For many startups and business owners, contracts are crucial to forming a successful business relationship. They can also serve as a pathway to revenue for businesses, facilitating deal closures and customer retention. Most importantly, they ensure that companies meet regulatory and financial accountability requirements.
As most business transactions are governed by contractual agreements, contract optimisation, defined as the process of systematically and efficiently managing contract creation, execution and analysis, becomes key to maximising operational and financial performance and minimising risks for the company. Poor contract management can lead to increased costs for the company, as well as missed revenue opportunities, weakened negotiation power, poor compliance, and potential regulatory repercussions.
Steps for efficient contract optimisation
To create an efficient and cost effective contract, you’ll need to look at the following factors:
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Creation
Without proper knowledge, creation can be one of the most time-consuming tasks in the contract lifecycle as it involves responding to requests for contracts and getting them drafted. One of the ways to optimise a contract is to use standardised templates.
As a startup lawyer, I have seen almost every contract a business would need in its artillery. Whether it’s a manufacturing, distribution or supply agreement, I have drafted these types of agreements time and time again. As such, I have already perfected a base document that I can easily modify to include bespoke requirements that need to be built into the contract.
Having a template can speed up the contract creation process for efficient contract optimisation without sacrificing quality or inviting risk. However, you’ll need to ensure that these templates are constantly evaluated and adjusted in terms of contract language and standard clauses to address the changing market and regulatory requirements.
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Review
Reviewing and processing a simple contract can cost companies a significant sum, especially when hiring a lawyer to review your contracts. To maximise contract efficiency, you can reduce the need for lawyers to review simple contracts by standardising contract terms and reducing the time they spend reviewing one agreement.
For example, some of the key clauses I look for in a contract include IP ownership, breaches of contract, serious misconduct provisions, confidentiality, warranties, termination rights, and payment terms. By standardising some of these provisions, you will decrease the need for revisions, speed up the review process, and increase the contract acceptance rate.
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Negotiation
The negotiation process can impede contract efficiency especially when stakeholders need to be involved in the process. One way to encourage speed and agreement is to remove terms that cause unnecessary friction but are not crucial to your business. You can also streamline your contract collaboration process by keeping communication in one place so you can quickly track what’s happening and where.
When to hire a lawyer for your contracts
Startups and business owners are not obliged to hire a lawyer, but their expertise can provide invaluable support not only in contract optimisation but also in protecting business interests and facilitating long-term growth and success. As contracts govern relationships with customers, suppliers, employees, and partners, a startup lawyer can draft and review contracts to ensure they are clear, enforceable, and protect the startup’s interests. If your startup requires external contracts, such as licensing agreements or partnerships, having a pair of expert eyes can help prevent your business from being deceived or taken advantage of.
Hiring a lawyer for your startup can be costly, but it pays to look for a lawyer who is willing to build a relationship with their clients. For example, any lawyer can respond to your queries with an outright quote, but a better lawyer would want to sit down for a discussion and have a better understanding of your brief before giving you a quote for their services.
Here’s a real example of a client who came to me the other day: They sent me a laundry list of documents they wanted drafted, and it would have cost them an absolute fortune. Instead of calling them back and giving them a fixed quote, I decided to jump on a longer call with them to go through that laundry list and actually work out what they’re trying to achieve.
It turns out that three of the contracts they needed could be combined into one. I could have quoted them for three contracts, but from my perspective, it’s all about transparency. It’s about building that trusting relationship with clients. That’s why I do what I do well. That’s why I can charge a certain amount for contracts—solid documents I’ve drafted over the years, bespoke and created specifically for a particular client’s needs.
Key takeaway
If you truly want to optimise your contracts, having a startup lawyer on board can make a huge difference. From securing intellectual property to negotiating partnership agreements to managing employee contracts and more, startup lawyers can safeguard your assets, protect your interests, and keep your business compliant and out of trouble. They can identify potential pitfalls, suggest improvements, and ensure existing and future contracts reflect the latest industry and regulatory changes.
For startups, having a lawyer who is committed to building a transparent and trusting relationship is invaluable. This partnership not only facilitates smoother operations but also provides peace of mind for the business, knowing that legal aspects are handled with precision and care.
Lazarus Legal can help your business navigate legal complexities, assist with all your requirements, and take the legal load off your shoulders. We ensure that our fees are transparent and affordable and that we work around your budgets and constraints. See if we’re the right fit for your company by contacting us for a “Start Up Meet,” a free 15-minute consultation with one of our advisors. By entrusting your contract requirements to professionals, you can focus on what truly matters—growing and sustaining your business.
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