What is Finder’s Fee Agreement Review?
A finder’s fee agreement is a legal contract that stipulates how a company will compensate a finder for introducing them to clients or other business opportunities.
If your finder’s fee agreement has already been drafted, you should review it closely to ensure it protects your interests.
Read the rest of this article to know what key terms to pay attention to, how to review the agreement, and when to consult a lawyer to review a finder’s fee agreement.
What are Key Terms to Review in a Finder’s Fee Agreement?
There are important terms to pay attention to when reviewing a finder’s fee agreement, such as:
- Referral scope. You should check that the finder’s tasks are clearly explained so they know what’s expected of them.
- Fees. Explain exactly what the finder earns and how they will receive payment.
- Contingency. To prevent confusion, make sure that the agreement states that the fee will be paid when the specified activities are completed.
- Expenses. Check to see if any additional costs, such as travel, can be approved for reimbursal.
- Exclusivity. You want to ensure that the agreement specifies if the finder has exclusive rights or if the company can work with other finders.
How Do You Review a Finder’s Fee Agreement?
When reviewing a finder’s fee agreement, you should consider additional information to ensure that the contract is balanced and clear to prevent disputes.
Outline the Transaction
Check what’s covered in the transaction clause to determine if the finder’s fee applies to the initial transaction or other aspects of it, such as follow-on transactions or related deals. It’s important to specify this so that there’s no confusion over what’s included.
Specify what Activities are Eligible
Linked to the previous point, the finder’s fee agreement must specify what leads and introductions qualify for payment. By specifying this, you’ll prevent confusion between parties. Usually, the party being introduced to the company shouldn’t already be known by them.
Check the Non-Circumvention Clause
Your finder’s fee agreement must include this clause to prevent the company from bypassing the finder to deal with the contact they found directly and getting away with not paying the finder’s fee.
Don’t Neglect the Confidentiality Clause
Your agreement should include a confidentiality clause that maintains the privacy of all agreement terms and other information exchanged between parties during the agreement term.
This prevents a situation in which a finder shares the names of introduced parties to the company’s competitors, which can undermine the deal.
Ensure Agreement Execution
It’s important that both parties sign the finder’s fee agreement prior to the finder making introductions to the company. This step ensures that the transaction is legally enforceable and valid.
Consider the Tail Period and Termination
If a transaction is finalized after the finder’s fee agreement has ended, you want to check that there’s clarity over how long the finder will be eligible to receive their fee.
When reviewing the termination clause of your finder’s fee agreement, you should also check if contract termination affects any fees that have already been paid or are payable on a future date.
Should You Hire a Lawyer for Finder’s Fee Agreement Review?
If you need to review a finder’s fee agreement, it’s advisable to hire an experienced lawyer to help you. A lawyer will:
- Clarify what activities trigger the finder’s fee. This prevents payment disputes.
- Check that the fee calculation is accurate. For example, they’ll review if the percentage is clearly defined.
- Identify regulatory concerns. They’ll ensure that the arrangement is clear about any licensing and other regulatory requirements, depending on your specific transaction.
- Protect against unexpected liability. They’ll review all indemnification, warranty, and liability provisions so that you don’t expose yourself to hidden risks.
- Resolve any gaps in the agreement. They’ll check for any vague or ambiguous terms to ensure greater clarity for both parties. This also serves to prevent misunderstandings or disputes.
- Making revisions to the agreement. They’ll flag any issues in the agreement and revise them so that they’re legally sound and all terms accurately reflect the transaction.
Where to Find a Lawyer to Review a Finder’s Fee Agreement
If you want to hire a lawyer to review your finder’s fee agreement, you don’t have to cold-call traditional law firms in your location. Using an online legal platform such as ContractsCounsel makes it easy and convenient to access qualified, reliable lawyers from the comfort of your home.
ContractsCounsel is one of the largest online legal marketplaces where you can easily connect with a curated network of vetted lawyers. All lawyers on the platform have years of experience in contract drafting and review.
To request that a lawyer on the ContractsCounsel platform reviews your finder’s fee agreement, here are the steps to follow:
- Go to the ContractsCounsel marketplace, where it’s free to post your project.
- Include extra information. You can mention a few details about what you need to match with suitable lawyers, such as the type of services you require from a finder.
- Receive lawyer bids. Instead of searching for a lawyer, you’ll receive multiple bids from lawyers on the platform who are ready to assist you.
- Review the lawyers’ profiles. The ContractsCounsel platform provides lawyer data, such as the lawyers’ credentials, client ratings for previous projects, years of experience, and field of expertise. This ensures you can select the most suitable lawyer.
- Connect with a lawyer and hire them immediately to review your finder’s fee agreement for a flat fee. You can also hire them to draft your finder’s fee agreement, should this be required.
