Ready to elevate your startup game? Dive into this power-packed podcast where Attorney Murray unveils the keys to conquering the startup world through strategic contract management.
Join us as Murray delves into the vital role contracts play in the startup ecosystem, offering invaluable insights on how to navigate the complex web of legalities effectively.
Discover the ABCs of contracts – from the essential elements that make them rock-solid to the diverse array of contract types that can shape your business destiny. Murray shares battle-tested negotiation strategies, revealing the secrets to understanding your value proposition, finding the perfect balance between priorities and flexibility, and building lasting relationships that stand the test of time.
Beware of the contract pitfalls! Uncover common stumbling blocks like vague payment terms, murky scopes of work, and the ever-dreaded intellectual property maze. Murray’s expert guidance ensures you steer clear of these traps on your journey to success.
Worried about the cost of legal counsel? Fear not! Murray spills the beans on affordable legal options, from online platforms to law school clinics and subscription-based services.
Cap off the conversation with Murray’s compelling case for legal counsel – from mitigating risks and making strategic decisions to achieving streamlined dispute resolution.
Don’t miss this opportunity to revolutionize your startup’s legal game! Tune in now and empower your business with the knowledge and strategies to thrive in the competitive startup landscape.
#StartupContracts #LegalStrategies #BusinessSuccess
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About the Own Your Genius Podcast
The Own Your Genius podcast is the perfect mix of business, law, and mindset to help black entrepreneurs succeed in business and life.
Join Attorney LaConya Murray each month as she and guest share their entrepreneurial journey, tricks of the trade, and their secrets to getting out of their own way to succeed.
Inspired by her grandmother, the community bootlegger Attorney Murray‘s passion for helping entrepreneurs started early. Today she helps entrepreneurs throughout the country protect their brand, content, and ideas through trademarks, copyrights, and business development.
Until next week, keep building your business, growing your brand, and owning your genius!
Hello, Geniuses. We are two weeks from Christmas, something like that, coming toward the end of December. And we’re just going to dive straight into today’s subject. And today we are diving deep into the world of contracts. And contracts, they’re a crucial aspect of building your strong legal foundation, especially as a startup. What we’re going to focus on today is navigating contracts as a startup. But as a quick reminder, if you have not subscribed to our podcast, if you have not shared our podcast with anyone, I left it to review. Please do so if you have found this content valuable, especially as we’re going into the new year. We just want to see if we’re providing value for you guys. Now let’s jump into it.
Welcome back to the Only Genius podcast where we discuss building businesses, growing brands and what else? Only your genius. I’m your host, Attorney LaConya Murray, owner of Off The Mark IP Solutions. Off the Mark is a boutique intellectual property firm representing innovative entrepreneurs aka geniuses who are looking to protect their brand and grow their business with ongoing legal support and business mentorship. We have a good one for you today, so let’s get started.
The contracts are the backbone of any business. What I love about contracts is they set the expectations, and they protect your interests while you’re working with third parties. What exactly is a contract? A contract is a mutual agreement between the parties that dictates each party’s obligation. Contracts come in various forms. You have employment contracts where one party is obligated to manage specific responsibilities in exchange for the other party’s obligation to provide employment, pay, and certain benefits. Then you also have things like client contracts, where the service providers are obligated to provide certain services, and clients are obligated to pay the required fee. They’re also required to be responsive and to provide necessary documents so the service provider can actually provide the service. Contracts define the terms of your business relationship, and they help avoid any type of misunderstandings and disputes down the road, but if there is a written dispute, guess what? If you have a properly written agreement, then the contract is going to make it easier to resolve that dispute. What makes a valid contract? And I’ll tell you, not all contracts are created equal. Some things, just because it’s written on paper, don’t necessarily mean that it’s a contract.
A valid contract is going to have three things. It’s going to have an offer, it’s going to have acceptance of that offer, and it’s going to have consideration. An offer is, I will do X, you know? Acceptance of that offer is I accept your X, I accept your offer and then consideration is something of value. A lot of times when we speak of consideration people think of money but it can be time that’s by borrowing contracts you know I’ll exchange this service, I’ll provide this service if you will provide this service or I’ll provide this service if you give me this product there’s no exchange of money but it’s still an exchange of value you need about a contract. If there’s not an offer, if that offer is not accepted and there’s no exchange of value, then there’s not a contract. I will also say this, sometimes people will make an offer. At that offer, you can make a counteroffer. I do this a lot. When someone gives me a contract and I’ll mark through it. So that marking through it is my counteroffer meaning I accept all the terms except for this term. That doesn’t mean that there’s a contract because now I made a counteroffer. The person that made the original offer has to review the contract and decide whether or not they want to continue with their offer based on me not accepting a certain term. You have the offer, you look at it, you make a change to it, that’s now a counteroffer, and then it goes back to the original party for them to decide whether they want to accept that offer and the consideration that’s tied to that offer. So yeah, that’s what makes a valid contract.
