Any contractor, employee, consultant, or business partner should sign a comprehensive NDA as soon as possible. ~ Denise Hemke, Chief Product Officer, Checkr
When it comes to creating legal documents for your business, it’s crucial to avoid common pitfalls. To help you navigate this complex process, we’ve gathered advice from a Personal Injury Attorney and a Chief Product Officer. From avoiding vague language to creating NDAs early, here are two key errors to avoid according to these experts.
- Avoid Vague Language
- Seek Professional Legal Advice
- Maintain Document-Version Control
- Proofread for Accuracy
- Draft with Intention
- Ensure Precision of Dates
- Secure Legal Documents
- Include Dispute-Resolution Clause
- Create NDAs Early
Avoid Vague Language
One error to avoid when creating legal documents for your business is using vague or ambiguous language. Legal documents should be clear, precise, and unambiguous to ensure that all parties understand their rights and obligations.
Vague or ambiguous language can lead to confusion, misunderstandings, and disputes, which can be costly and time-consuming to resolve. To avoid this error, it is important to use precise and specific language when drafting legal documents. This includes defining key terms, using consistent terminology throughout the document, and avoiding generalizations or overly broad statements. It is also important to ensure that the document is well-organized, with clear headings, subheadings, and sections that are easy to understand and navigate.
In addition, have legal documents reviewed by a qualified attorney before finalizing them. An attorney can help identify any potential ambiguities or inconsistencies and suggest changes to improve clarity and precision.
Seek Professional Legal Advice
In 20+ years as a lawyer, it’s been observed that businesses often bypass professional legal advice when crafting documents. This may seem economical, but the risks are considerable. Business law, teeming with specificities tied to industry and location, can render contracts void if misinterpreted. This could leave a business exposed to unnecessary disputes, liabilities, and financial burdens.
The allure of online templates is understandable, but they can’t cater to unique requirements. Enlisting the expertise of an experienced attorney is paramount, ensuring enforceability and legal compliance. It’s always recommended to consult a legal expert for advice tailored to a specific situation.
Maintain Document-Version Control
It’s important to have consistent standards for document-version control in place. Just this past year, our company changed our corporate address. The downstream consequence is that almost every legal document is affected. The important thing was to prioritize the most critical ones to modify first.
We released new versions of those and archived the old copies in a place unlikely to be accessed by a member of our team. Every time we released a new version, we made sure the older copy was archived but unlikely to be confused for the latest and correct document.
Proofread for Accuracy
Proofreading ensures that all your documents are accurate and free from errors before they are signed or distributed. Errors in legal documents can have serious consequences, such as invalidating contracts, making them unenforceable, and even leading to litigation. Therefore, it is essential not only for lawyers but also for business owners to proofread their work carefully before submitting it.
Proofreading should not be taken lightly. Rather than quickly scanning the document once over, take a thorough approach when reviewing your contracts so that any potential mistakes can be identified and corrected immediately.
This includes double-checking all facts cited in the documents, ensuring proper grammar usage throughout, verifying spelling accuracy with a spell-checker program, checking formatting consistency between paragraphs and sections of text, and looking out for typos or other minor errors that may have slipped through initially.
Draft with Intention
Businesses should prepare all legal documents with intention. Drafting with intention means planning for the good, the bad, and the ugly.
This approach can help business owners avoid disputes or quickly and cheaply resolve disputes when they arise. Legal documents should reflect your business model, goals, and objectives, while also protecting your interests. This is true regardless of whether you are drafting a formation document, defining terms, or contracting with a customer. Failing to account for what may happen can be a costly mistake.
Ensure Precision of Dates
From personal experience, one crucial mistake to avoid when creating legal documents for a business is overlooking the inclusion of dates.
The precision of dates in a legal document is paramount, as it determines the validity, execution, and termination of agreements. On one occasion, in the midst of a contract renewal with a key client, the date field was left blank unknowingly.
This simple error led to confusion regarding the commencement of the contract and unnecessarily delayed service provision, impacting operations. It served as a critical lesson that underscores the importance of diligence when drafting legal documents—a simple oversight, such as missing date fields, can cause a significant ripple effect in business operations.
Secure Legal Documents
These days, it’s important to secure your documents and keep them safe from hackers, data leaks, and any cybersecurity threat. This is important for everyone, but especially crucial for law firms and the maintenance of their legal documents, which often hold important, sensitive information.
You’ll need to implement the proper tools that can keep your documents safe from possible threats and especially use the best platforms that won’t put you at risk as you send documents between team members, or even with the client.
An error you want to avoid is leaving these documents open to threats. It could result in you unwittingly sharing client information with the public, having your company hacked for important documents, and maybe even exposing everyone to harm. Avoid this by putting the right safety protocols in place for all of your legal documents and how you handle them on a daily basis.
Include Dispute-Resolution Clause
When writing legal documents for a business, it’s crucial not to forget to discuss how disagreements will be handled. This is referred to as a dispute-resolution clause. Consider it a game plan. If someone doesn’t follow the rules, what’s the next step? Perhaps there will be a meeting first, or maybe it will go straight to a lawyer. The choice is yours.
This is extremely important. Failing to include this and a problem arises later, could result in a lengthy, costly court battle. So, it’s advisable to discuss disputes in legal documents. It’s akin to carrying an umbrella. You hope you won’t need it, but if it starts raining, you’ll be glad you have it!
Create NDAs Early
Some business leaders don’t create NDAs until their business is growing, but this critical document should really be created and distributed before you share your business idea with anyone. The NDA becomes your first line of defense to protect your business, and it’s unfortunately easy for someone with deeper pockets to steal your idea and kick-start their own version.
Any contractor, employee, consultant, or business partner should sign a comprehensive NDA as soon as possible.