How Much Does a Contract Review Cost?
Again, from the LinkedIn Q&A area, a member asked about pricing on having contracts reviewed.
But pricing for contract reviews is broad because it encompasses more than just an attorneys billing rate. Yes the per hour charge can go from $150 to $500 or more an hour, but there are others factors to consider and here are two of them.
The first factor is simple, but difficult to anticipate with an attorney you've never worked with. One attorney may charge 75% more but be able to do the work in 1/2 the time. So that attorney is actually the cheaper attorney.
The second factor is more complicated and involves not only legal skill but business skill.
People often think the idea behind contract review is to protect you if the contract goes bad. But the most protective contract might well not get signed because (among other reasons) the other side (a) also wants protection and (b) might think your company is TOO worried, so maybe they will conclude its less likely to produce or pay under the contract.
This happened with the first contract I ever drafted for a client when I was a teeny tiny newborn attorney. He kept wanting me to put on protective clauses because this was an unusual project for him. "What if this happens?" he'd ask repeatedly. And I dutifully put in a new protective clause each time. I gave him the contract, and when I saw him about 2 years later, I asked how that project had gone. He replied "I never got the contract, the other side backed out. They said I obviously didn't trust them and they didn't want to work with me."
A contract is part and parcel of the entire sales process. The deal isn't closed (whether its contracting for services, selling your products, or licensing something) until the contract is signed. A good contract will protect you, and push the deal towards closing. Sometimes those goals are not in balance. It's the attorneys job to work with the client to find the right balance for the client.
And then the deal isn't fully completed until the product or service is delivered and paid for. A good contract will guide the parties through the process, providing direction when there are questions. A poorly written one at best provides no guidance, and at worst provides faulty guidance.
The total true price of a poorly written contract can be way larger than the price of a well written contract. And the best contracts come from having your attorney know your business. The more I know about a client, the better job I can do.
Right now I am reviewing contracts I wrote for a client two years ago and re-doing them, based on changes in how they actually do business. Some of my clauses were about how they thought they WOULD do business, but that changed over time. Some new clauses came to mind because of things that have come up in the last two years that we never anticipated - some having to do with the business, some having to do with technology that didn't exist 2 years ago. So the contracts should change.
Not all clients end up using a lot of contracts. Some types of transactions don't typically use a written contract, and sometime a client will be getting the contract from the other side. In that case the same concepts apply but the cost is less because 9 times out of 10 it takes less time to review than to create.
