DIY Contract Review & Negotiation (Why do I need an attorney?)

Business owners, especially aspiring ones and those without deep pockets, quickly learn the value of reducing costs. Legal fees are commonly a cost that business owners avoid which is understandable taking into account the negative press the legal profession generally receives.  As cited in the preceding link, only 18% of persons surveyed in a Pew Research Center study believe lawyers contribute “a lot to society” and 34% believe lawyers contribute “very little or nothing at all” to society. So I understand why entrepreneurs and small business owners choose to axe legal fees and other “unnecessary” legal-related costs.

So why use an attorney?

Because words in a contract can have significant impact on a business!

When startup entrepreneurs and small business use services like Legal Zoom or obtain form agreements through Google searches or Bing searches, many entrepreneurs expect to make a few minor modifications to the form, such as the date and address and voila! – they’re protected and avoided the expense of hiring an attorney.

However, common words may have “legal definitions” – meaning, under certain contexts, the use of a particular word has legal significance.

For example, in a contract, the use of the word consideration typically means “something bargained for and received by a promisor from a promisee” or “that [thing] which  motivates a person to do something” and “consideration is necessary for an agreement to be enforceable.”  However, the common use definition of consideration is “continuous and careful thought”.  When a party to a contract agrees that a party gave consideration, the context isn’t “continuous and careful thought” – the context is that the party gave something of value.  A simple word like consideration has a powerful impact in a contract.

Another example is the word quit, which can mean to leave, unlike its common usage definition, which is to cease or stop.  Realization can mean to convert non-cash assets into cash instead of the common use definition meaning the state of understanding or becoming aware of something.

So when a business performs a cost-benefit analysis of hiring an attorney, responsible business leaders must consider the prophylactic value of legal advice.

Misinterpreting contract language can be costly!