A Signed Fee Agreement is Great, but MAKE SURE You Know What You Have in Your Agreements
If you know anything about our company, then you know that we have preached for the last 27 years about always getting a contract signed. This applies to fee agreements, credit checks, and any other contract you can think of. You also want to make sure that when you create these contracts to bury safeguards in them to protect you. We previously held a webinar on how to turn a credit application into a contract, and we mentioned some of the things you should always put in them: attorney fees, collection fees, secured creditor, jurisdictional clause, and a process for any late fees or interest. That being said, it is important to put safeguards into your contract as long as you know exactly what you are saying.
Lately, we have had clients come to us who put random legal words into a contract and end up with a time bomb that screwed them over on their own contract. There seems to be a new phenomenon to put legal-sounding words, usually found on the internet, in a contract and it backfires! We know that the intent is good, but the results can be detrimental.
One of the worst scenarios this can happen in is when staffing firms deal with indemnification and do not clearly outline mutual accountability which can produce serious liability on their part; the same goes for releases. You may find yourself in a dilemma of heads they win and tails you lose.
Here is a situation to think about: you are in negotiations and have a standard fee agreement, but your client wants to change it, make sure you read all the way through and change the contract from the top to the bottom. You do not want contradictions throughout it. We have seen how a contract will state one thing on the first page, but not be changed on the second page, and it can fall against our client. In some cases, it can be resolved if you have documentation of the agreement and both parties agree it was a mistake, but do not rely on this happening.
We are fortunate to have an in-house attorney because we always have them involved in any contract we draw up or sign. You may be thinking this is a bit excessive, especially with the kind of money that you have to spend on attorney fees, but an extra thousand, in the beginning, can save you from losing thousands in contracts. You may even find a contract online that was drawn up by an attorney but have it double-checked by a local business attorney because some contracts can be broad and not cover your jurisdiction.
The most common reasons that our clients get in trouble is because they are being cheap, or they are overthinking their contracts. For those of you who are fans of Friends, there is an episode where Joey writes a note using a thesaurus to change every word and he ends up with a jumbled mess that had no relation to his original message. Please do not try to use a thesaurus or put in legal terms unless you know exactly what they mean and how they relate to each other. Important: indemnify is a powerful legal word that can easily become a ticking time bomb. Do not use it in your contract unless you know what it means, and you have the insurance to back it up!
All of our clients have access to our vault of contracts, and these are broad write-ups that they can modify to account for the laws in their jurisdiction. Our contracts are better than using nothing, but each state is different. If you want access to our vault or help with your contract write ups and negotiations, please contact either Wilson Cole at email@example.com or Samantha Cole at firstname.lastname@example.org.
Quote 1: There seems to be a new phenomenon to put legal sounding words, usually found on the internet, in a contract and it backfires!
Quote 2: All of our clients have access to our vault of contracts, and these are broad write ups that they can modify to account for the laws in their jurisdiction.