Christina Scalera is the founder of The Contract Shop. On this episode of the Salesman Podcast, Christina explains –
- Whether salespeople should be signing contracts on behalf of the company they work for
- Why legal is always slow to come back to salespeople
- How to speed up contract negotiations
Featured on this episode:
Resources:
- TheContractShop.com
- Christina on LinkedIn
Transcript
Will Barron:
This episode of the show is brought to you from the Sales Man at HubSpot Studio. Coming up on today’s episode of the Sales Man podcast.
Christina Scalera:
A contract is it’s basically a materialisation of the relationship that you’re trying to cultivate with that other party or person. There’s two quick little things I want to mention there too. Typically, legal and marketing are, I mean, they’re enemies inside a company because marketing’s always trying to do something. And legal’s like, why did you say that? Why did you do that?
Will Barron:
Hello Salivation, my name is Will Barron. I’m the host of the salesman podcast, the worlds most downloaded B2B sale show, and today’s episode. We have Christina Scalera. You can find it over to thecontract.shop.com and contracts are exactly what we’re talking about in this episode. You’re probably signing them all the time. You’re probably not even reading them. And you probably don’t think you’re liable because you assume that you’re signing on behalf of the organisation that you work for. Well, Christina shares that, that isn’t always the case. And Christina also shares an experience that you probably have been through. I’ve been through, I give some anecdotes in this episode of contracts that we’ve gone through recently that go to a marketing team or HR team, whoever you’re selling into, and then the bop off to legal and they don’t come back for six months and then they come back completely different to what you expected in the first place.
Will Barron:
Christina explains exactly what happens when they got to legal and how you can speed up that process. You get more deals done, faster. Everything that we talk about as always is available in the show notes for this episode over@salesman.org. So with that said, let’s jump right into it. Christina, welcome to the salesman podcast.
Christina Scalera:
Yeah. Thank you for having me. Will.
Will Barron:
You’re more than welcome. I’m glad to have you on. And I think you’re going to offer an incredible service to the audience today. We’re going to talk about contracts, the basics of them. What is a contract we’re going to start with a few questions like that, but the reason why it is, that I’ve just done a and, we’ll talk about this in a second, I’ve just signed a whole bunch of contracts, I had to have a little bit of help with it.
What is a Contract? · [02:15]
Will Barron:
Loads of stuff would have passed me by and I would have signed a contract that would not have been as useful as what it was in the end, just because of habits. I signed things all the time. I know when I was in medical device sales, I would signed contracts on the organization’s behalf all of the time. And I’d never read them. I know I’m assuming I’m expecting someone else within the organisation has done that work for me, but that isn’t always the case. So we’ll get into all that good stuff in a second. But first, Christina, is there a definition of what a contract is? Can it just be two people agreeing something on a napkin and signing it? What needs to be in a contract for it to be, I guess, useful and also enforceable as well.
“A contract is basically a memorialization of the relationship that you’re trying to cultivate with that other party or person.” – Christina Scalera · [02:33]
Christina Scalera:
Right, really good question. I come at contracts from the same angle that most of you guys do with sales, which is a contract, it’s basically a materialisation of the relationship that you’re trying to cultivate with that other party or person. So I think at its core, that’s what we’re talking about is the same thing that you are dealing with every day in sales is a relationship. And just to answer your question about what’s enforceable to have a legally valid contract, you only need three things. So it doesn’t matter how this is conveyed. It can be through action. It can be on the back of a napkin. You just need someone to make some sort of offer. Hey, I would like to hire you and you have to have some sort of acceptance. So for example, that person’s like, yes, that sounds great. I would love to take this job on this sounds like a great opportunity.
“You don’t even have to have a written contract to technically have a legally enforceable agreement” – Christina Scalera · [03:55]
Christina Scalera:
And then there has to be something that each side of that agreement loses. So for example, the traditional arrangement is the person who’s providing services is losing their time. And then the person who is hired during the service based consultant or whatever that looks like they’re losing money and in exchange for that time. So they’re both losing something of value to them. And that’s, what’s legally called consideration. So offer acceptance consideration. You have all three of those. It doesn’t matter if it’s, action-based such as I’m like, Hey, Will, would you like to paint my house? And you say nothing to me, you don’t text me back. You don’t email me. You just show up on Monday, you start painting my house. That’s considered an acceptance. So you don’t even have to have a written contract to technically have a legally enforceable agreement, which is why I think written contracts are so important because obviously there’s a lot more that can be conveyed even on the back of a napkin. Then just you showing up to paint my house. Its a lot of-
Will Barron:
I don’t think you’d want me to paint your house. It’d be the one, the worst. Is that something you’d do with it at the moment? Is that Freudian slips up top of mind for you?
