Insurance Coverage Disputes

Why is it Important to have a Litigation Lawyer Review Contracts?

Companies, corporations, partnerships, and individuals, enter into contracts on a daily basis. Many companies use form contracts, standard language used repeatedly without updating or reviewing. General contractors generate standard subcontracts for trades, while owners and developers also use the same form contracts over and over. Many of these contracts are reviewed by corporate counsel, a lawyer familiar with the contracting parties and the contract’s terms.

If these contracts have been used continually, and they are reviewed by corporate counsel, why is it important to have them analyzed by a litigation lawyer? When a contract is breached, results in a harm to one of the contracting parties, or is unilaterally modified to one parties’ detriment, litigation may ensue. Even worse, a third party—usually a member of the public- may be injured or damaged due to the activities of one of the contracting parties, or even several of them.

In the unlikelihood event of a lawsuit arising from the parties’ conduct in relation to the contract, the language regarding indemnity, arbitration, attorneys’ fees and other related issues suddenly gains paramount importance. The parties’ responsibility to one another, and to third parties, may be dictated by outdated contract language.

This result occurs since how a contract is interpreted regarding the indemnity owed between the parties for responsibilities for injuries or damages to third parties, and how claims or suits are addressed by the contracting parties, is an evolving aspect of the law. Legal opinions vary regarding interpretation of indemnity clauses, attorneys’ fees clauses, and clauses prohibiting suits between the parties.

The companies’ corporate counsel is may be well versed in the required contract language to satisfy governmental regulations, general contractors’ form requirements, or even indemnity and attorneys’ fees language; however, unless the attorney regularly litigates indemnity clauses, attorneys’ fees clauses, prohibition of suits and arbitration clauses, along with other related clauses, he or she may not be familiar with the leading edge state of the law.

A litigation attorney, although not as familiar with the corporate structure or business of the company, may have greater and more recent experience with how judges, courts and governmental entities are currently interpreting those contractual clauses that become paramount once the parties have a contractual dispute, or whenever a third party is injured or damaged due to the contracting parties’ activities.

These factors also apply to employee training documents. Not only should the litigator be familiar with how the sufficiency of the training documents are interpreted by courts, but he or she may be able to analyze the liabilities created between various contracting parties.

As a corporate risk manager or even general counsel, consideration should be given to having a lawyer versed in litigation review your contracts and documents for the sole purpose of offering opinions regarding the current state of the law and how, if a lawsuit, injury or damages were to occur, the company or individual may be best protected and insulated from litigation.