience was a real estate deal. The owner wanted to occupy the property for a year after closing. I conveyed the options to my attorney and got back a book! Not only was it expensive, it killed the deal.
That experience became a model for what I should avoid. My target thereafter was one page and grew to two in the 90’s. I standardized certain items and kept them in a separate document to reduce clutter and confusion.
That’s my story and I’m sticking to it.
I am a contracts lawyer, so I can only comment from that perspective in response to your question. The size of the contract is going to depend on how complicated the subject of the contract is and where you think your risks are. For example, if you are worried about the financial ability of the other party to pay the terms, you might want to include provisions that protect you from that risk (like payment to an escrow account or collateral).
One area that needs to be crystal clear is the description of what the work or product to be provided is. You don’t want to get something that does not conform to your expectation of what you bought, for example. Another area for clarity is what the payment terms are (i.e., what triggers your obligation to pay me and when do I get the money?).
None of this needs to take a long time or be complicated, but it might take more than 2 pages. But I agree with keeping a contract relatively simple, in proportion to the dollars at stake if something is overlooked.
I totally know what you’re talking about. One way to alleviate this is simply to look at what other people did in a similar situation. In a lot of cases there are simple solutions to circumventing complex language issues that may extend the length of contracts and make them almost unreadable to anyone without a law degree.
I’ve experienced the so-called contract from hell – and to tell you the truth, I’m lazy at reading long, puzzling contract and smallprints. I told my consultant to read mine and write an excerpt 😀
IMO, you don’t have to write down every single details, like, “who will deal with the garbage guy?” and sort of things like that.
To me, it’s better that I talk the ‘executive summary’-way with someone I deal with, and let other read the details of the contract.
So, yes – I love user friendly contract!
The contract from hell was when I was working at a large travel company and the brief was for a simple contract we could use with our suppliers. It was so complicated and scary most did not want to sign until we forced him to cut the jargon and simpify it. He actually did not understand what the fuss was all about.
On the other side my attorney is great, down to earth and any documents he has prepared for my company or for myself have been easy to understand and he actually takes the time to go over it to ensure I am happy with it.
With my prior company (I subsequently sold it), we had attorneys involved in every project (we were averaging about one new project per day). Initially it was a hellish experience. Every time one side would request a word change, it would start a chain of changes… wasting time and money.
Once we realized this, we established our standard contract and delivered to every prospect stating it was unalterable. We expected to lose prospects because of our stance, but we didn’t lose a single one.
I’m printing this out and reading it over coffee this morning! Thanks!
I’ve been thinking about pget a standard contract together for my custom work. The one I’m using now is a little unfriendly.
Can’t wait to read this! Thanks again!
One of my best learning experience was a contract effort to establish future fairness by formulas. It was spreadsheets galore, valuation formulas, multipliers, and contingencies, and on both sides. My attorney smiled patiently throughout the long negotiations, much like a Cheshire cat (and not because of the obvious billing hours, because he was in only a small fraction of the actual tortuous negotiations). I asked him about it, once, and he said “it will never matter. This will end in mediation.” And he was right. When things came apart, the formulas were useless. It was a one day mediation. Live and learn.
Great post, thanks Anita. Tim
My wife was presented with a contract that had a lot of penalties against her, but none for the company. It was only three pages, but everything was so squeezed in, single spaced, that it would have been way longer double spaced. It certainly would have been much easier to read. We met the owner and I told him it looked like she was signing up for all the liability without any protections. He said we could alter things we had problems with; trust me, I did. I don’t know if this guy was trying to pull a fast one or whether his lawyers did it, but it ended up much safer for her in the long run.
From the perspective of a lawyer who represents small businesses, let me make a few observations:
1. There are times when clients say they want to be “completely protected” and yet they want a very short contract. Of course anyone who thinks that any contract can COMPLETELY protect them has unrealistic expectations, but it is doubly unrealistic to think that you can put everything into a page or two and not leave vast areas ill defined. Yes, it is often reasonable to keep the contracts to a minimum but it is then necessary for the client to understand that the contract will not answer every question that the parties may have.
2. If the attorney is drafting an agreement completely from scratch, coming up with a short contract may be easier than coming up with a long contract. But both attorneys and clients know that contracts are typically based on prior similar contracts. Many prior contracts can be pared down and/or put in plain English, but that takes effort and time. Are the clients going to want to pay for that? If you have a perfectly good contract that you have used before for a particular type of transaction, you may be able to tailor it to the client’s needs in an hour or two. If you completely rewrite the contract in plain English or meticulously go through and evaluate each sentence to see if it is absolutely critical or can be sacrificed for brevity, you may double or triple the time, only to hear the client say “How could you spend 4 hours on a two page contract?” It is unrealistic for a client to expect a perfectly good contract to be written to his or her stylistic taste and not expect to pay for that effort.
The key is to have the client and attorney understand each other. It should be the attorney’s responsibility, of course, to determine what the client expects. If the client wants the product to look a certain way and the attorney knows that it will take more time than the client probably anticipates, then the attorney should make that clear from the outset. If the client’s primary goal is to keep it short and simple, the attorney should also let the client know, at least in general terms, that simple may mean that some issues that arise under the contract cannot be resolved.
I do agree, however, that if the length and complexity of the contract comes as a complete surprise to the client at the end of the process, then the attorney has fundamentally failed to communicate properly with his or her client.
Looking for Client Friendly Contract
I came across this post, looking for lawyers who write client friendly contracts. Is there such a thing as fun legalese? I would like to have a contract that is not so serious sounding, but still has all the right language and protections in it, regarding late fees, etc.. But in a client friendly, non defiant sounding way. Is there such a thing?