Christina Scalera:
No, that’s actually the example they use in law school, but yeah, I don’t even have a house to paint. So I live in the city.
Will Barron:
I’d be painting your windows where you live.
Christina Scalera:
Right.
Key Reasons Why Written Contracts are Crucial During Sales Negotiations · [04:35]
Will Barron:
And so, right. So with that said that there’s a tonne to go here because one of the, I want to cover what it is and we’ll formalise it. And who’s responsible for this in a second, but you just leaned on a really important point. We talk about communication all the time in sales to get a deal done. You’ve everyone’s got to agree. To negotiate in the negotiation training that we teach. A lot of it is just make everything logical. Take the emotion out of it, get everything written down on paper. Ron was sliding bits of paper across the table so that everyone very literally agrees on what’s written on the page. And it seems like contracts are no exception to this, right? Do we all, are we leaving ourselves open to interpretation, to issues to people coming back and complaining later on buyer’s remorse, all these things that can kick us in the arse as salespeople. If we don’t do our job appropriate up front, if we don’t get a written contract, if we lean on verbal contracts or if we try and just invoice someone and not write anything down at all.
Christina Scalera:
Yeah. I mean, that’s really dependent on the situation like typical lawyer answer, right? But the main thing to think about there, and I think what you’re really asking is, when do you actually need a written contract? And the two situations, I always tell people, you need something written down and really fully developing what your responsibilities and obligations are for each side. That agreement, the two situations are when the relationship matters. So I see a lot of people that enter into business with someone in their family, maybe a sister or a parent or something. And they’re like, well they have to love me and their family. Well, that’s also where things start to go south. So we want to make sure that we have a contract to essentially act as a scapegoat if something goes wrong. Because remember if it’s a written contract, people can point back to that and say, that’s what you agreed to.
“Anytime it has to do with relationships or money, there should be some sort of pretty well-documented arrangement in the form of a contract.” – Christina Scalera · [07:01]
Christina Scalera:
You didn’t agree necessarily to the situation that whatever bungle we got in, but you agreed to the terms of this agreement or this contract. And so we’re going to lean on that because you said yes to this. And then the other situation where it helps a lot is any time there’s any kind of transference of money, because there’s just too much that can go wrong. There’s too much. He said, she said, that could happen if you don’t actually write down where that money is coming from, where it’s going and how any kind of incoming money will be split up if that’s appropriate for the arrangement. So anytime it has to do with relationships or money, there should be some sort of pretty well-documented arrangement in the form of a contract.
Client Versus Service Provider: Who is Responsible for Drafting Contracts in the B2B Space? · [07:08]
Will Barron:
And this is going to seem like a stupid question, but I’ll flesh it out with an anecdote here. Who’s responsible for all of this. Now, from my perspective, when we are doing ad sales on the podcast, typically I will do some kind of, we call like a partnership agreement to a sponsorship agreement, send it over. It just lists the exactly what they’re going to get. We both signed it and I stay in control of that ratio. Now, when I’m doing larger deals, like we’ve just done a massive deal with HubSpot CRM organisation, they did everything and they would not budge on things. And there was stuff in the contract that I was like, well, it’d be great if we could just twist and turn it like, Nope, legal says this, this and this. So whose responsibility is it? Especially in the B2B space to have that, I guess, start the conversation and then provide the paperwork.
Christina Scalera:
Typically, it falls on the person who’s providing the service, not the person who’s paying. So that makes sense. In some of the situations you talked about, it would be very strange for a consultant to expect someone to show up to this, the arrangement with their own client contract ready. That being said, I do see more and more of that nowadays. It’s just because I think people are worried about protecting their own interests if they’re the client to that relationship. And they want to make sure that obviously everything that they’re interested in protecting, whether that’s money or the relationship or their time, those things are all important. So they’ll show up sometimes with a contract to the situation in the situation that you talked about with HubSpot, it’s very common for people to see with these larger companies, like maybe you’ve ever signed a lease agreement with a big leasing agency, right?
