Legal services are too often a black box. You don’t know what your lawyer is doing. The lawyer doesn’t know enough about what you need. A few phone calls here, a few drafts there, and a few weeks later you have a mediocre work product, a fatty hourly bill, and you learned nothing to arm your team for the future.
Broke: Find another lawyer.
Woke: Learn how to compound the value of your lawyer’s advice.
Indeed, maximizing the value of your lawyer’s work product while minimizing billable hours is attainable and not the subject of myth and lore. Who you engage as your lawyer obviously matters, but implementing a proper framework to guide your communications with any lawyer can often get you to the best business result.
Before you send your next project to your lawyer, keep the following two goals in mind:
(1) Overshare;
(2) Future-proof.
SaaS agreements are a perfect example. You’re an early-stage SaaS startup negotiating your first Master Services Agreement across a Fortune 500 enterprise customer. You have massive ambitions and a light wallet. You can forward the 30-page agreement to your busy lawyer on a Sunday with a pithy one-liner email like “Draft by Monday?” Or you can do a bit of homework, optimize future customer negotiations, and reduce fees by including the following in your cover email:
(1) Overshare
Collect all facts and overshare: you know your business better than your lawyer ever could. Since this is your first big SaaS customer, read the Master Services Agreement, identify the terms that you can answer, flag the ones that you can’t, and triage feedback from all internal stakeholders.
- Publicity: Customer is not letting you make a press release and publicize the customer relationship, is your marketing team okay with that and does that change the value of the contract?
- Termination: Customer wants a termination for convenience clause, how does your sales team feel about that?
- Data Rights: Customer doesn’t want to let you use their data to improve your products, can your engineers scale the product without that data?
- Indemnification: Customer is asking you to indemnify for data breach, is your security team comfortable with that?
Have no clue what an indemnity is? Don’t know where to start or you’re embarrassed that you don’t know? Tell us anyway! You’d be surprised how helpful an “I have no idea” can be. Lawyers need more information, not less. Our job is to fact-find and assess risk, so the higher the fidelity the better the work product.
After collecting the facts, package everyone’s feedback and layer them into comments in the Master Services Agreement along with how your team feels about the clause:
“This X must change to Y.”
“This is okay to accept.”
“We have no clue, but here’s our thoughts.”
“I’m lost, can you help?”
Because if you fail to ask these questions internally, a good lawyer would take a chunk of her valuable time to read the Agreement and ask you those very same questions anyway. A bad lawyer might not even spot these issues, and you’re screwed and don’t even know it!
(2) Future-Proof
Force your lawyer to teach you how to fish. This is where the magic (compounding) happens. In your cover email, ask long-term questions so that you don’t have to do this song and dance for the next customer. Your goal is to build an internal framework for your team to leverage even if you change lawyers or you’re no longer with the team. Taking the example questions above, here are A+ future-proofed questions:
- Publicity: What contract language can we build into future Master Service Agreements that provides our team an opportunity to market each new customer relationship while respecting the customer’s need for approval?
- Termination: Can we not give a termination for convenience right as a default in the future? Or maybe give a right to terminate within the first few months, but not after?
- Data Rights: It seems like our engineering team absolutely needs certain data sets to improve our products, is there a way to draft the language so that we have broad data rights as a default, but have a fallback option if a customer pushes?
- Indemnity: It seems like all our customers will ask us to indemnify for data breach, is there a way for us to set a maximum liability cap as our bottom line so we’re not overexposed?
The answers shine light on the core business and legal questions as your sales cycle accelerates. Not only will your lawyer mark-up the current Master Services Agreement and prepare a strong negotiation with your first customer, you now have a baseline that you can leverage for your next customer. Your entire team can negotiate with more certainty, and more certainty means more leverage.
Best of all, you accomplished all of that in 1 email. Your lawyer provided all the answers in 1 response. The only thing we can’t guarantee is that you’ll get that draft by Monday.
Tags: Drafting Clause
