When Munchkin Inc., a manufacturer and designer of infant products in Van Nuys, Calif., needed to prepare its second international-distribution agreement, its chief financial officer wanted neither to pay a lawyer to draw up a nearly identical contract nor to go it alone using the first contract as a template.
With lawyers costing $200 an hour, the do-it-yourself approach was tempting. Many managers resent paying lawyer fees for what seems to be a reinvention of the same old wheel, but doing it on one's own can lead to legal troubles that might cost more than hiring a lawyer in the first place.
Luckily for Munchkin, its law firm offered an appealing compromise: interactive software that can automatically draw up distribution agreements. The software prompts users through a series of questions about potential distribution agreements and uses responses to generate customized international-distribution contracts.
The program saves the companies from making costly gaffes. Consider, for example, the question regarding the length of contracts. The program asks how long the agreement is to last. If the time period the user enters exceeds the target country's permissible limit, the software will flag the discrepancy. The application also cautions users about clauses that might put either partner at a disadvantage.
Munchkin had paid its lawyers between $3,000 and $5,000 to draw up a typical agreement. The software cost the company about $1,500.