Christina Scalera:
It’s like a multinational corporation that has like an apartment building. And that’s the one that just comes to mind because those are the ones that you see where they say like, absolutely not. We’re not changing anything. Kind of like what your experience was. It sounds like, and there’s two things that I’ve done to get around that, first is everything is negotiable. I think you know that, but the second is to reinforce that negotiation with some sort of benefit to the other side. So if you can ever bring your reasoning for changing a provision, it can really help to go a long way because a lot of times, yeah, like it’s easy to toss it back and be like, well, legal says this or legal says, this is like absolute terms. But if you can actually show how something that you would like to change in one of these contracts, they throw at you how it would benefit them too.
Christina Scalera:
That can also help to go a long way just to have legal, take a second, look at that and to show them that this is something that is going to help both of you. This is the best way to speed up contract negotiations. And that’s why it should be changed to whatever you’re insisting on. And then I think there’s some other changes that companies try to get away with that are not always what I would consider ethical. So for example, and of course, I’m not going to give legal advice on the podcast because I don’t know everybody who’s listening their particular situation. But what I will say is there’s typically in like hold harmless, right? Like you sign an agreement.
Christina Scalera:
It’s like, I agree to defend and indemnify defendant hold harmless this company, that word defend is really problematic. And that’s something that is always top of mind for me. When I see these iron clad, big corporate agreements, I always ask to get that removed because I don’t know what that corporation’s doing. I’m not going to agree to defend them. And so that’s, there’s certain little sticking points in contracts that I’ve found even big corporations will take out if it’s a little word like that. Or again, if you can frame it as a benefit for them.
The “Legal Said” Excuse During Contract Negotiations · [10:30]
Will Barron:
Which has been really valuable for the audience here Christina and I won’t name the organisation, but it’s not HubSpot. And they’re probably sponsoring this episode of the show now we’ve, done an even bigger deal with these guys right, and it just paints them in a bit of a bad light. Which it shouldn’t because it’s just business. And I found that there was one thing in this contract, and this is the contract that I had to get a friend to look over. And he agreed. He came back, said look, don’t sign this until this, this and this change. So I went back to this brand and I said, Hey, I can’t sign this until this, this and this. And they said well, they use this, I know this is what I’m asking you do. People use, legal said this, and legal said that as an excuse, can that be BS? Can that be people scapegoating the legal team as a reason for not kind of moving forward to things, because what happened in the end was, I just said, I’m not doing it.
Will Barron:
The deal’s done. We’re walking out of here. And then with in a a couple of days. They came back and the contract was more appropriately written. And it wasn’t even a big deal. It was just the fact that they refused to change one thing. So I was like, Hey, this sets the tone of the relationship moving forward. And now that there’s a little bit of leeway, everyone was happy. So do, whether it’s a purchasing team or a procurement team executives, whoever is on the other end of these contracts that salespeople are trying to negotiate. Do they just fob everything off onto the legal team? Do they BS that the legal team says that things can’t be changed when maybe they can?
“Any legitimate company that’s running, even if they’re privately held, they’re not publicly traded and that kind of thing. Even at that level, they’re still employing some sort of legal team, whether that’s in-house or outside counsel or some combination of both.” – Christina Scalera · [12:25]
Christina Scalera:
I don’t know for sure. Cause I don’t work in these companies, but I would imagine that there is some of that happening. I used to work in-house at a big international toy company. It’s a privately held company, but we used to work on licencing agreements all the time. And that was the whole point of my position there is to negotiate what wasn’t going to be included in those licencing agreements with our vendors and things like that. So I can tell you that any legitimate company that’s running, even if they’re privately held, they’re not publicly traded and that kind of thing. Even at that level, they’re still employing some sort of legal team, whether that’s in-house like the one I was in or outside counsel is what it’s called when they hire the firm or some combination of both.
Christina Scalera:
Typically, that’s actually how we ran and what the in-house counsel, their whole job is to make these small tweaks and changes. And you know, it might take a little bit longer. So if there is a time sensitive deal that can obviously affect this, which is also why it’s important for you to approach someone with changes and understanding, some reasoning behind why those changes are important, because it helps to push that through. If the lawyer sees this as just semantics and I can change this and this, this makes sense, great. But if you’re putting all the work back on that legal team, of course, you’re not going to get as great of a result as you were hoping for, because you’re asking them now to do extra work on top of whatever else they have and they’re taking time out of their schedule, which already is full of other things that they’re working on.
