Costs of a Lawyer Contract Review

Do You Need A Lawyer to Review your Contract?

You might think that an attorney taking 10 hours to review a 40 page contract is over doing it, but you would be wrong. A qualified lawyer should not only be seeking to avoid all of the obvious problems, but they should be looking for the not so obvious issues that could cause you a world of hurt. If you do not have a lawyer that is savvy enough or aggressive enough to point out these issues, then it may well have been a waste of time and money. Issues with contracts are simply a numbers game. Some contracts have a ton of issues that will be fixed before the parties sign and other contracts have no issues at all. If your lawyer does not point out all of the issues, no matter how minor you may think they are, to protect you from what might happen when those issues turn into problems then they have failed to properly do their job. We have several clients that have come to us after spending a lot money on contract negotiations with other firms and they just praise the other firm and think that they did a great job. These same clients then come to us and ask us to review the contracts because almost every time there is a big issue that they missed. We try to explain it to the clients in the simplest of terms by telling them that the devil is in the details. The devil is truly in the details. I have seen several deals go up in flames over a barely used clause that was never discussed. If I can catch that and point it out to the client , then they can make an informed decision on how they want to deal with it. A good example is a deal I was working on that involved cross collateralization. The client was going to give up their lease for property where they were doing approximately 70% of business and I was able to convince them that in the event that the client lost a claim, the bank would steal the clients property through a cross collateralization clause. In that instance, by getting rid of the cross collateralization clause, the client saved approximately $200,000.00. A missed issue can cause serious trouble for a business and they will usually not know it until it is too late and they have lost a motion. There is a reason that lawyers spend years fine tuning their craft. If the business was truly easy, then they would be in house lawyers with a guaranteed paycheck and a big bonus at the end of the year. Lawyers are not in house lawyers for a reason. They are billed as experts in the law for a reason. You may not always need a lawyer for a particular situation, but there is typically a hidden reason as to why.

Factors that Influence Lawyer Contract Review Costs

The cost of a lawyer contract review can be affected by a number of different factors. One factor is the length of the contract at issue. Obviously, longer contracts take more time to review than shorter ones. Complexity of contract can also increase the time necessary for a thorough review. A simple supply agreement may only take an hour to review, where a long, complex distribution agreement may take several hours to review. Generally – and how long it takes depends on the situation, of course – agreements in the 10 – 15 page length range can be reviewed in 2 to 3 hours. A confidentiality agreement may take less time, but a supply chain agreement may take longer. The experience of the lawyer reviewing your contract will also affect the time necessary for a review. An attorney experienced in reviewing the type of contract you have generally will have an understanding of common objections and responses to them, and so will be able to provide a review more quickly than an inexperienced attorney, who would have to look up the responses to the objections that the other side tends to make. Naturally, your own involvement with the review will affect its timing. If you are able to get any pertinent information to your attorney quickly, this will save your attorney billing time. Having a list of the questions you have and proposed terms you want to add or edit will allow your attorney to combine a few phone calls into one, decreasing the overall bill. Some factors affecting cost don’t really have to do with the review itself – they involve being able to bill the client efficiently. The most expensive time necessary in reviewing a contract can be the time needed to consult with the attorney to receive updates on the progress of the review. While it’s normal for clients to want updates on the progress of their legal issues, getting these updates quickly and easily is a must for keeping your attorney bills down. Regular calls to your attorney’s office, especially when the attorney is not available, are a general waste of time; instead, use the email system or have a piece of paper with your attorney’s email address on it that you can use to leave a message with the office staff.

