July 23, 2020
One of the most important steps in the contracting process can be hiring a contract lawyer to review your written agreements, as the wording and format often have to be very specific to be legally binding. Working with a contract attorney will ensure that your agreements are legal, admissible in court, and are free of loopholes.
Understanding exactly what you need a contract review lawyer to do when they review your contract will help you make the decision whether or not you want to make the investment in hiring an attorney. After all, you need to protect your interests and your pocket.
How much do legal fees cost for a lawyer to review a contract and give legal advice? First off, you are not required to seek legal help from a law firm – you can definitely draft an agreement by yourself, especially if you need something simple. Hiring an attorney that went to law school to look over your agreement before you sign can be quite expensive, but in the long run this decision might save you a bundle. When you hire a lawyer to review a contract, you are doing more than getting a second set of eyes - you are purchasing years of experience, knowledge, and training to guide you and help to ensure you get the best deal possible in your contract.
Just like with any question related to a lawyer’s services, the fee you will pay for a legal professional to look over your contract depends on the lawyer's hourly rate and the contract's complexity. Here are some factors it can depend upon:
The length of the contract
Your budget
What does the attorney need to look for
If you need just a review or help with drafting services
Your industry
Rules and regulations in your industry
The amount of money at stake
The duration of the contract
How much risk are you willing to take on
The number of signing parties involved
Your lawyer’s experience and current workload
Depending on these, and many more factors, hiring a lawyer to review a contract can be quite steep, ranging from $300 and $1,000. In case you want them to actually draft and negotiate the contract for you, it could get even more expensive, falling somewhere between $500 and $3,000. Alternatively, there are some legal firms that offer services at a package rate, rather than by the hour. Depending on the frequency and complexity of your contract needs, this may end up saving you thousands over time.
Different Types of Contract Reviews
When you decide to hire an attorney to review your contract, you need to understand what they will do in that process, so you can better protect your financial interests.
ISSUE-Specific Contract Review
An issue-specific contract review is the most economical option if spending money is the most important factor for you. If you are mostly happy with the contract, but not quite clear on some of the specific terms or issues, or need a specific clause of the contract explained, the lawyer will just look over those specific areas of concern. A lawyer can help decipher the legalese and explain those terms in common English so you can figure out if they work for you. You don’t want to sign things you don’t understand, so if you're on a tight budget, but still need the peace of mind, this is a good way to feel more confident before signing the agreement.
This easy, “explain-this-to-me”, contract review will cost you approximately between $150 and $350 and you’ll spend very little time in contact with your attorney, as it’s almost always conducted over the phone.
In short, if you can limit the extent of the contract review, the attorney fees will not hurt your pocket as much. But you need to understand that there is always a quid-pro-quo, and you will have to accept the fact that your attorney will not review any other aspects of the contract except the ones you circled. If something goes wrong down the line, the attorney will not be responsible and you’ll be on your own.
Basic Contract Review
This option is more intense in comparison to the issue-specific review we just discussed, but it is still very limited in scope. If you decide to choose the basic contract review, your lawyer will look over your agreement on the surface level, answer any questions that you may have about it, and inform you if you need to pay special attention to an issue. In basic contract review you might want your attorney’s opinion on a particular issue, rather than just an explanation of terms.
This type of review lacks the personal touch you might want as most basic reviews take place over the phone or through an email giving the client several bullet points to think about.
Basic or “what’s-your-opinion” review will be more expensive than the issue-specific review, costing you anywhere from $450 to $3,000.
These types of questions will require your attorney to get to know more about you, your preferences, and your business dealings. They may require some research or revisions to the contract.
Basic Contract Review Plus Edits
This type of contract review will definitely be more costly than the basic level, but you will get much deeper involvement from your attorney. Instead of having your lawyer just review your document, point out what needs to be fixed in your contract, and answer your questions, they will provide you with a version of your contract that you can submit to the other party for review, edit your agreement, and review those edits with you. In the legal world, this is known as “redlining a contract”, which can really help the whole process move along more smoothly. In other words, you don’t have to discuss the changes in your agreement with the other party, as they will receive the contract already finished with the option to accept or deny.
This more complex, “what-do-you-think-about-this-and-this” contract review will set you back more than $3,000. The more questions you pose about the contract, the more complex the contract is – the more you will have to dish out to have an attorney help you with it.
But read on - there are new services available which aim to drastically reduce these types of fees.
Contract Review Plus Negotiation
In serious contracts negotiating between the parties can be extremely difficult. When you opt to hire an attorney for this level of reviewing, they will not only review and edit your agreement, but they will submit a “redlined” document to the other signatory party and negotiate all the changes on your behalf. If you are not confident in tackling your complex contract, you should definitely choose this option. When you do, your attorney will handle everything for you, including reviewing, editing, redlining, and negotiating the contract.
This most involved, “handle-this” contract review will be most costly, but you’ll be able to sleep at night knowing that all the back-and-forth is going to be avoided, as the attorney will take the helm and facilitate the process – and the emotions – on your behalf.
How Contract Review Pricing Works
Each lawyer sets his or her own prices depending on their own level of expertise and the fees they charge can vary greatly from one attorney to the next. Most of the time, however, lawyers use either flat-fee pricing or hourly pricing when they get hired to review a business contract.
Flat-fee Pricing
In recent times, flat-fee pricing or fixed fee pricing is becoming more and more common when paying for legal services. As a customer, you pay a single set fee for contract review regardless of how much time your attorney spends on working on the project. Most respectable lawyers will determine the flat fee only after they take a good look at the contract and assess the amount of time it will take to do the work. Be wary of the lawyers who will offer you a set rate without setting their eyes on your paperwork – in so many cases a single-page condensed legal document contract could be more complex and convoluted than a 50-page fee agreement. A good and respectable contract lawyer will always ask to see an agreement before quoting a price.
Hourly Pricing
The more traditional pricing model is charging by hour. Most attorneys will collect an upfront retainer and subtract their hourly fees from this retainer until either their work is completed or more money needs to be paid for the retainer. The hourly prices can vary depending on your lawyer‘s expertise and the level of service you’ve selected, but the typical range for contract reviews can go from $100 per hour up to $750 per hour.
Summary
It is not required by law to consult an attorney when you are drafting a business contract. There is nothing necessarily wrong with signing a contract you don’t understand. People have been signing contracts they haven’t read and have gone on to live very happy lives. But you have to be willing to accept the risks associated with not reading a contract. How much does it cost for a lawyer to review a contract? It depends on your budget, your confidence level, the complexity of the agreement, and your willingness to risk or avoid risk. Yes, it might be expensive, but that investment can bring you a peace of mind and save you from headaches down the road.
And pay attention to new services available to the small business owner, where for a low monthly membership fee for working with a dedicated attorney, a set number of contract reviews come included every month. These attorneys are also capable of giving fixed, upfront costs instead of billing by the hour - so you, and they, know exactly what to expect.
Add a TransGlobalSystems Approved Attorney to your team today.
Sources:
https://www.rocketlawyer.com/article/do-i-need-a-contract-attorney.rl
https://www.upcounsel.com/contract-review-attorney-fee