Christina Scalera:
So they’re less likely to get to it in a timely manner. So I don’t know for sure if other companies are doing this, but I can say that was definitely the scapegoat excuse that the company I worked for would sometimes just throw out and be like we got to send this to legal and that would dissuade some people from asking for certain things, because obviously that would take more time. That would be potentially more cost, more costly for them with their lawyers and their team, because typically they had a lawyer themselves, even if they were a small company. So yeah, I don’t know how it works for everybody. I think it’s going to be different for everyone, but that there’s no doubt that that’s happening at some level for some people. So just make it as advantageous to yourself by just assuming that they’re going to come back and say no. Just like in sales, overcoming that objection and giving them a good reason to go forward with the result that you would like to see instead.
Will Barron:
For sure. So I want to get into later on in the show, how salespeople can really help the legal team, what they can do to make their jobs easier and to smooth over these deals. But before that, and I don’t want to sound like we’re just piling on top of people like your ex your old career, and people in these organisations. But sometimes it does feel like Christina, that things go into this black hole of legal they’re in there for two weeks and then randomly they get popped back out. Now, when I deal with the marketing team, I would deal with a sales team, I would deal with even the CFO finance, into direct finance. And it seems to be, it’s easier to communicate. It’s easier to understand what’s happening. It’s clearly cause there’s multiple levels of expertise that go in the legal space that someone whose perhaps listen to the show myself included aren’t familiar with.
Why Legal Departments Are Being Asked to Approve Contracts Faster · [15:13]
Will Barron:
So what is actually happening? What happens when I say, I’d like these changes to the contract and it goes off to this legal bubble, whether that’s in-house or out of house what’s actually happening. And not that we’re complaining that it takes so long, we’re just trying to understand, I want to get from you the context of why it can take a few weeks to make these changes.
Christina Scalera:
Yeah, for sure. So from my experience, and again, it’s going to be different at different companies, but what would happen with us is we would typically get, you would email the marketing team. Who’s the person you have a key point of contact there, you’re working with them and you email them back the changes and they would email it to the legal team, which would be in my case, I think there were three of us lawyers and three or four lawyers there and then a couple assistants and some paralegals. And so what would happen is the assistants would go through that inbox every day, which was getting hundreds of emails a day, whether that was marketing or, not just from the marketing department, but newsletters, things like that on top of any kind of requests and the assistants would flag what’s important as high priority.
Christina Scalera:
And then they would flag medium, low priority, and typically requests like this get flagged as low priority because it’s very little risk to the company who you’re working with for them not to get back to you, right? You either do the deal or you don’t with them. They haven’t lost out on a lot versus like high priority is something that is actively in litigation. And has deadlines that if they’re missed, there could be millions of dollars fined.
Will Barron:
Our toys are spontaneously combusting that’s a priority for you, right?
Christina Scalera:
Yeah. I don’t think we ever had that happen, but we did have some pretty gnarly litigation going on at one point. But, yeah so I think that’s what’s happening is it just gets marked low priority and then things start getting piled on top of it. So just like anything else, you have to be really diligent about staying on top of it. And I mean, I’m shameless. Like I would, if I needed to get in touch with someone, I would go on LinkedIn and I would find out who was in the legal department. Cause lawyers love telling you their lawyers. So go find them on LinkedIn and find a different way to contact them.
Christina Scalera:
I mean, it’s no skin off your back, especially if you’re like, Hey, I have this important thing. It’s not going to take that much time. You know? And actually in that situation, I would be looking for like the legal assistant to that lawyer because they’re going to be the ones who want to help you if you’re scratching their back or if you’re just able to frame it in a way that helps them to see how important this is potentially to that legal department, even if it’s not that important or if they just like you, right.
Christina Scalera:
Like you see, they have a star wars hat on or something and you connect over that. So there’s lots of different ways that you can be creative. That was actually what I did in law school is I, to get internships. I figured out this was before LinkedIn, but I figured out who the general councils were of these companies. And so I almost got an internship at Neiman Marcus in Dallas and I, it ended up not working out, but I still had a great two hour phone call with the general counsel of that company. Just giving me advice on my career, because this is the backdoor approach that I took to write letters to people and just kind of explain why I wanted to help them. And then they wanted to help me out genuinely in return. So getting creative like that is definitely not off limits. And I know that you guys know LinkedIn. So.
Actionable Steps to Improve Communication Between Salespeople and the Legal Department · [18:30]
Will Barron:
And let me ask you this Christina, this is again a weird question to ask perhaps, but is that appropriate. If you were an assistant paralegal, whoever, perhaps within the hierarchy below the main person that we’d like to deal with, would you feel uncomfortable if a salesperson and we’re not talking about used car sales person, they’re trying to flog you random stuff. We’re talking about people doing large deal sizes, complex deals, where there are multiple stakeholders in the organisation. Would that be, would that get people’s backs up? Would that be the normal thing? Is that, is that common to happen?
