What is Finder’s Fee Agreement Drafting?
A finder’s fee agreement is a legal contract between a company and a finder who is compensated for introducing the company to a client, investor, or other business opportunity.
This contract must include key terms to specify exactly how the agreement will work, such as by detailing payment terms and what’s required of the finder.
Read the rest of this article to explore a finder’s fee agreement in greater detail, such as the core terms to include in it, how to draft it for clarity, and why you should consult with a qualified lawyer for assistance with the finder’s fee agreement drafting process.
What are Core Terms to Include in a Finder’s Fee Agreement?
A finder’s fee agreement usually contains the following terms to provide clarity and help both parties align their expectations.
- Parties. Identify the parties involved in the finder’s fee agreement. Provide their full legal names and entity types.
- Referral scope. Define what’s required, such as if the company wants the finder to locate specific investors or customer leads.
- Criteria or payment triggers. Specify conditions that the finder must meet so that they can earn compensation.
- Fee structure. The agreement must provide the fee the finder earns and how it will be paid.
- Contingency clause. It’s important to explain that the fee is only provided if the transaction is successful.
- Term and termination. State the duration of the agreement and how parties can end it.
What Additional Information Should You Include in a Finder’s Fee Agreement?
Once you’ve established the key terms in your finder’s fee agreement, there is additional information to outline so that there’s no risk of miscommunication between parties.
Provide Clear Payment Triggers
When establishing the payment triggers, you want to detail milestones by when the required payments will be made, such as when a deal closes, and include payment schedules.
Explain Criteria for Success
The agreement must specify how success is defined and what criteria must be met, such as signing a contract.
If the agreement includes the finder making introductions, you want to explain what counts as a valid introduction, such as that the finder must introduce the company to a party they didn’t already know.
Include a Non-Circumvention Clause
This clause helps to protect the finder in the agreement. It prevents the company from eliminating the finder to directly deal with the contact they’ve sourced and not paying the finder’s fee.
Consider Loose Ends at Termination
Your agreement should specify how to end the contract and how to deal with unfinished business, such as pending introductions to new investors. This will create a smoother agreement termination process.
Think About Expense Reimbursement Clauses
The company might want to compensate the finder for any expenses they pay during their work. This could include travel and marketing costs.
To prevent confusion over what expenses should be reimbursed, clearly state that costs require prior approval and finders should present receipts as proof.
While specifying what costs can be approved for reimbursement, you should also list what’s excluded.
Check for Legal Compliance
Your finder’s fee agreement must comply with all laws and requirements. This is especially essential if the finder in the agreement is going to introduce the company to investors or regulated companies.
How Does a Lawyer Help with Finder’s Fee Agreement Drafting?
Although you can draft a finder’s fee agreement without seeking legal guidance, you should consider hiring a lawyer as they have experience to help you draft a legally valid and clear contract that serves both parties’ interests.
A lawyer will help you in various ways during the agreement drafting process, such as by:
- Identifying the included parties and specifying their roles to prevent disputes.
- Defining the finder’s specific services, such as introducing customers or investors to the company.
- Helping you to establish how a qualifying introduction is defined. This prevents ambiguity.
- Outlining the fee structure, such as if the finder receives a flat fee or commission.
- Explaining when the finder’s fee becomes payable. This includes stating the payment triggers.
- Protecting confidential information that’s exchanged between parties.
- Addressing termination. A lawyer will outline exactly how the agreement can come to an end and what happens to unpaid fees or unfinished introductions to prevent disputes.
- Reviewing a finder’s fee agreement you’ve drafted. They’ll provide an in-depth legal review of the contract so you can feel confident it’s legal and clear.
Where to Find a Lawyer to Draft a Finder’s Fee Agreement
If you want to hire a lawyer to draft your finder’s fee agreement, you don’t have to cold-call traditional law firms in your area. By using an online legal platform such as ContractsCounsel, you’ll easily access qualified, reliable lawyers.
ContractsCounsel is one of the largest online legal marketplaces where you can easily connect with a curated network of vetted lawyers from the comfort of your home.
To request that a lawyer on the ContractsCounsel platform drafts your finder’s fee agreement, here are the steps to follow:
- Go to the ContractsCounsel marketplace, where it’s free to post your project.
- Mention some information about what you need to match with suitable lawyers, such as the type of services you require from a finder.
- Receive lawyer bids. You’ll receive multiple bids from lawyers on the platform who are ready and willing to help you.
- Review the lawyers’ profiles. The ContractsCounsel platform provides lawyer data to help you select the most suitable lawyer, such as the lawyers’ credentials, client ratings for previous projects, years of experience, and field of expertise.
- Connect with a lawyer and hire them to draft your finder’s fee agreement for a flat fee.
