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’re collecting 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.
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, unless researched heavily or well understood by a professional, might go overlooked. If overlooked, the legal document could be missing important protections for you and your business.
A good 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 world “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, at Nocturnal Legal, I break down those barriers 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 right away that the person doesn’t have their act together or lack 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 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 in many business deals, there is an uneven balance of power. 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 right terms, whether there’s a loophole in the contract, or whether your business is inadvertently breaking the law.
NDAs are easy to use for examples because there are so many ways an NDA can work inadvertently work 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. There are many reasons why you may want to retain a copy of another business’s confidential information, 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 will 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.
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
Contain all the right provisions necessary to create adequate protections and
Make your business look professional and helps you build credibility with customers and business 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.