“The only hesitation that legal department would ever have in getting back to you via that extracurricular means is they’re worried that you have your own attorney. So, they can’t talk to you if you’re represented, they need to talk to your attorney.” – Christina Scalera · [19:15]
Christina Scalera:
No don’t think it’s common. I would suggest it as an extreme measure. If you followed up via email and things like that, and they’re not getting back to you, but I would say also the only hesitation that legal department would ever have in getting back to you via that extracurricular means is they’re worried that you have your own attorney, so they can’t talk to you if you’re represented, they need to talk to your attorney. So where there’s attorneys involved, typically we favour wherever this is, the UK, the US we want those attorneys to talk to each other. The parties are allowed to talk to each other too. This is an active litigation. So it’s not like that big of a deal for them to talk to you.
Christina Scalera:
But typically they’re going to look out for that. So that would be a good not a red herring, but what would you call like, I don’t know, like a normal hearing, this is something that you want to plant in the email where you’re saying I’m not represented and I haven’t gotten an answer and I’m looking for this. Is there any way you can help me? This is what I’d like to do for you in exchange so that would be-
Will Barron:
I would have never even have considered that. And some of the organisations I’ve worked for one medical device company was a public company. They definitely had a massive legal team because they were going through some shenanigans when I worked for them at the sea level and the audience will know who this is, it was Olympus. When I worked for them, there was all kinds of shenanigans with the Japanese mafia being involved and all kinds of stuff. So-
Christina Scalera:
I don’t know anything about that [crosstalk 00:20:30] that’s interesting.
Will Barron:
Our deals going in and out to probably even our own internal legal team, were probably marked unimportant at that point. So, yeah. So that’s probably not an unreasonable example because this we’ve got stakeholders, both sides, right? Which you just evidently proved there. We’ve got our customers legal team, we’ve our own legal team, and I’ve had the same experience, the black box of legal, it just absorbs the thing. And it’s probably cause as I said, it’s just not a priority for, it’s priority for us. It’s not a priority for them in that moment. I think that was really valuable to give us context to understand that. So we’ve almost said [crosstalk 00:21:03] go on, go on.
“Typically, legal and marketing are like enemies inside a company because marketing’s always trying to do something and legal is like, why did you say that? Why did you do that?” – Christina Scalera · [21:05]
Christina Scalera:
There’s two quick little things I want to mention there too. Typically, legal and marketing are like, I mean, they’re enemies inside a company because marketing’s always trying to do something and legal is like, why did you say that? Why did you do that? So sometimes there can be some internal tension there. And then the second thing I would also say is just like anything else in sales, try to find one person that can be your point person. So if you do happen to get someone on the phone early on or a brand approaches you try to get somebody on your team that you have as a contact and not just legal@company.com. So those are just two other quick little things.
Why is Marketing the Most Disliked Department in Most Organisations? · [21:40]
Will Barron:
That is interesting you mention. Legal and marketing being at loggerheads, right? And I can assume that sales is less of a pain in the arse because you can pass it down to that individual said it as opposed to it’s printed on a website that 20,000 people a day are seeing, because I know sales and marketing are often at loggerheads because marketing want sale people to say stuff that is seemingly untrue or nonsensical or a real human would not say a lot of the stuff that marketing try and get real human salespeople to say. So do you have any thoughts or experience on that dynamic? Because it seems like marketing is just a pain in the arse for everyone.
Christina Scalera:
Yeah, I know, right. Well, my dad was in sales at PepsiCo and he, I’ll deny it, although I’m recorded now, but he always used to say it’s so annoying. We make all the money marketing just spends it.
Will Barron:
Yeah that makes sense.
Christina Scalera:
I don’t know how it is at other companies. But what I will say is that I think it really depends on who is in charge of that marketing department. Cause I remember there was this amazing woman and Amber Kurjie who was in charge of Mar, she’s actually the one who came up with the, what is it called? The Superbowl, what is it, the commercial thing where someone wins a million dollars for coming up with the best Superbowl commercial. She’s the one who came up with that idea. And so when she was in charge, I know it was a much better dynamic and they loved each other.
