By Patrick Murdoch

You may be a new business with a great idea, just waiting to sign that first contract that’s in the hands of your new attorney. Or perhaps you’re a young associate who wants to show the partner that you really know what you’re doing with a contract review. Either way, it’s essential that you make sure your time (and money) is spent wisely.

Nothing is worse than illegible contract review. Not only is a messy contract review a waste of time and money, but it also can be used against you. At best, the people on the other side of the contract may find you ill-prepared. At worst, they’ll consider you unknowledgeable and look to take advantage.

Luckily, there’s an easy remedy. Follow these five simple rules for marking up a contract, and you’ll be sure to use your time and your money wisely.

1. Always track your changes

Did we say always? This should be your most obvious and fundamental rule. When you receive a contract and want to make changes, it is crucial that changes are apparent. If you are using any modern word processor like Microsoft Word®, it is as easy as selecting “track changes” from the review menu. Any change you make is tracked, included something simple as adding a comma. Your changes will be readily and easily seen. 

Failure to track your changes can damage the the attorney/client relationship.

[tweetthis]Failure to track your changes can damage the the attorney/client relationship[/tweetthis]

Failure to track your changes can sometimes have dire consequences. If you’re lucky, the other side will think you sloppy and merely get annoyed. However, you also run the serious risk of creating distrust because it can look like you are trying to bury changes so that they won’t be found. For a client, this will be a red flag that could impact the attorney/client relationship. Neglecting to track changes is a simple mistake that can and should be avoided with the click of a mouse.

2. Avoid double red lines

The old “double red line.” Here’s the scenario – you’re tracking changes like you’re supposed to do and your reviewing a contract provision regarding liability. You’ve already made some changes and save your work before you talk to your client. After talking to your client, you’ve changed your mind and now go back to re-make those changes again. What results? The “double redline.” In a nutshell, don’t rewrite your own edits. Not only is it a mess to read, but you’ve likely revealed your thought process and your strategy to the other side. They now have another way to take the upper hand in this contract negotiation. Avoid this pitfall by making edits only once before you save your work. 

Problems with defined terms in a contract can make it ambiguous and even potentially unenforceable.

[tweetthis]Problems with defined terms in a contract can make it ambiguous and even potentially unenforceable[/tweetthis]

3. Avoid defined term errors

Lawyers love defined terms. That’s fine and done right, defined terms can make an agreement easier to read. The simple but important rule is that every place that the term or concept is found in the contract, that term or concept needs to be the same. Exactly the same. If you define the term “Agreement”, it needs to be capitalized through the document. If you decide to call someone an “Agent” in a lease, you need to call them an Agent throughout the lease. Problems with defined terms in a contract can make it ambiguous and even potentially unenforceable. It’s important to mean what you say and say what you mean. It takes time to go through the document and make sure you’ve defined consistently, and an attorney that’s sharp and on the ball will make sure these errors don’t exist.

4. Keep your marks to a minimum

It’s important and helpful to define terms, but don’t go overboard. If it’s clear that the term “lender” means any source of debt, leave it alone. Exhaustive lists of every alternative synonym to a term not only will make your agreement cumbersome to read, but if you leave a term off your exhaustive list, a term that would usually be interpreted correctly had you not gone overboard might be misconstrued. If a term can be interpreted the way you want it to be used, let it be. 

If the words in the contract get the deal done, don’t change them. Don’t replace whole paragraphs.

[tweetthis]If the words in the contract get the deal done, don’t change them. Don’t replace whole paragraphs[/tweetthis]

5. Work with the existing text

Also known as avoiding “wordsmithing.” While it is probably absolutely true that you can rewrite that paragraph better, if it gets the point across, leave it alone. Don’t replace whole paragraphs. Work with the existing contract language the best you can to get your point across. Your client wants the deal done. If the words in the contract get the deal done, don’t change them.

As they say, time is money, especially when it comes to lawyers. A lawyer is an important partner in getting a deal done. But sloppy work can help make sure that the deal doesn’t happen. A good attorney should spend much more time on resolving important issues than on re-writing them. Following these five essential but straightforward golden rules will make sure you’re on the right path.

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About the author

Patrick Murdoch

Patrick Murdoch

Patrick received his legal training while working as an attorney in the New York office of Shearman & Sterling LLP, a leading global law firm. Patrick left the world of “big law” to establish his own law firm and work hands on with startups and media companies operating in New York and abroad. Patrick provides counsel to clients in the U.K., Spain, Germany, Malaysia and Canada. His clients include tech startups, web developers, new media companies, music publishers, record labels and software companies.

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