Contract review is a common request we get from clients. Clients usually don’t understand the process, though. We’d like to give you some insight into SW&L’s process of reviewing contracts.
Step 1: Scope
Our first step is to understand what exactly you need from us. We call it defining the scope of the review. Here are a sample of questions we usually start with:
Do you just need a quick review of one provision (a provision is a sentence or series of sentences in a contract). Do you need a review of the whole entire contract?
What’s your deadline? Everyone has a deadline to respond. It’s best if we know that from the start.
Do you trust your counterpart? If you don’t, we will probably recommend scrutinizing the contract more closely.
Step 2: Putting You To Work
The second step is to put you to work. Have you read the entire contract and written down your questions, comments, and concerns? If you have not, we will probably recommend you do this first. Here are the reasons why: legal risk depends on a combination of law and facts. You probably understand the general and specific facts much better than we do. Moreover, if there is a dispute, a court looks at how you understand the facts and understand the contract instead of how we understand them. The most efficient way for us to understand the facts is to discuss it with you after you get a feel and understanding for the contract. If we know the factual context, we will much more efficiently and effectively be able to review the contract. In other words, we can give you better and cheaper legal advice if you read the entire contract and get us your questions, comments, and concerns. So, we will ask you to carefully review the contract and write down all comments, questions, and concerns, including:
If you still do not understand a provision.
If you do not believe a provision accurately memorializes your understanding.
If any representation of fact is not true and complete.
If the contract contains an obligation you didn’t agree to and which changes the fundamentals of the deal.
If you don’t believe you are able to perform an obligation as it is written.
Step 3: SW&L Gets To Work
The third step is where SW&L gets to work. Our work usually consists of the following:
Identifying provisions that expose you to a disproportionate amount of risk.
Identifying how your counterparty might use the contract to leverage you into a difficult position.
Identifying how circumstances might change and put you in a difficult position.
Identifying operational inefficiencies and impossibilities.
Identifying conflicting provisions.
Identifying ambiguous provisions.
Answering your questions, comments, and concerns.
Identifying typos and mistakes.
Step 4: Resolving Other Issues
The fourth step is to discuss any remaining questions, comments, or concerns. Usually, the process causes issues to arise that require additional conversation to resolve. This is the step where we resolve those other issues. This is highly dependant on the situation. Sometimes many issues arise. Sometimes none arise.
Step 5: What’s Next?
After a review is completed, you might feel comfortable with the contract. You might not need anything else from us. Other times, you do not have this comfort and need some revisions. When you need contract revisions, you have three options: (1) DIY option; (2) Hybrid option; and (3) lawyer option. Option 1 means you revise and negotiate with your counterparty yourself. Some people prefer to do this, and some contract changes simply don’t require lawyers to be involved. Option 2 means we make the suggested revisions and continue to give you guidance while you communicate directly with your counterparty about changes. Option 3 means you ask us to make the revisions and negotiate on your behalf. We ordinarily give you recommendations on which option is best for you.
If you need help with a contract review, please contact us.