Small and medium-sized enterprises (SMEs) face just as many legal challenges as larger firms, from intellectual property protection to regulatory compliance. SMEs (and certainly all start-ups) may consider themselves too small to justify the cost of a full-time (or even part-time) in-house legal advisor, but most realise that they are probably big enough to require some sort of legal input and advice. This is especially true in the business-critical area of drafting and negotiating contracts – employment contracts, client contracts, and vendor contracts.
The Dangers of DIY Contracts
Contracts are the backbone of any business relationship with suppliers, vendors, clients, or employees, but if the cost of hiring an in-house specialist (let alone consulting external lawyers) is considered too prohibitive, the question then becomes where does the start-up or SME get that legal advice from? It’s here that it should be noted that, in business as in life, it is a cast iron truism that you only get what you pay for.
Many will take the cheapest, but also the riskiest, option and cobble together contracts based on documents they have seen others using or templates found on the internet for free. There are lots of things a start-up founder can do themselves, such as building a website or creating a logo, but legal work should not be one of them. Simply copying and pasting contractual provisions from different agreements you have seen or come across dilutes, and often negates, how those provisions work together to protect the parties’ interests.
Individual words in contracts also have consequences in law. Many court cases have featured expensive and lengthy litigation with parties arguing about the difference between ‘shall’ and ‘will.’ The authors of online contracts may not have spent as much time considering this detail as a skilled business lawyer would.
Risky Online Contract Templates
If the dangers of trying to put something together yourself are obvious, the apparent benefits of saving some money by using a free online contract or template are also massively outweighed by the risks. Sometimes business owners simply do not understand what type of contract they require, or indeed if one is needed at all. Some online contracts are simply bad contracts that could lead to costly litigation that will prove fatal to the business.
Free online contracts may not incorporate the latest laws and regulations, or worse may actually contain illegal provisions. Some cookie cutter contract templates may be so badly drafted that any agreement will be invalidated because clauses in the same contract contradict each other. If there is confusion in a contract document, liability is construed against the drafter – i.e. you.
The Importance of Professional Bespoke Advice
In the long run, it is always safer and more cost-effective to get professional advice from a firm such as Motion Paradox to ensure that your agreements are tailored to your exact needs, are clear and legally binding. This will protect your rights and minimise the risk of any potential liabilities. This is especially true when an SME is seeking investment in order to grow. Your existing contracts will be scrutinised by potential investors keen to determine if those documents actually protect your company and their interests.
Growing SMEs will also naturally need to expand their teams but may not have the resources for an in-house HR department. The experts in employment law at Motion Paradox can ensure that your employment contracts are up to date and tailored specifically to your business.
As an SME develops even further, perhaps contemplating expansion, mergers, or acquisitions, the legal landscape becomes even more complex. The legal processes involved in these circumstances could range from structuring deals and navigating tight regulatory requirements to drafting shareholder agreements and joint venture arrangements.
The skilled business lawyers at Motion Paradox, based in London and Los Angeles, can give any start-up or SME the benefit of their expertise in matters such as contract law without the need for a full-time employee and for less than you might imagine. Their understanding of all aspects of contract law can ensure your business operates efficiently within legal boundaries, leaving you free to do what you do best – making your business a success.
