What is a Management Agreement Review?
A management agreement is a document that’s signed between the owner of an asset, such as a company, and a manager who will take over its operations for a designated amount of time. It specifies terms, such as regarding services, compensation, and more.
There are various risks to be aware of with management agreements, such as conflict between parties and loss of authority or control, so it needs to be reviewed carefully to identify red flags.
Here’s what you should know about management agreements, such as what they contain, how to review them, and when to consult with a professional lawyer for a legal review.
What Does a Management Agreement Contain?
While there are various types of management agreements, such as property management agreements and contract management agreements, some terms you’ll typically find in a management agreement include the following:
- Service scope. This specifies the daily operations and other tasks that will be performed by the managing party.
- Compensation. This should include details about the payment structure, fees, and expense reimbursement.
- Term and termination. The length of the agreement should be confirmed as well as how the agreement can be terminated, such as if written notice is required.
- Reporting. Parties must agree to submit specific financial reports and approval processes for costs.
- Performance standards. These are essential to outline so that the manager can provide quality tasks that meet expectations.
- Dispute resolution. Your agreement should make provisions for future arguments or conflict. It should have a clear dispute-resolution clause that states how the disagreement can be settled, such as via mediation or arbitration.
How Can You Review a Management Agreement?
To ensure you have clarity about what the management agreement contains, you should review it in the following ways.
- Check the services. You want complete details of what the manager will provide in terms of services and timelines. This will ensure that both parties’ expectations are aligned.
- Verify payments. All payment structures, fees, and schedules must be clear and accurate to prevent disputes.
- How can the agreement be terminated? For a smooth exit, the agreement should contain a termination clause that details how either party can leave it. It’s also important to have clarity about what can trigger contract termination.
- Consider how much control you have. You want to be sure of when you’ll have authority and when the other party will have decision-making power, as this prevents role confusion.
- Check responsibilities. Check who is responsible for losses, damages, or legal fees. These can serve to minimize risks.
- Don’t ignore performance metrics. The agreement needs to outline clear and reasonable standards for performance, how these can be reported, and provide any remedies for failure.
- Protect your interests. Search for clauses that protect your business and interests, such as data and intellectual property protection, and fair clauses that aren’t one-sided to favor the other party.
- Note any vague language. If any wording in the contract is ambiguous or too general, it should be discussed with the other party to make it more specific. This will prevent misunderstandings.
- Search beyond the price. While compensation is usually what many people focus on, you should also check the agreement for hidden fees, late penalties, and price escalation.
- Ensure there are adequate reporting obligations. These will prevent the managed party from feeling like there’s not enough transparency about the manager’s duties.
- Negotiate any unfair terms. If you’d like to change some terms in the agreement, you should negotiate them with the other party. This is also a good opportunity in which to clear up any confusing or vague terms.
Should You Contact a Lawyer for a Management Agreement Review?
You don’t always have to hire a lawyer to review your management agreement, especially if it’s simple and straightforward. However, if it’s complex or you’re concerned about some of its terms, it’s worth consulting with a professional lawyer.
When you work with a lawyer for a review of your management agreement, they’ll help you by:
- Spotting unusual or unfair terms, while considering all industry norms and regulations.
- Protecting your rights and lowering your risk of disputes, saving you time and money.
- Clearing up any vague, general, or broad terms so that the contract is specific and legally solid.
- Negotiating with the other party to ensure more favorable terms, whether that includes fair termination terms or lower fees.
- Spotting any hidden risks, such as ownership red flags that remove your authority.
- Giving you peace of mind that your contract is legal and fair before you sign it (when issues are easier to resolve).
How to Book a Management Agreement Review with a Lawyer
If you want to schedule a management agreement review with a reputable lawyer, finding a reputable lawyer doesn’t have to take a lot of time. Online legal platforms make it much easier.
An example of one is ContractsCounsel, one of the biggest online legal marketplaces that connect clients with vetted, experienced lawyers who draft and review contracts and provide legal guidance.
To get a management agreement review from a lawyer on ContractsCounsel, all you have to do is follow these easy steps.
1. Post your project for free on the ContractsCounsel marketplace.
2. Include some additional information about what you require so lawyers know how to help you quickly and efficiently.
3. Wait to receive lawyer bids. You’ll receive multiple bids from lawyers on the platform who want to assist you.
4. Review the lawyers' profiles based on various data that’s accessible on the platform, such as their location, years of experience, field of expertise, and client ratings for previous projects completed on the platform.
5. Choose the best lawyer for your purposes, and get peace of mind that your contract is professional, fair, and legal before you sign it.