Let’s just give a real-world example of why contracts are important just so you can see. Just imagine that you are a consultant, and you are working with a third party. But without a written contract, the scope of your work, payment terms, project deadlines, they can be open to interpretation. And we both know that the way the people interpret things can be totally different, especially depending on what side of the contract you’re on, if you’re the service provider or if you’re the client receiving the service. But a well-crafted contract can take care of all those uncertainties. So that’s why I love written contracts.
Now that we talked about the basics, let’s talk a little bit about negotiation because I always tell people whenever someone gives you a contract, that’s not the final say. It doesn’t have to be the end of everything. Negotiation is an art. There’s an art and you have to strike this crucial balance between being assertive, standing your ground, and being flexible. How do you like to stand your ground and be flexible? Let’s get into it.
Now, I’m going to give you three things to consider as you’re negotiating. And if you can go back to episode, I can’t remember the episode number, but I’ll drop it into the chat. I want to say we have an episode on negotiation with Jacqueline Twillie. If you’re not following her, you must follow her. But anyway, let’s explore some negotiation strategies. When you’re trying to strike this balance between being assertive and being flexible, it can kind of be like a little delicate dance and mastering it is really the key to securing favorable terms for your business. And here are three essential negotiation strategies that we’re going to talk about today. The first one is, whenever you go into a negotiation, do you have to understand your value proposition? And as a business owner, you’ve probably heard value proposition over and over and over again. What are you bringing to the table? Why are you valuable? How can you make this partnership, disagreement, this whatever business relationship better? And this is going to be helpful whether you’re pitching your services to a client or whether you’re negotiating a partnership. Be clear on what your value proposition is because if not then you won’t get everything that you’re asking. You have to know your strengths, you have to know your unique selling points, you must know how your proposal aligns with the needs of the other party and that’s crucial.
Napoleon Hill’s Think and Grow Rich, he mentions in that book one of the things that stood out to me is when we’re talking to people, we have this habit of saying and speaking on ‘I’ basis, right? ‘Me, me, me.’ And most often the other person starts to tune out because they’re not too interested. Like they care about you, but it’s like, yeah, okay, this is about you. You bring them in by talking about what you’re doing can benefit them. And that’s all we’re talking about in this understanding your value proposition. How can what I have bring you value? How can it help you to where you want to go? That’s how you understand your unique value proposition. That is also going to require you to do some homework on the third party. What are the pain points? What do they need? Cause how can you have your unique value proposition if you don’t know what they need? Like even though you bring value, the value that you’re bringing might not be of use to that person if that’s not what they need. You have to do some homework too, in order to understand your unique value proposition. When you have this knowledge, it’s not only going to boost your confidence because you’re going into the negotiation prepared.
But it’s also on positioning as someone who knows their worth. And that’s very, I wanted to say, like first thing that popped in my mind was sexy, but it’s very valuable. It’s very, can’t think of the word that I’m looking for, but I feel like it brings another level of respect from the party you’re negotiating with when you come in there with that knowledge, with that understanding and with that confidence. Number one, I would say, understand your unique value proposition. The second thing when you’re negotiating, I want you to prioritize but be flexible. That’s where that whole be assertive, but also be flexible. That’s where that comes in too. Once you prioritize what you want, but also be flexible. Don’t be so hard at it that the whole negotiation is thrown out like divorce cases. I don’t do divorce cases, but I’m in lawyer groups and they’re talking about clients who are getting divorced, and they can’t finalize this divorce because they’re fighting over the most random things like a $2 lamp. I’m not signing this agreement because he has the $2 lamp and I want the $2 lamp. Be flexible, right? Because when you talk about negotiation, it’s often a give and take and it’s important for you to go in knowing what you want to come out with with this negotiation. You want to make sure you know that, but you also have to be flexible on how you’re going to obtain that. The way that you kind of play this dance is you go in there being very clear on the elements of the contracts are essential for your business success and then which areas are going to leave room for adjustments. This is a great example because I see this often. Let’s say you’re hired to present or do a presentation for an organization, and you have a strict ‘no recording ‘policy but the person or the organization that you’re working for is adamant that they need a recording for they are going to have some people who won’t be able to attend the presentation and they want them to get that value that you’re presenting. Now you could stand your ground and be like, no, there’s absolutely no way that we’re recording my presentation. That’s the hard no for me. Or you can negotiate and you can say, hey, I’ll be glad to record this presentation and give you access to it for a limited time for this fee, which will allow you to have everyone in your organization be able to watch this presentation. So essentially, you can negotiate a licensing opportunity for your presentation. And it still has that, because I understand the reason you don’t want to record the presentation is that you don’t want them to be able to share it and just have this unlimited access to this information. But now under this negotiation and under these terms, they have limited access for a limited time and so, win-win situation. So that’s how you can stand your ground and be flexible at the same time. That’s just one example for that.