Christina Scalera:
But, but yeah, I think that’s not the norm. I think most companies are at, fighting with marketing, whether it’s legal, who’s like, you can’t say this on packaging, we’re literally going to get sued. Or if it’s sales who, maybe has the sentiment that marketing, spending all the money that they’re making. So I’m not sure how it works in most companies. I can only speak to the ones that I’ve been inside or have seen inside a little bit. But yeah I definitely think that there is, that’s something that’s underrated that we just take for granted, but there are more nuanced things happening here than just, illegal won’t get back to you.
Will Barron:
Yep, and there’s perhaps some of the problem and it’s a communication issue of if I’m dealing with someone in marketing, this unnamed company that probably is sponsoring the show, right this moment at the, that isn’t a HubSpot. The, I’m dealing with someone in the marketing. I’m dealing with the VP of marketing at a massive organisation. And I feel like you were making this clear for me now that there is other things at play, but everything, budget, done, budget hundreds thousand dollars done, no problem sign off on it. It’s the. What else? Marketing collateral. Okay. There’s a team of four people working on it right now. It’s going to be with you next week. All of these amazing video assets, branding assets, social media assets, done. But the contract the VPs, well, I don’t know, nothing to do with me.
How Salespeople can Negotiate, Offer Value, and Build Rapport with People from the Legal Department · [24:25]
Will Barron:
And then just palms it off and says, again, it says, it goes into this black hole of legal, but now as you’re describing it, it seems like marketing could be some of the issue here, which it makes total sense. So without that said, with that said, then Christina, what can sales people do? So you mentioned this idea of giving it exchange, giving value, if you want things to be done quicker or just getting the person to like you a little bit. So they’ll do your favour. Is there anything tactical that salespeople can do or is there even less tactical, is anything genuinely useful that salespeople can do and just deal makers, it could be a sales person. It could be an executive trying to get a contract signed. Is there anything that we can do, again both I guess, internally and externally to make your job easier.
Christina Scalera:
To make the legal job easier? You’re saying.
Will Barron:
So legal goes, oh, it’s Will, we really enjoy working with this dude. We’ll just get it done. He’s made everything seamless he’s given us this, this and this, and it’s a joy to work with him. Is there anything that we can do, there might not be anything, but is there any leverage points that we have to be able to help legal to make things easier on their side? We’re trying to speed up contract negotiations when dealing with legal teams.
Christina Scalera:
Yeah. I mean, I feel like I’ve covered a lot of it. I mean, short of taking them out for lunch or something lawyers love to eat out, get out of the office for an hour every day. So yeah. I don’t know necessarily that there’s anything else that I would add to that conversation, but I just want to encourage people to continue to be creative about this. If this is something that they’re really, there’s a deal that’s very important to them, right? Like you would almost treat it like a client just to seal that deal and make sure that obviously it’s not a one-sided agreement, which we can get into the legality of that because sometimes those one-sided agreements are, will oftentimes they’re not enforceable.
Christina Scalera:
So there’s not anything I would add to that conversation per se, just continue to get after them, maybe come up with a system for yourself. If you’re not a very organised person, I think it helps to have some sort of calendar reminder or like sales docketing system to see where you’re at in the process with all these different brand deals and things like that, that you might be trying to close. So those are all really helpful tools to have in your arsenal, which you’re probably already using in some other way with your business and your B2B sales.
Will Barron:
For sure, it seems like we should almost be adding when we got longstanding contracts, contracts that are changing regularly being renewed regularly. It seems like a sales nation, everyone listening, we should be adding if we can legal contacts into the CRM, keeping them in the loop of things. And even if we are low priority, at least having a line of communication to see where we’re at with things. Now, this is clearly not going to be legal advice from yourself because you’re not studying the case. And it massively be subjective, but this is a dynamic that I’ve always not, I’ve not really understood.
How to Protect Yourself When Signing B2B Contracts on Behalf of Your Organization · [27:06]
Will Barron:
It would be great if you could explain it to the best of your ability, if I’m representing an organisation maybe as a multi-billion dollar enterprise, whatever it is, or it’s a small, medium sized company, and we do a deal, I’ve experienced this, I’m putting my name down a lot of the time on this. I’m not saying I’m signing, I guess, on behalf of an organisation. So it might be say employee, yada, yada salesperson, business development individual am. I roping myself in legally to anything here by using my own signature on a B2B contract where these are two separate legal entities. And I’m kind of in the midst of things.
