Contracts and legal documents are essential for businesses to generate new business, collaborate with partners and hire employees, but can be expensive and time consuming. This is because the contract review process often requires legal expertise from a contract lawyer. The amount of money a company is required to spend on legal services is often excessive for small business owners. This article reviews the underlying costs of a contract and how to keep them under control.
Contract costs measured in time and money.
Tim Cummins, the Chief Executive of the International Association for Contract and Commercial Management stated that “contracts are the lifeblood of all businesses”. We’d have to agree. However, the cost of the contract and of the contracting process will vary based on the type of contract you are creating.
How much does a contract really cost?
However, the cost of business contracts has reached unprecedented levels. In an IACCM research report (2017), it was found that processing and reviewing a ‘basic everyday contract’ costs businesses $6,900 on average and organisations are spending, on average, 25% of their time contracting on contract creation. Employment contracts, NDAs and consultancy agreements are examples of everyday commercial contracts which need to be created properly and can take time to process regardless of whether a company has its own in-house legal team or a law firm on retainer.
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How do you calculate the cost of a contract?
Whilst this seems excessive, the IACCM reports that the average cost of contracting has risen by 38% in the last 6 years so it doesn't seem unreasonable to guess that these costs will only get higher. Whilst you might be reading this thinking that this does not apply to your startup or smaller business, inflated prices for contracts will still affect you.
- What about those free templates online you ask?
- Well wouldn’t you rather have confidence that your contract is up to date with changes in the law without having to review your templates every time there has been a change in the law?
- Couldn’t this time be better spent on other areas of your business?
- How easily can you realistically access those contracts when you need them?
- Do you know if your intellectual property rights are sufficiently protected?
The actual cost of a contract is therefore a combination of administrative and legal fees. Saving on contract attorney fees will not reduce your internal costs of managing contracts and processing legal work. Moreover, not investing in contract management can undermine your organisation's ability to grow faster.
How does Legislate help you keep your contract costs under control?
Legislate finally puts a ceiling in place, saving you significant time and costs. Our lawyer-approved contract templates cost a flat fee of £9.95 and:
- Include electronic signatures
- Are up to date with changes in the law.
- Offer your business that perfect balance between flexibility and stability.
- Can be created in minutes, allowing you to focus your attention on what really matters.
- Can be searched and found in a couple of minutes using e-commerce type search functionality
Users can create, negotiate, sign and manage simple contracts on the Legislate platform for a monthly subscription or by paying a fixed price of £9.95 per contract. Our patented technology also provides key insights across your contracts, allowing you to take a step back from monitoring when your employees might be requiring pay rises, for example. Learn what contracts you can Legislate and how Legislate works. For a fair, fast and affordable future sign up today.
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.