This flexibility, what it’s going to do is going to foster an atmosphere of collaboration. It’s going to increase the likelihood of you guys finding common ground, and it’s going to help you with point number three, which is building long-term relationships. Because when you go into these negotiations, it’s not just for the now. You want to approach negotiations with a long-term perspective. You want to build lasting relationships and it’s more often more valuable than securing a one-time favorable deal. To build this long-term relationship, you want to emphasize the mutual benefits and express a commitment to the success of both parties. You don’t want to go into it again, it’s all about you. How can we make this relationship work for the both of us? This collaborative approach not only helps in reaching agreements, but it also lays the groundwork for potential future collaborations. What do you think? Are you ready to negotiate? Do you feel a little comfortable when people give you contracts? And I always say, just because someone gives you a contract, you don’t have to sign that contract as it is. There’s always room for negotiation at some point. And I think these strategies that we just talked about can significantly impact the outcome of your business deals. And just remember, negotiation is not just about getting what you want, it’s about creating a win-win situation for everybody involved.
As we’re navigating these contracts, we now know what the basic contract structure is, like the basic contract law. We know how to negotiate contracts. And the other thing I want to talk about are some of the pitfalls that you need to avoid when we’re talking about contracts. So even with the best intentions, entrepreneurs can find themselves in legal hot water due to poorly drafted and misunderstood contracts. Let me give you a few examples. The first one I see is payment terms that are very vague. The contract might do something like state the fee, but it fails to say when the payment is due and what happens if the payment is late. The business owner assumes that, hey, I send them a contract, they’re going to send me payment right away. And the person receiving the contract was like, okay, great, I received this contract, I have 30 days, I have 60 days, I have 90 days, whatever, to pay it. I just need to let them know that I owe them money and I know that I owe them money and when it gets paid it gets paid. But if you do that from a business standpoint, you’re going to start facing cash flow problems, you’re going to struggle to meet your financial obligations, and then that relationship with the client becomes strained but you’re like doing work and you’re like these jokers ain’t paid me yet and we don’t want that. And to avoid all that we want to make sure you have clearly outlined payment terms that can prevent misunderstandings and maintain a healthy cash flow for your business.
The second pitfall that I see startups fall into having a contract that’s very vague about the scope of work that’s to be done. And a lot of times more often than not they might have, hey this is the work that’s supposed to be done and I’ll just use our services as an example. We provide trademark registration for clients. The trademark process is so intense, there’s so many steps to it, it’s very important for us to be clear on what our services include and what they don’t include. In our contract not only do we spell out the services that are included. But we also say what’s not included because from a client’s point of view, they don’t know that there’s extra work to require. You file the application, then there’s an office action that’s received. They don’t understand that that office action takes additional work that’s going to require legal research and legal writing to respond to. They don’t understand and they just assume that it’s included in the services. You had to be clear on not only what services you’re providing, but also what services you’re not providing. And again, when you set that expectation, the only thing it’s going to do is make your relationship with your client stronger. Because you’re not going to be any type of misunderstandings. They’re going to be like, oh yeah, we discussed this already. What I found is when you have lack of clarity, it’s going to lead to disagreements about what’s included in the services and what should be considered an additional cost. And then the business owner ends up providing more services than they initially anticipated without getting paid because they want to maintain the relationship, but now they are salty about it and it’s going to impact the business’s overall profitability. And like I said, it’s going to potentially damage that client relationship because now you’re all upset, and the client has a bad taste in their mouth because why do I have to fight you and keep talking to you about providing the service that should be included? And you’re like, why am I doing extra work that I’m not getting paid for?
A third pitfall that I see business owners get into a lot is intellectual property. Let’s talk about intellectual property. Suppose that a business hires a freelance designer to create a logo or maybe write a copy for them. And this is a common scenario because everyone has their gifts and design and writing is not all of our gifts, right? When you have a contract that doesn’t define who owns the right to that design or to that work, it can be a problem for the business owner because as we talked about with copyrights, the person that creates it is the person that owns it. So now, because there’s no language in the contract that assigns those designers that work to you as the business owner, the designer down the line, they have the right to enforce their ownership and say, hey, you can’t use this work for that purpose, or I need additional money if you’re going to do it for this purpose. When you clearly outline intellectual property rights in the contract, it can prevent costly legal battles. There’s a… I can’t remember the podcast episode, but we talked about the people out in New Orleans that were working with the designer. And when they decided to stop paying for one service, the designer was like, well, fine then you’re going to rebrand after they spent like 10 and $20,000 with this company. Now they need to rebrand because they don’t want them to do this one service. To avoid all of that, get it in writing, be very clear about who owns what, and that’ll solve that. And these are just a few examples that underscore like the importance of having precision and clarity in contracts.
