Why Contract Planning for Lawyers is essential
It is essential for Lawyers to carry out Contract Planning if they want to draft a fit-for-purpose Contract. This means they need to plan properly BEFORE they begin drafting the Contract.
Unless they do so, Lawyers risk their Contract being unsuitable, and it may not work properly for the relevant project, sale or purchase. It may also not properly protect the Lawyer's organisation or Client from risk.
Key questions Lawyers can ask in the Contract Planning Stage
Lawyers should ask a number of questions while they carry out Contract Planning:
- Why am I drafting this Contract?
- What is the Contract's purpose?
- What am I trying to do with the Contract?
- Do I need additional information from my Instructing Officer or Client?
The risk if Lawyers just start drafting the Contract is that they may not have thought through these foundational questions. Their Contract could then end up being confused and contradictory (and may not even achieve its intended purpose).
7 Steps before you start Drafting a Contract
Lawyers should never just sit down and start drafting a Contract (or any document, for that matter)!
The following steps are critical for Lawyers to ensure there is a solid foundation to the Contract and that it ends up achieving the purpose for which it is needed.
Whether you use a precedent, a template, or an example document to draft a Contract, or whether you draft a Contract from scratch, I have learned over my 20+ years of Contracting that there are steps you need to take BEFORE you dive in and begin drafting.
1. Check whether your instructions are adequate
Sometimes you will have received the instructions from your Instructing Officer (likely an internal Contracts Professional), and other times from your Client.
Never be afraid to ask questions of either of them.
In particular, ask "Why are we doing this? What is the purpose of the contract?" If you don't get enough information, keep asking!
10 times out of 10, your Instructing Officer or Client will have additional information that they haven’t given you, and which is critical for the Contract you are drafting. A good question to ask is, “Is there anything else I should know in order to draft this contract so it works the best for you and your organisation?”
Gather any necessary supporting documents or information.
Make sure you find out the duration of the Contract (including whether it is a fixed term contract or expires after performance of all the works/services).
2. Plan on paper
Once you have complete instructions from your Instructing Officer or Client, grab paper and a pen.
Use highlighters and symbols. Write a list.
Let's do some planning. Trust me, old-school paper does work better for planning than your computer - try it and see!
In my experience...
Throughout my Legal career and over the past 20+ years, I was trained to work largely on paper when planning and drafting contracts. While most of us these days use Word or other computer programs, there are a number of advantages to using paper in these initial stages (including that it engages a different part of your brain and allows you to think about the planning at a higher level).
3. Scope of Works/Scope of Services
Determine the scope of the Contract, to avoid any misunderstandings or disputes down the track.
In my opinion, although you may not personally draft the technical Scope of Works or Scope of Services (which may also be called a Specification, Statement of Requirements etc), you should review it to make sure the scope is clear and to check that there are no conflicting commercial terms included in the draft.
4. Identify the type of Contract and Project Delivery Method
Write down what type of Contract this will be (eg Design and Construct, Services Agreement, Supply and Installation Contract). This is a crucial step before you draft a Contract.
Choose the appropriate Project Delivery Method and form of contract to be used. If you've been advised about the chosen Project Delivery Method, consider whether it is the right one for the particular parties – do they understand what it requires of them?
That's your job as the Lawyer to advise on Project Delivery Methods and the best form of Contract, help make the decisions, and then plan and draft the Contract to ensure it is fit for the purpose of that Project Delivery Method.
Also consider whether you will use a standard form contract or a bespoke (purpose-written contract).
5. Write down the parties and list their key responsibilities during the project
Consider what industry the parties are in and which industry-specific issues need to be considered.
Identify the laws, regulations and industry standards that apply to the contract, the parties and the works/services?
Depending on the nature of the contract, there may be certain legal or regulatory requirements that must be addressed. It is important to research and consider these requirements in order to ensure compliance
6. Determine the preferred risk allocation
Determine who will bear the risk for particular events should they occur during the Contract term. Some of the answers may come from your organisation's playbook or preferred negotiating stances, and some from common industry practices.
Map preferred risk allocation for the draft Contract out in a table for larger projects.
You may, of course, need to change this risk allocation during the course of negotiations.
7. Identify the legislative requirements that will apply
What are the laws, regulations and industry standards that apply to the contract, the parties and the works/services?
Depending on the nature of the contract, there may be certain legal or regulatory requirements that must be addressed. It is important to research and consider these requirements in order to ensure compliance.
Once you've gathered all the information and asked all the necessary questions, THEN you can start drafting!
Check out our Contract Planning Guide for more information.
