The Business Owner's Guide To Keeping Legal Costs Under Control

Commercial transactions can generate substantial legal costs when they involve complex or poorly planned agreements. With the right preparation and strategic approach, businesses can streamline transactions, use legal advice more efficiently, and avoid unnecessary expenses.

Commercial transactions often involve significant legal costs, particularly when agreements are complex or poorly planned. While legal advice is essential, businesses can take practical steps to manage commercial transactions efficiently and control legal costs, avoiding unnecessary expenses along the way.

1. Start with Clear Objectives

Legal costs increase when deal goals are unclear. Before engaging counsel, businesses should define their objectives, key terms, risk tolerance, and timelines. Clear instructions allow a business lawyer to focus on what matters most instead of spending time on avoidable revisions and exploratory work. Discussion between counsel and client at the outset on the objectives to be achieved, the potential pathways to achieving the objectives given the risks, legal budget and value proposition of the project or transaction is invaluable.

Using legal cost control strategies at this stage ensures that fees are aligned with priorities, helping reduce legal fees while protecting the company's interests.

2. Use Term Sheets to Reduce Drafting Time

Term sheets or letters of intent help align the parties on pricing, structure, and major terms before full contracts are drafted. When used properly, these documents reduce misunderstandings, narrow negotiations, and limit the number of revisions, saving both time and money.

A commercial agreement legal review at the term sheet stage can significantly reduce commercial contract legal costs later in the process.

3. Preparation

There is no greater way to reduce legal costs than to have all relevant information and documentation in order and well organized at the outset. Multiple communications do nothing other than significantly increasing the time required by your legal team to get the job done. If all questions can be asked or documents provided in a single communication this will save time for all concerned. Much time wastage can be avoided if a project or transaction commenced with all relevant documentation and information in place and any due diligence established early on.

4. Stay Organized and Responsive

Delays in providing information or feedback increase commercial transaction legal costs. Assigning a single internal point of contact, responding promptly, and consolidating comments from different team members where there is not a single point of contact helps lawyers work efficiently and avoid duplicated effort.

This is one of the simplest ways to keep legal fees predictable and implement effective legal budgeting for businesses.

5. Focus on Material Risk

Trying to eliminate every possible risk often leads to excessive legal drafting and higher fees. Cost-effective legal services for businesses prioritize high-impact issues, such as:

• Payment terms
• Liability allocation
• Termination rights
• Dispute resolution mechanisms

Minor risks can often be managed through operational practices rather than extensive legal language. This approach is a key part of managing legal costs in commercial agreements.

6. Use Standard Documents Where Possible

For routine transactions, standardized agreements can significantly reduce commercial contracts legal fees. While templates should always be reviewed and tailored, starting from an existing framework is far more efficient than drafting from scratch. This approach is particularly effective for repeat business transactions and routine service agreements.

7. Address Issues Early

Many cost overruns occur when legal issues are addressed late in the transaction. Early review by a lawyer helps identify problems in advance, reduces pressure at closing, and avoids expensive last-minute revisions.

Knowing how to control legal costs in a commercial transaction often comes down to early planning and proactive legal involvement.

Final Thoughts

Managing commercial transactions to control legal costs is about preparation, efficiency, and prioritization. Clear planning, early alignment, and focusing on material risks help businesses achieve their objectives while keeping legal costs predictable and manageable.

For Canadian businesses, consulting a business contract lawyer or conducting a commercial agreement legal review can provide additional oversight and further reduce legal fees in complex  transactions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.