Rethink Your Relationship With Legal Agreements: Deal With Change and Conflict In A Healthy Way
Updated: Jul 5, 2021
From boosting your bottom line and expanding your business to hiring the most talented team and improving every relationship you enter into, this series offers a comprehensive look at how effective legal agreements can enhance just about every aspect of your operation.
If you are like most business owners, you’ve likely been presented with legal documents that contained terms you didn’t fully understand. You may have even signed documents that you didn’t completely read because you were intimidated by the confusing legalese. There have surely been times when a client or team member has signed a legal document you presented to them, even though they didn’t fully read or understand what they were signing.
Unfortunately, such scenarios are far too common. But it doesn’t have to be, rather than creating confusion and anxiety, the agreement process should do the exact opposite.
Indeed, the agreement process is your opportunity for creating clarity on your relationships, policies, and procedures, and delivery of your product or service. Take it from us, if you avoid reviewing, rethinking, and revamping your agreement process, you are not only putting your assets and business at risk, you are short-changing yourself, your work, and your relationships.
In addition to creating clarity, when done right, the agreement process is ultimately about creating connection, consistency, setting boundaries, and establishing expectations. If your current agreement process isn’t providing you with these outcomes, then this article is for you.
Contracts vs Agreements: What’s the Difference?
Is there really a difference between a contract and an agreement? If you don’t put it in writing, you may have a contract, but a contract and an agreement are actually two different things. A great agreement that is often overlooked in writing requires these elements of agreement as well:
Being on the same page.
This is how many business owners end up in unnecessary, expensive and messy conflicts. They have contracts, but not true agreements. To help ensure you don’t end up in the same situation, we recommend you rethink your relationship to legal agreements by implementing the following best practices.
What Do You Want From the Relationship?
First of all, before you ever sign a contract or enter into any business agreement or arrangement, get clear on what you actually want from the relationship. In doing so, it’s vital that you are completely honest with yourself—and be willing to be completely honest with the other person as well.
When it’s unclear what you want from the relationship, be willing to seek support in order to become clear. This might mean finding a safe space to talk through what you think you want from the relationship. Or it could mean speaking out loud about your unsurfaced assumptions and receiving reflective feedback. It may also look like asking questions you may not have initially thought about.
Achieving this kind of clarity is one of the major differences between using generic template agreements you find online versus working with a business lawyer who serves as your trusted advisor. As your trusted advisor, we will support you to get clear, test your assumptions, and surface what you cannot see. This allows you to get out of your head and achieve a truly objective perspective from a position that you may not be fully aware of you can if you are solely relying on a generic online agreement.
If you are resistant to receiving counseling to create high-quality legal agreements or working with a lawyer who is not a great counselor and they are only providing you with templates full of confusing blanket terms, you are missing out on one of the most significant opportunities a business owner can have. The counseling process we provide allows you to work through all aspects of a business relationship that may bring up uncomfortable feelings ahead of time, rather than having those uncomfortable feelings surface down the road, resulting in expensive conflicts that could have easily been avoided with the proper planning.
Start With The Ideal Outcome In Mind
Once you are clear, putting in place the legal agreement is easy. Follow these steps below to gain clarity on the foundation of the agreement:
Start by identifying your desired outcome of the business agreement. If you could see into the future and achieve the ideal result the relationship is to provide, what would be true for it to be successful? To understand the ideal outcome, first, imagine yourself celebrating a future in which the relationship met all expectations. Suppose you worked together in all the best ways, and you accomplished all of your goals together. What would need to happen for everything to go that well? That’s what you want to document in your agreements.
If you are hiring a team member, for example, how will they know they are succeeding? Based on what that success looks like, you should establish clear, measurable outcomes for the role, with specific metrics for success, along with time frames for specific goals and objectives to be achieved. Then, include that information in the employment agreement, so it’s abundantly clear what the expectations for the position are for the team member and for you.
On the other hand, you also need to think about how you would work with the team member if things didn’t work out as expected. What would happen if the team member needs to leave, can’t perform, or isn’t performing for some reason? Are you agreeing to any payment beyond just payment for performance? If so, that needs to be documented, and if not, that also needs to be documented. Next, what are the reasons you can terminate the relationship? On what basis can the team member walk away? What is each of you entitled to in the event the relationship needs to end? All of these scenarios need to be thought through and planned for during the agreement process.
Along these same lines, whenever you bring on a new client, you should establish similar metrics of success for that relationship and document them in your client service agreement. What would need to happen for the engagement to be fully complete? How will you know when it’s time for the relationship to transition to the next level? What happens if the agreement is not followed or the scope of work changes?
Lastly, and perhaps most importantly, you should similarly outline your payment terms in your agreement: how much you get paid, how and when you expect to be paid, along with how late payments and non-payment will be handled. The more clarity you can achieve around these outcomes and document what the ideal outcomes would look like, the better things will be for both you and your client.
Next week, in part two, we’ll discuss how you can use the agreement process to more effectively deal with the inevitable changes that take place as your business relationships evolve and your original agreements need to be renegotiated.
For now, make the commitment to never sign or send another legal agreement again before it’s been reviewed by us, your Family Business Lawyer ™. This is a foundation of great business practice, and it’s one we support every client with. If you have current agreements that are either in place or ones that need to be signed, contact us. We can review what you do have and support you with wise counsel on your entire agreement process. It could be the make-it-or-break-it difference for your business.
This article is a service of Christopher J Reel, esq., Family Business Lawyer™. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Schedule a time to chat with us today.