You can avoid these legal pitfalls, it requires a thorough understanding of contract terms and the implications they may have, which is why it’s important for you to seek legal counsel. When we’re talking about navigating contracts with startups, the question that I get a lot is, hey, when is the time for me to bring in a professional? When should I hire an attorney? And I would say that seeking legal counsel might seem like an unnecessary expense but think of it as an investment in the longevity of your business, because that’s what it is. What I want to talk about now is because hiring an attorney can be costly, let’s talk about three ways that you can afford legal counsel. Then we’re going to talk about some of the benefits, why it’s important that you do what it takes to make sure you have some legal help. The first thing I would say is online platforms. You’ve got many service providers that will provide templates, guides, and even DIY courses for a fraction of the cost of hiring a traditional legal attorney. These platforms can assist with contract drafting, compliance, and general legal issues. Markedlegal, if you’ve been to markedlegal.com, that is one of those platforms that offers these products. And notice I said products, not services, because typically on these platforms, you’re not getting that one-on-one service that you would with a traditional attorney, but you’re still getting some of what you need.
The second thing I would tell people, or a second cost effective way. And something that a lot of people don’t think about is if you have law schools in your area, see if they have legal clinics and pro bono services that can help you with the things you need for your small businesses. A lot of times these organizations will offer free or low-cost consultations, and these services can provide essential advice on various legal matters and offer valuable resources for businesses on a budget. It’d be a great starting point for those businesses that are just starting out. You can check if you have law schools, even if you don’t have a law school in your area, check your local bar association and see if they have a pro bono clinic and that offers help for small business owners. Another way that you can get the legal help that you need is through subscription based legal services and it’s becoming increasingly more popular. For a fixed fee, businesses can access a range of legal services. This model allows for small and micro business owners to budget effectively knowing that they have the legal support they need without the whole thing about, oh, how much is this going to cost me?
My firm, Off The Mark IP Solutions, provides ongoing legal support on a subscription basis. And for a flat fee that’s paid annually, our clients receive free consultations, free document review, access to Mark Legal where our contract templates lay our product, and they receive discounts on legal services. And I can tell you that providing this service has been a lifeline, literally saving businesses for our clients. They love it so much. And I love, they love it. I guess the best thing ever. Let’s just talk about why it’s the best thing ever, right? Not necessarily why ongoing legal support is the best thing ever, but it is. But let’s talk about the benefits of having legal counsel for your small and micro business. The first thing is risk mitigation. Having legal counsel helps in identifying and mitigating potential risks, whether it’s reviewing contracts, ensuring compliance with regulations, or even navigating legal disputes. Having a legal professional on your side can prevent issues that might otherwise threaten your business. Knowing what risks are associated with the moves that you want to take to grow and scale your business is really crucial. And that’s one of the things that we provide in our ongoing legal support service, Genius Insider, we provide quarterly audits, because I do recommend that you speak with your attorney on at least a quarterly basis, just so that you can stay up to date with what those potential risks are.
I would also say one of the best benefits that our members get from the ongoing legal support is going to be the strategic decision making. You no longer have to do this by yourself. Legal counsel can contribute to strategic decision making. They offer insights into the legal implications of business choices. They help owners make informed decisions that align with both their vision and legal requirements. And this proactive approach helps prevent legal challenges in the future and one of the things that my clients love, because oftentimes my clients are solopreneurs, they love being able to speak with us about their business and just having that second person to talk things out with. And the third reason that you will want to hire an attorney and make sure that you work with the attorney is, in the event of a dispute, having legal counsel streamlines the resolution process, especially if there’s another attorney, there’s an attorney on the other side, because they’re more likely to speak more candidly with another attorney than they are with you.
Whether it’s negotiations, whether it’s mediation or representation in court, if needed, having that legal professional, having that attorney, it’s going to ensure that your business interests are protected and that conflicts are resolved efficiently. What do you think? I think those are some good reasons to have an attorney on your team. But like I said earlier, you might not have the opportunity to start there because of your situation, but there’s something out there. Look for those low-cost entry ways to get in the help you need, but don’t stay there. Especially if you have big visions, big goals for your business, you want to make sure you have a legal foundation to support those goals. We covered the basics on contracts. We talked about negotiation strategies, pitfalls to avoid, and the importance of seeking legal counsel. Remember, building a strong legal foundation is not just about protecting your business.
It’s about setting the stage for growth and success of that business. And that’s a wrap.
Let’s take this conversation over to the Markedlegal Community. I want you to share this episode with three people and have them meet you there. But you know what to do before you go. Make sure you hit that subscribe button and rate the podcast. Until next week, I want you to keep building your business, growing your brand, and owning your genius.