Having practised for over 25 years, I know that there are certain misconceptions about drafting commercial agreements:
- All that a lawyer does to produce an agreement is just take a precedent off the shelf and insert the names and addresses of the parties. In the area of intellectual property (“IP”) agreements, it couldn’t be further from the truth. Apart from a few exceptions, most IP agreements eg licences, distribution agreements, software agreements etc, involve several hours of legal work. They are bespoke agreements, specifically tailored to the client’s requirements. Although a lawyer may base the agreement on existing agreements, the new agreement has to be drafted for the new situation. This involves talking to the client to find out what they want in their agreement, conceptualising the new agreement, choosing from a range of clauses and amending them, free hand drafting new clauses and checking the final product.
- It doesn’t matter which side drafts the agreement – it is all the same agreement – and it will save costs to let the other side draft the agreement. This can be a dangerous assumption to make. In every agreement there are two sides. A lawyer will normally draft an agreement to benefit their side – slanting it in favour of their client. Sometimes the first draft can be very one-sided and unfair to the other side, or the agreement may not be well-drafted and is unclear. Not all lawyers are equally skilled at drafting agreements. In cases such as these, it can easily cost as much to try and correct the agreement as it would to re-draft it from scratch. My motto is always to “get hold of the drafting” if at all possible, so that I can draft for the benefit of my client.
- The parties are in agreement over the deal so that it will be OK and cost-effective for them to use the one lawyer. This is also a dangerous assumption. Lawyers have ethical duties to avoid conflicts of interest and acting for both sides of a transaction is a classic conflict of interests. As set out in 2 above, there are two sides to every agreement, and an option that will benefit one side will usually be to the detriment of the other. This is why, if the two sides come to a lawyer’s office, the lawyer will normally have to turn one party away to seek legal representation elsewhere.
Commercial agreements, such as IP agreements, are complex beasts. They will govern the relationship between the parties in relation to valuable IP rights, perhaps for several years. A well-drafted agreement will clearly set out the rights and responsibilities of each party and will hopefully avoid future disputes because everyone knows where they stand. IP agreements need to be drafted with care by an experienced IP practitioner working solely in the interests of their client.
This blog entry provides general information only, and is not intended as legal advice specific to your circumstances. Please seek the advice of a legal professional if you have any particular questions.
© Margaret Ryan, Melbourne, Australia, 2019