Protect Your Blindside. We hear this term in sports, but how does this relate to running a business?
It’s all about risk management. One important way to protect your blindside in business is to ensure contracts are reviewed before signing. Never blindly sign a contract.
Businesses usually have multiple types of contracts and other legal agreements:
- With clients
- With vendors
- With employees
- With contractors
While running a business, most people are amazed when they quantify the number of contracts in place. You add up the number of employees, vendors for everything from office supplies to delivery services to catering, and then add in client agreements and contractors for consulting, and the number of contracts in place gets big quickly.
Are you confident you and your firm are protected with all these contracts in place?
Step 1: Do Not Sign Blindly
The first step in the process is to ensure that no one representing the business signs an agreement without proper review. This protects you and your business from undue risk.
Example: Client signed contract blindly assuming the small print was the typical legalese. Unfortunately, the terms of this contract provided for a substantial discount for prompt payments – something the company’s CFO would never have agreed to.
Establish a policy for review of contracts. Not all contracts need to be reviewed by outside counsel, but many times it is money well-spent. We serve as our clients’ outsourced in-house counsel, including contract reviews. Protect your business.
Step 2: Review Your Businesses’ Contracts
Many of the contracts your business utilizes, whether employee agreements or end-client MSAs, may have been drafted several years ago. If it has been more than 2 or 3 years since these contracts have been reviewed, we recommend that it is time for a fresh look.
Step 3: Review External Contracts
The bigger risk of exposure comes from agreements that were not initially developed by your legal counsel. Businesses are often careful with extra-large contracts, but small contracts can carry a lot of risk, too. Do not assume that a small-dollar agreement is OK and can be signed without any legal review.
Typical areas where we see risk for our clients:
- Indemnification
- Limitation of Liability (or lack thereof)
- Payment Terms & Refunds
- Confidentiality
- Assignability
- Scope of Services
Conclusion
Managing risk should be an ongoing priority for any business owner and leader, and contracts can be a huge source of exposure. At Wilchins Cosentino & Novins, our business law practice offers you experienced counsel – including reviewing contracts and preparing contracts — to protect your interests and to protect your business.
Contact JT via email or phone at 781-247-8055 or contact us via our website to discuss how our outsourced in-house counsel can be put to work for your business.
JT Mann leads the Business Law practice at Wilchins Cosentino & Novins. Learn more about JT including his 25 years of experience as in-house counsel handling domestic and international legal and business matters.
This article is not legal advice and should not be taken as such or relied upon as legal advice.