Few business owners are legal experts. Yet many act like they are veteran attorneys when it comes to their legal agreements by thinking they can simply wing it and create their own contracts or rely on cheap, fill-in-the-blank legal forms they purchase for cheap online.
However, this is playing with fire. In fact, you could end up paying tens of thousands of dollars in attorney’s fees and court costs—or even end up going out of business entirely—just because of one poorly constructed legal agreement.
Unless you have a law degree, far too many things can go wrong with your agreements when you take the do-it-yourself route. To show just how complex legal agreements can be and demonstrate how ill-prepared you are to manage the creation of your own agreements, here are a few of the most common mistakes you are likely to encounter if you try to go it alone.
If you are hiring a new employee, for example, you should establish clear, measurable outcomes for the role, with specific metrics for success, along with time frames for specific goals and objectives to be achieved. Then, include this information in the employment agreement, so it’s abundantly clear what the expectations for the position are for the team member and for you.
For example, in the above scenario where you are hiring a new team member, you need to think about how you would deal with the team member if things didn’t work out as expected. What would happen if the team member needs to leave, can’t perform, or isn’t performing for some reason? What is each of you entitled to in the event the relationship needs to end? All of these scenarios need to be thought through and addressed in the agreement.
When entering into an agreement with a new business partner, for instance, you should think about and plan for all of the ways each of you might potentially exit the business. What would happen in the event you decide to sell the business? What would happen if the business failed and you had to shut your doors? What will happen when one (or both) of you dies or if one of you becomes incapacitated? You need to get clear about all of these eventualities, and then document them in your operating agreement or corporate bylaws and/or a buy-sell agreement.
To secure ownership of your intellectual property, you need to include work-for-hire and copyright assignment clauses in every contractor’s agreement to ensure you actually own the work you are paying for. And yes, this means every single person, even those you may have worked with for years without a single problem.
Treat Your Agreements With The Respect They Deserve
Just as you would never try to wire your office’s electrical systems yourself if you weren’t an experienced electrician, you shouldn’t try to do the same with your company’s legal agreements by pretending you’re an attorney. When it comes to implementing such a critically important element of your operation, you should always consult with a licensed and experienced business lawyer.
Whether you need new agreements created or want us to review agreements you already have—even those drafted by another lawyer—meet with a Family Business Lawyer™. We will support you to not only create clear concise agreements, but also implement an agreement process that will allow you to more effectively navigate the inevitable changes that take place in every relationship, while dealing with conflict in a way that’s both healthy and productive. Contact a Family Business Lawyer™ today to get started.