Christina Scalera:
Yeah, I think it depends if it’s your name, comma, the company that you’re representing and your position there at the company, or it even says representative of company, then it’s still the company that is the one who’s liable for performing anything in that contract. You’re just the actual physical person, right? Because we don’t have robots signing contracts yet. I think we’re getting closer with blockchain, but anyway, so you’re the actual physical person who that company has vetted and put forth as their representative. And they’re trusting you to do whatever it is that you’ve agreed to do with them. So for example, if you’ve agreed to read the contract and make sure to flag anything that they need to know about, and then you don’t do that and you sign it, I don’t think you’re necessarily going to be in trouble as far as that, that the other party to that contract is involved, is concerned. But for your own company that you’re representing, they might have some major issues with that.
Christina Scalera:
And they might ask you why you didn’t do the job that you were assigned to do. And obviously there’re repercussions for that. So as far as, yeah, I mean, to answer your question, as far as that goes, I think it would be, I’d be more concerned about the company I’m representing and doing a good job on their behalf. Than for example, the other side of that agreement.
Will Barron:
So very literally practically for the audience, we should be looking for those words on the contract of a representative of, or the company name, just, you’re not signing your own name and nothing else on there. That’s important, right?
Christina Scalera:
Yeah. And especially for your small business owners who are listening, this is the number one mistake I see. Everybody goes out, they get their LLC or whatever it’s called in your respective countries. And my company name, my official company name, let’s just call it Christina Scalera, LLC. And instead of signing on behalf of my company, you’re right. They sign as a personal entity. So I just signed my name and then that’s it. So the more proper way to sign in order to be signing as my company to make my company liable, for performing the services or paying or whatever it is that I’ve agreed to do is to sign Christina sclera, comma owner, or principal or whatever your position is, representative of Christina Scalera, LLC. And so I’m a really big stickler about that.
Christina Scalera:
If someone sends me a contract to me personally, I always make sure that they actually put the party like this agreement is signed by blah, blah, blah, and Christina Scalera, LLC, because typically they will send it to you personally. And it’s kind of a pain in the butt because you have to send it back and say, Hey, can you change this? Whatever. But in the long run, if anything were to happen, my company has insurance for the actions of my company. I don’t have personal insurance for the actions of my company. And so that’s why that’s important.
Will Barron:
Is it, Sorry, this is, that alone is worth the admission to this episode, Christina, in that I’ve worked for, well, I said multi-billion dollar medical device companies. I’ve signed all kinds of things. I’ve never read. I’ve never bought the organisation after the fact. And again, medical device companies the lawsuits here could be in the millions. We’re not faffing around at this point. So that is incredibly valuable for the audience. And some of that, I need to go look at some contracts I’ve signed recently and just double down and make sure that’s the case-
Christina Scalera:
You can always make an amendment.
Christina Explains Why The Legal Team’s Primary Mandate is to Protect the Company and Not the Employees · [31:01]
Will Barron:
Sure, sure. And with that then we’ll wrap up with this, Christina, what happens if this, what happens if us, does hit the fan a little bit with this, do we go running to our own legal team? Are they there to protect us or are they there to protect the company that we work for? And we’re out of luck. How does this work? If we do sign something, we signed a contract. It goes, it goes belly up. And seemingly we’re wrapped up and on the line for some of this.
“The legal team that works in-house or counsel that’s hired to protect that company, all of those lawyers they’re working for the company. So the client is actually the corporation, not the individual people in that corporation.” – Christina Scalera · [32:13]
Christina Scalera:
Yeah. I’m glad you asked this. A lot of CEOs of big companies don’t even know this, or they’re just in denial, but the legal team that works in-house or counsel that’s hired to protect that company, all of those lawyers they’re working for the company. So the client is actually the corporation, not the individual people in that corporation. So for example, if a CEO, like if the CEO of Enron tells their lawyers or their legal team, that they want to do something, to shred the books or something, the legal team, it’s their job to protect that company and say, this is actually illegal. We don’t want the company who is the real client here getting in trouble. We have to report the CEO to the proper authorities and a lot of people don’t know that. So yeah, the company, even though it’s not walking around breathing, talking, it is the client. When you have an in-house legal team, or if a firm is retained to represent that company, you have to have your own. [crosstalk 00:32:23]
What is an Entity? · [32:24]
Will Barron:
It seems like as a small business owner, I understand some of this having a kind of limited liability company here in the UK, but can you just to finally wrap up that here, could you explain this idea of a company being an entity? What is, are we as a company, a person, do they have rights? And what does this look like when we assign in agreements between entity to entity? What is an entity? And it kind of layman’s term.