Cost of Lawyer contract review broken down

Costs for contract review by lawyers can vary based on the location, the type of lawyer you are working with, and/or the type of contract you are reviewing. The cost per contract or project tends to range between $150 and $5,000+. Hourly rates for contract review by a lawyer usually range between $100 and $900 depending on the lawyer and the type of agreement. Some attorneys, law firms, and online platforms charge a flat fee for basic contract review, which typically costs between $250 and $1,000. Alternatively, many premium online platforms provide affordable contract review in exchange for a monthly membership fee.
Freelancers and creative consultants working with lawyers typically pay between $150 and $350 per hour for simple contract review, depending on whether the attorney is handling the review directly or works with a senior partner or associate. Non-creative startup founders or general corporate clients may pay between $200 and $500 per hour, plus up to $1,500 for basic contract review. For more complicated agreements, such as a nondisclosure agreement or a software licensing agreement, corporate clients may pay between $350 and $900 per hour.
Business owners and executives paying an hourly rate for contract review will generally spend between $300 and $750 on average for a complimentary contract review. Clients in need of a review for a more complex contract, such as a deal or transaction agreement, may budget $500 and $1,000+ for their initial consultation. This up-front investment is a logical next step in the process and often results in savings down the line since companies which hire a lawyer to craft their agreements usually avoid costly legal woes in the future.

Saving Money on Lawyer Contract review

One way to make contract review more affordable is to bundle it with other services. For example, if your lawyer was helping you on a purchase contract, seek their advice on the contract with the seller’s lawyer as well. Similarly, if your matter involves a joint venture for various projects, use the same lawyer if you can. This will allow you to save money by avoiding firm matter-opening costs and having your lawyer become familiar with your business.
Another way to cut costs is to hire a less-experienced lawyer. If you plan to use your lawyer over the years so that they will become very familiar with your business , it is usually best to hire a senior partner. But if you find yourself in a specific situation that requires prompt action, you might want to use a junior associate. You can save money on simple matters, such as supply purchase contracts, without entrusting your case to a senior lawyer over an extended period. Senior lawyers will often spend less time with your matter, while juniors will have more time to focus on your matter. Third, you could negotiate your prices. If you use a lot of legal services, your lawyer may offer a discount.

How to Select the Right Lawyer for Contract Review

When selecting a lawyer for contract review, there are a few criteria that are important individually and collectively. Figures on costs can be helpful but should not be the only guiding force as they can vary widely. Three focused on the same area of law could have three different billed hours, rates, and end result cost; what is far more important is whether one of them might have been able to help avoid the issues entirely or helped you solve some of the problems you are facing. Cost cannot be the only factor.
Another important consideration is experience, and specifically the experience of the lawyer reviewing the contract. While it may not matter if any of the lawyers in question are specialists (and some do choose to focus on certain practice areas, while others are equally versed across a wide range of legal topics), it may be important that the person you choose has experience reviewing contracts, as well as other specialized documents. While it is not uncommon to have someone tap into outside expertise for a specialization outside of their field, if you choose a lawyer specializing in the area where your contract is used, they will not only be familiar with them in general but with how they are used in your field of interest. Lawyers regularly build up expertise on the fields where their contracts are used and how to better serve those clients.
An attorney’s reputation can be important, especially in larger cities that have many law firms and experienced offices. While you may be able to ask other people who have used them recently, testimonials from people you trust or this lawyer’s past clients can be a great tool to help you weigh costs and value of the service. Many use referrals by friends and family to find a lawyer, which is also a popular method in this field. In addition, awards, such as Super Lawyer (TM) can offer an opportunity to learn about a lawyer in a way that is independent of the persons desire to market their own services when you are not familiar with them.

Common Pitfalls in Contract Reviews and Price

Common mistakes made during contract reviews can have far-reaching financial consequences. Whether you are dealing with a license, distribution or employment contract, every error can compound the costs and risks to your business. A poorly worded clause could lead to regulatory fines, of course. Or your contract may run afoul of the ever-evolving California and federal privacy laws. There could be a sudden, unforeseen tax exposure. Perhaps you are unexpectedly liable for damages caused by a third party. The list goes on. The only way to avoid all these consequences is to take the time to properly review the contract and protect yourself.
Taking the appropriate time to review , analyze and revise the contract can reduce all of these risks. You are effectively hedging various issues that could critically injure your business. For example, if you are a tech startup, careful vetting of your contract before you bring on your first client could save you months and hundreds of thousands of dollars in litigation fees. Your IP, your entire business model for that matter, could be in jeopardy. Failing to properly protect yourself now could, and most likely will, cost far more than it would have to get it done correctly the first time.