There have been several blog posts recently upon why many lawyers seem unable to break away from the concept of strict hourly billing. Some of these can be found on a blog by a company called Exari. I have no association with this company and do not endorse their products, but you may find some of these posts interesting – if not a little scary: http://blog.exari.com/

It’s obviously difficult to estimate how much time it is going to take to draft a contract from an initial discussion with a client – and sometimes things turn out to be a bit more complicated than originally anticipated and take longer than planned. However, that’s life!

Buying any services with a deliverable – for example a contract, – on an hourly basis can leave you with an unexpectedly high bill unless you know how quickly (and effectively!) someone works. However, buying on a fixed fee arrangement can also mean buying an ‘off the shelf’ product, which may or may not be suitable for you. So what’s the best solution?

If someone is billing by the hour, ensure that spend limits are agreed in advance and that you receive regular progress reports and spend-to-date figures. That way, at least you won’t faint when you get the bill! Alternatively, if you opt for the fixed fee route, select your supplier based upon the referrals and recommendations of people you trust, so that you know that you will get what you are paying for.

All of my contracts and terms and conditions are tailored to the specific needs of the client, and whilst some clients prefer me to work on an hourly (or daily) basis – particularly when I am attending meetings with them to support their negotiations, – many smaller businesses prefer work to be done at a fixed fee. Accordingly, I offer both – and also retainer arragnements for clients who need more regular help and advice.

To contract ….. or not!

What do you think of when you see the word ‘contract’?

Unfortunately, through experience, people have come to associate the word ‘contract’ with other words beginning with ‘C’ – ‘confusing’, ‘complex’, ‘combative’ and ‘costly’. However, the alternative meaning of the word is as a verb meaning to shorten, so why can’t contracts be ‘concise’?

Good News – they can! Further, if they are drafted by someone who takes the time and trouble to undertstand your business needs, they can also be ‘clear’, ‘collaborative’ and ‘cheaper’.

If you can’t understand your contracts, then it is not unreasonable to assume that yor clients won’t be able to either – which makes the whole exercise pretty pointless. Also, money spent on preventing disputes is worth twice that spent on helping you in court – by which time you will already have lost your customer, potentially your reputation, and probaby some of your hair along the way.

This approach also applies to other documents involved in the contractual process. Here are 2 clauses, the first of which is taken from a real-life tender I reviewed – complete with typos. See which you prefer.

The confusing, complex, combative and (probably) costly one:

“The tender remains open for 30 days unless previously withdrawn. Thereafter, the tender is subject to confirmation or adjustment by the contractor/company. Acceptance of the Tender/Quotation/Estimate by the customer is deemed that the customer accepts the Terms & Conditions of Trading by the contractor and supersedes any Terms & Conditions as laid down by the customer, unless agreed upon in writing by the contracctor within 30 days of the customer accepting the tender.”

Or the clear, concise, collaborative (and almost certainly cheaper) one:

“If you wish to accept this tender, please do so by [insert dae]. If we wish to withdraw the offer to tender before that date, or agree to extend the date by which you may accept, we will notify you in writing.

Please note that by accepting the tender, you will also be agreeing to our Terms and Conditions (attached), which will apply in place of any terms and conditions of your own in respect of the work to be undertaken.”

“Res ipsa loquitor” as my old Latin teacher used to say – a no-brainer!

Why not make your resolution for 2010 to dump your confusing, complex, combative and costly documentation – and replace it with some which is more appropriate to business in the 21st century?

Happy New Year!!