How to exchange contracts faster – and spend less on legal fees!
It sounds like a double-win. And why would a lawyer suggest how you might save on legal fees? Abigail Mitchell, Head of Commercial Property, explains
Is there a simple way to make sure we exchange contracts faster?
There is! In our experience one of the biggest delays in reaching exchange is in when lawyers get involved in negotiating terms that could have been agreed between the parties before they had been instructed.
What’s the best way of dealing with that, then?
Whilst you don’t always need formal Heads of Terms, it’s always best if there is a clear set of terms agreed between the parties in writing at the outset (marked “Subject to Contract”). Often that will be with the help of experienced agents or surveyors. We’re always happy to help at that stage in advising on any points that arise – a couple of conversations at that point can save hours of negotiation later.
Why does it make such a difference?
Once the lawyers are instructed, one of them has to prepare an initial draft. If the terms are unclear, they will typically prepare a draft that is favourable to their client. Often a small point in the agreed terms can develop into several paragraphs of detailed drafting.
When that draft goes to the other party’s solicitor, they will explain it to their client who will realises that that is not what they had intended (and often the point has not been discussed between the parties). Sometimes this can lead to ill feeling creeping in or to suggestions that the other lawyer is “scoring points” or “re-writing the deal”.
Often, the second lawyer will go back and strike out the offending clauses and then rewrite them so that they favour their client. Usually that doesn’t just apply to one clause, but to several – and the process involves many drafts going backwards and forwards, with weeks being added to the process, causing frustration all round.
That won’t always affect fees, though, will it, especially if we’re working on a fixed fee?
Even if lawyers work on fixed fees, this will ultimately have an impact. If you work with your lawyers as a team, you can ensure that the process works smoothly, so that your lawyers can provide a cost effective service to you.
If you regularly instruct them on transactions where clear terms are agreed at the outset, so that they can draft documents that reflect an agreed deal, they should be able to price their work to match (including any fixed fee scale). If they are regularly having to get involved in the negation of deals that are unclear, then they will need to price their fixed fees to reflect that.