CXO

Are do-it-yourself contracts a mistake?

Are you sure your contracts will hold up in a court of law? Get the scoop on hiring an attorney from lawyers who deal with IT professionals. Here's what they said about do-it-yourself contracts and the pitfalls you may avoid by seeking legal advice.


Do you build your contracts from a hodgepodge of borrowed paragraphs from sample contracts and Web sites such as TheLawyerPages? The fast pace of the IT consulting business and the repetitive nature of the contracts may have lulled you into a false sense of safety. Unfortunately, your wake-up call may come in the form of a lawsuit and the nightmare of court costs and expensive settlements.

Litigation, whether you’re the plaintiff or defendant, is costly and time-consuming. While hiring a lawyer to create your contracts may cost more on the front end, it may save you money—and possibly your reputation—in the long run.

We spoke with several attorneys who offered advice for consultants who are considering hiring an attorney. Read on for their thoughts on creating your own contracts, hiring an attorney, and the price you may pay.

Why can’t I write my own contracts?
It’s easy to overestimate your abilities to draw up a legal contract, according to Ralph Losey, an attorney with Katz, Kutter, Haigler, Alderman, Bryant & Yon in Orlando, FL.

“Often, IT professionals try to cut costs by going to an online legal-form Web page, downloading the forms, and making their own contracts,” Losey said. “This can be a big mistake because items are left out that could lead to legal problems later. After getting an idea of what services you are providing, an attorney will know which items to add into the contract and will be able to word the contract so that you have a backup agreement to help you avoid litigation. The expertise the lawyer provides in including these important issues does not come in free, downloadable forms.”

To avoid litigation, it’s important to have all your bases covered in a contract before beginning any work for a client. With esoteric issues such as intellectual property and media law to contend with, a solid contract is your first step in maintaining good relations with your customer.

If you do choose to compose your own contract, do have an attorney check the contract and make any needed corrections, and “if litigation occurs, specify the jurisdiction where it can be litigated” to avoid the numerous layers of the legal system, said Larissa Lidski, a professor of media law at the University of Florida's Levin College of Law in Gainesville, FL. “Also, you need to cover what happens if, in the middle of the contract, the relationship breaks down. And don’t forget to cover information such as trade secrets [and] sensitive and confidential information.”

Can a lawyer keep me out of court?
While hiring a lawyer to prepare your contracts is no guarantee that you won’t have to go to court, it may go far in protecting you from litigation.

“No lawyer worth his salt will promise to keep you out of trouble, but a good attorney will do his best to protect you and keep you out of litigation,” said Larry Roberts, an attorney with Roberts and Associates in Nashville, TN. “Work is basically intangible; you might have delivered what you thought was in the contract. The fact that [the client may] see it differently is a matter of personal opinion.”

Roberts said a contract that’s been drawn up by an attorney may lessen your chances of having to go to court—and the costs incurred by such a matter.

“The true question is: How much are you willing to lose on your contract?” Roberts said. “If you feel you can absorb all the costs of a possible litigation, write your own contract. If you know you can’t, and are unwilling to put your business to the test, consult an attorney, even if it is just to check over the contract that you prepared and make corrections to it.”

Should I hire an in-house lawyer?
David Phipps, attorney at law and expert source for AllExperts.com, said that the advantage to hiring an in-house attorney—one you retain to audit your practices—is that he or she can protect you from litigation by identifying practices you are presently engaging in that may lead to a lawsuit. By being a part of the process from beginning to end, an in-house attorney shares the burden of recognizing problem areas.

“An attorney who is not in-house counsel—and therefore is not expected to initiate discussions of possible problems—can protect [you] from lawsuits by advising on what conduct will lead to or prevent lawsuits, but only to the extent that [you] recognize a potential problem area and make the call,” Phipps said.

How much will I pay?
You’re probably wondering what kind of hit your budget will take. The average per-hour charge quoted by these experts was $300. A ballpark quote for contract preparation would be around $1,000. Obviously, if you already have a prepared contract and ask the attorney to simply review it for errors or omissions, expect to pay significantly less than if the attorney draws up the contract from scratch.

All the attorneys we talked to cautioned that if you do choose to execute a new contract yourself, or if anything has changed in the consulting agreement, you should at least call and consult with your attorney before you sign on the dotted line. New information may prompt you and your attorney to insert new legal agreements in the event litigation should occur. Be forewarned, however, that this simple phone consultation may cost anywhere from $150 to $300, but it’s possible that you may be able to work out another arrangement with your attorney.

To make sure you’re getting the best “bang for your buck,” the legal experts suggested comparison-shopping—remembering that fees are set based on experience, seniority, longevity of the law firm, and the complexity of the contract. A cheaper price may indicate that the attorney is inexperienced and may take much longer to get the work done, thereby voiding any savings.

Information for this article was gathered by TechRepublic contributor Marsha Glick.

How do you make sure your contracts are legally sound? Has a lawyer saved your business by simply inserting an important clause or performing some other dynamic legal wrangling? We want to hear from you! E-mail us about your experience, or post your comments below.

Editor's Picks