“In its simplest terms, an entity is a new person in the eyes of the law. So the law is going to treat it as someone that can be sued.” – Christina Scalera · [32:55]
Christina Scalera:
Sure. I feel like this is like a trick question, like a pop question for a law school test, but essentially in its simplest terms, an entity is a new person in the form in the eyes of the law. So the law is going to treat it as someone that can be sued. If they can be a defendant, it can be someone who owes taxes. It can be someone who can enter into these agreements. It is someone who obviously as a representative of lots of different interests and things like that. So in the eyes of the law, you really are creating a new person, but with a huge asterisk there this is actually like something of legal debate is whether a company who pollutes can be charged as a person instead of a company.
Christina Scalera:
So this is a gross oversimplification. I just want to caveat that for the lawyer who’s in the audience, who’s listening and he or she is like, no, that’s not good. But yes. So in, in the eyes of the law, it is a new person who pays taxes separate and apart from you personally, who has different rights and obligations and obviously has different interests potentially than even the owners of the company. Even if it’s like a one person company.
Will Barron:
Sure.
Christina Scalera:
Does that make sense?
Will Barron:
That makes total sense. And this is how I try and wrap my head around it of, I now work for an organisation that I’m the sole director of. So I own, but it’s not me, but then that could be sued. So it confuses me. So I’m sure that will be useful for the audience to wrap their heads around it, the reason I ask you all, sorry.
Christina Scalera:
Yeah, One thing I would just want to say again, I’m not telling anyone they need to do this isn’t legal advice, but one of the best things I think you can do for yourself as a professional or as someone who owns a company is to look into purchasing professional liability insurance, sometimes called errors and emissions. And this is a really important, but also can kind of be a little pricey. So this isn’t obviously for beginners, but it’s a really great insurance policy to have to protect you from anything that could happen as you are signing these agreements. And then just to tack onto that cyber liability, which is a very new form of insurance, very inexpensive, typically a couple hundred bucks or pounds a year. So that would be a great addition as well. So these are two really cost-effective ways for you to make sure that you’re not messing up without even hiring a lawyer.
“The legal team represents the company. If there’s an issues internally, the HR team is there to protect the company. Your boss is there to protect the company. You’re out on your own if you screw up.” – Christina Scalera · [35:20]
Will Barron:
For sure. That makes total sense. And the reason I ask you all of this, well, a lot of that at the end of the show though, Christina, is that I really want to drill down the point that you said it perfectly, the legal team is represented the company. We find this with HR, if there’s issues internally, the HR team is there to protect the company. Your boss is there to protect the company. Yeah you’re out on your own if you screw up. Legal are not there to help you speed up your contact negotiations! And so that’s why I think it’s really important and you’ve given us a tonne of real actionable, practical advice here to make sure that we’re doing things correctly because you know-
Christina Scalera:
Can just add one thing Will, of course you can. Okay, sorry. So you brought up a really good point and I just want to point this out where use the same things that lawyers are doing. The company is there yes to protect its own interests, but like you can totally lean on those departments that you just mentioned to cover your own butt. So emailing them, having that paper trail, asking them if something is okay, getting them to say, yes, that’s okay. Or having the evidence that you emailed them five times and they never responded. These are all things that can help you. So it doesn’t take much effort. I mean, it’s probably stuff that you’re already doing, but just having that email trail instead of phone calls or text messages that aren’t as easy to trace can also help you to, plus it might give you the answers you’re looking for. If you’re able to get in touch with these departments.
Will Barron:
For sure I get a little bit that paper trail incredibly important. Obviously, hopefully it’s more difficult to shred emails than it is to shred Enrons paperwork in the back room.
Christina Scalera:
That was a long time ago. I think so.
Will Barron:
So with that, Christina really enjoyed the conversation. I think you’ve added a tonne of value to the audience. Tell us where we can find out more about you and what that you’re up to.
Christina Scalera:
Sure. It’s all on thecontractshop.com and that will give you everything that you need to know about contracts and running your small business.
Will Barron:
Amazing stuff. Well, we’ll link to that website, some of your social media profiles, all that good stuff. Oh. And the show notes this episode over@salesman.org. And with that Christina, two things I want to thank you for your insights. And I also want to thank you for coming on to a B2B sales show to talk about something that you probably was like, what the heck is he want to talk about with me? I don’t, I’m not a B2B sales person or expert in that space myself, but this was incredibly valuable for the audience. So I appreciate you taking that, perhaps that little bit of leap of faith to join us. And with that, I want to thank you for joining us on The Salesman podcast.
Christina Scalera:
Thank you. Will, it’s been such an honour.
