A client recently asked me if contracts need to be drafted by a lawyer in order for them to be considered legal. He compared it to an engineer stamping a drawing. In certain situations, drawings must be stamped by a professional engineer. Is the same true for contracts? Does a lawyer need to sign off on a contract for it to be legal?
The short answer is no. A lawyer is not required to draft a contract for a business or an individual. In fact, anyone can draft a contract. Although this is the case, it’s not necessarily the best strategy. If you are contemplating drafting your own contracts for your business or have done so in the past, you should consider having a lawyer review your contracts not only to ensure that they are legally sound, but also for your own piece of mind.
A lawyer has attended university and law school. After graduating from law school in Ontario, they “article” (similar to an apprenticeship program) before they can officially practice as a lawyer. During their time in law school and articling, they read, write and talk about a lot of legal issues, and come across many contracts. I remember being an articling student and getting set up in a boardroom with about six other students and lawyers at a large law office on Bay Street. Our task was to summarize the contracts and point out any issues to our client who was looking to purchase another company for millions of dollars. I remember thinking, how do I know what the issues are if I haven’t reviewed contracts before? When I asked the lawyer in charge of this due diligence project, her response was that I would know it when I saw it. This was not super comforting when this was a multi-million deal and I was hoping to get hired back at this firm. We spent a lot of time in that boardroom over the course of the week and during that time, the red flags did start to stand out. By the end of my time on that project, I could easily pick out the provisions that were not advantageous to our buyer and the ones that they would want to know about before deciding to move forward with the deal.
As a commercial lawyer, my job is to review contracts and point out what is not common in the industry, what is not to my client’s advantage or what simply does not make sense for the client. I draft contracts that are favourable to my client and put on paper what the client envisions in his head. As a lawyer who specializes in contracts, I have read a lot of fine print and run-on legal sentences. As a result, if a client comes to me with a business idea and wants me to draft the contract, I can easily put one together that includes all of the legal nuances that will benefit the client. This is not something that can easily be done if you are not familiar with drafting contracts. You may know the industry, but do you know the best tactic to limit your liability, protect your IP and terminate a contract without being on the hook financially? That is just part of the value that a lawyer brings to the table.
In my opinion, leave the drafting to the professionals; the lawyers who draft these types of contracts every day. That way you have the security of knowing that it is done correctly.
I understand that working with lawyers is expensive. You are paying for their education and expertise, just as someone will hire you because of your expertise in your field. If the quote that you receive from a lawyer for drafting your contract is too high for your budget, get other quotes. Sometimes, the contract that you need is quite involved and therefore requires a higher price tag. If however, you are looking for a basic contract for your small business, one option is to purchase contract templates that have been drafted by a lawyer. Click here for a description of the templates that I currently sell.
Although you can draft your own contracts, that does not mean that you should.
Given the education and expertise of lawyers, I suggest leaving the legal drafting to them. That way you can focus on generating revenue for your business and sleep well at night knowing that your contracts are rock solid.
What kinds of contracts do you need for your business? Let me know in the comments.