Investing in legal support is not sexy.  In fact, spending money on legal services is generally viewed as a cost center regardless of whether the business is new or celebrating fifty years.  However, similar to insurance, I always recommend that businesses view legal expenses as an important CYA asset. 

In fact, professionally drafted legal documents are the most important investment you will make throughout the evolution of your business.  They reduce your personal and professional liability while simultaneously bringing your business into compliance with applicable laws and regulations.

In this blog post, we will discuss the five benefits and cost savings your business will enjoy when investing in lawyer-drafted legal contracts.

1. Failure to Comply with the Law = $$$

For instance, if you collect e-mails, names, or addresses from California residents, you may be subject to the California Consumer Privacy Act (CCPA) either now or in the future.

The CCPA requires businesses to permit California residents to make specific requests when it comes to their personal information — like the right to have their personal information be deleted.  As a business, your corresponding obligation is to be able to fulfill this request, which means not only must you keep the information you collect organized in such a fashion that you can actually delete the individual’s personal information, but you must also have a privacy policy that outlines the protocols for this right and corresponding obligation.

For example, your privacy policy needs to provide certain minimum contact information at which the California resident can contact your business in order to assert his or her rights.  If you do not have this contact information listed, the California Attorney General’s office could deem your business to be in violation of the CCPA.  Violators face heavy penalties with a fine of up to $2,500 per violation or $7,500 per intentional violation.  That could add up pretty quickly!

2. Random Form Documents are Bad News

Many individuals think they can pop on a website they know and simply “borrow” legal language for their own use.  There are so many reasons why this is a bad idea.  For starters, copyright law prohibits you from taking written content from another website without the website owner’s permission or a license to do so.

Even if you find a free-form document online, you have no way of knowing who drafted the legal language.  Some areas of the law contain nuances that might go overlooked unless researched heavily or well understood by a professional.  If overlooked, the legal document could be missing important protections for you and your business.

An excellent example of this is the use of a non-disclosure agreement (NDA) with provisions not fully understood or not performed.  A significant number of NDAs contain a marking provision.  This provision requires that any information to be protected under the NDA must be marked with the word “confidential” or “proprietary” and, if disclosed orally, reduced to writing and similarly marked within a certain time period after disclosure.  Even when this provision is included in an NDA, it’s rarely followed by the employees of the business and leaves all sorts of information at risk.

This very issue occurred in a 2013 case in which two businesses entered into an NDA, and one party decided to share presentation slides with the other without making clear either verbally or in writing on the slides themselves that the slides should be treated as confidential.  The district court held, and on appeal, the appellate court confirmed, that the NDA, as written, must be applied to the situation at hand and that because the presentation slides were not marked as required by the NDA, they were not protected as confidential information.

Another good example from my personal practice: a local family-owned company decided to hire five new employees utilizing a form document they found on the Internet.

When it came time to terminate an employee for her failure to show up to work as scheduled, it was discovered the form document was a binding employment agreement as opposed to an employment offer.  This wiped out the business’ ability to freely fire the employee because she was not technically employed at will.  After ultimately terminating the employee, the employee sued for wrongful termination, which was ultimately settled for a significant sum of money.

3. Saves You Money and Time

For the above reasons, legal templates can get a bad rap.  But the truth is legal templates can be a great way to contain legal costs while receiving the same high-quality legal documents as if you retained an attorney by the hour.

Nocturnal Legal offers business owners quality, fully-protective legal documents drafted by a licensed attorney.  Each of our forms:

• Are customized for your particular business(i.e.,  terms and conditions for an e-commerce website vs. terms and conditions for a blog);

• Are easily personalized by you, and

• Includes in-depth, step-by-step instructions to assist you in understanding the document and feel comfortable implementing it.

While the legal industry has worked hard to make the law mysterious and complicated, I break down those barriers at Nocturnal Legal and place you back in a position of power to better understand the legal issues that may impact your business.  Of course, time is money, and that’s why Nocturnal Legal routinely publishes legal resources that give it to you straight and cut to the chase.

4. Builds Credibility as a Business

Have you ever read a work e-mail that’s littered with typos?  If you’re like most of us, you likely form an opinion immediately that the person doesn’t have their act together or lacks the proper training.

The legal documents you use and implement can set the tone for whether third parties, like your customers or business partners, take your business seriously.

Well-drafted legal documents that are free from typos look professional and contain all the standard legal language to make your business look professional.

In addition, if your legal documents are perceived by others as having been drafted by a licensed attorney, they will treat the business relationship more seriously.  It’s no secret that there is an uneven balance of power in many business deals.  One company is often situated in a more advantageous position to negotiate better terms for itself, which can result in the little guy agreeing to certain risks and obligations that it otherwise wouldn’t.

While you may not have a lawyer on speed dial, a professionally drafted legal template can give off the perception that you have an experienced attorney regularly assisting your business, which may make the other guy think twice about trying to push you around.

5. Peace of Mind

When your legal documents are drafted by a licensed attorney, you can rest easy that the documents contain adequate and appropriate protections for you and your business.  There’s no second-guessing whether you’ve included the correct terms, whether there’s a loophole in the contract, or whether your business is inadvertently breaking the law.

For example, NDAs are easy to use because there are so many ways an NDA can work inadvertently against you.

For this example, let’s say both businesses intended to exchange confidential information with one another and, therefore, have entered into a mutual NDA.  In the mutual NDA, there is a provision that requires both parties to return or destroy confidential information they received during the term of the agreement, but there’s no right to retain copies.  You may want to retain a copy of another business’s confidential information for many reasons, but mainly for legal compliance purposes.

If you get audited, someone files suit or you simply need to refer back to the rights and obligations that survived the termination of the agreement, what would you do if you permanently deleted the NDA and all other related pieces of confidential information?  Worse yet, what if your data is automatically backed up and archived on a server that you can’t easily access?  Technically, without the right to retain copies, these backed-up files are a breach of the agreement.

Well-drafted legal templates account for these sorts of issues and address them outright so that there’s no guesswork and the typical behaviors of your business will not put you at risk of breaching a contract or failing to comply with its terms.

Conclusion

Professionally drafted legal documents are a worthwhile investment because they:

• Bring your business into compliance with applicable laws

• Protect you and your business from unnecessary and avoidable liability

• Contains all the proper provisions necessary to create adequate protections and

• Make your business look professional and helps you build credibility with customers and businesses with which you collaborate

• Gives you peace of mind that your business is covered and your actions or inactions won’t inadvertently cause a larger legal issue

As a commercial contracts attorney in Arizona, Nocturnal Legal has helped countless businesses create standard form agreements to send to their customers, suppliers, and third-party business partners. Let us help you create a solid legal foundation for your business.