The Contracts to Sort Out Before You Scale

You are about to hire, sign bigger clients or take investment, and the paperwork that got you here is a template you half-read and a founder arrangement that lives in your heads. Three documents matter more than the rest, in this order: your customer terms, written IP assignments, and — if there is more than one owner — a shareholders' agreement. Those are the three that due diligence goes at hardest, and the three that get more expensive to fix every month you leave them.

Why growth makes weak paperwork expensive

Two things change when you scale, and they multiply each other. The stakes rise: a dispute worth £2,000 when you were tiny is worth £40,000 at volume, on the very same weak clause. And the volume rises: a loose arrangement you could eyeball across three deals a month is baked into three hundred contracts a year. Fixing a template before you scale it fixes every future deal at once; fixing it afterwards means unpicking live contracts one by one.

Then somebody reads them. Investors, buyers and large customers run due diligence on the same short list — does the company own its intellectual property, is there a shareholders' agreement, do the share register and the Companies House filings agree, are the customer contracts signed and assignable. Gaps rarely kill a deal outright. They cost you time, warranties and often price, at the one moment you can least afford to renegotiate.

1. Customer terms — and getting them into the contract

Your terms touch revenue on every deal, so they go first: a defined scope, firm payment terms including late-payment interest, a liability position you could actually defend, and a clean way to end the relationship.

The drafting is only half the job. Terms bind the other side only if they were in front of them before the deal was formed — referenced in the quote and on the order form, with a tick-box or a signature captured. Terms printed on the back of the invoice arrive after the contract exists and generally bind nobody. Most businesses that find their terms do not protect them had perfectly good terms; they had simply never incorporated them.

2. IP assignments — you may not own what you paid for

Copyright in the UK is automatic, with no register to file at, and it belongs to the person who created the work. Paying the invoice does not move it: an assignment of copyright has to be in writing and signed by the assignor. So if a freelancer built your logo, your website or your code without a signed assignment, they may still own it, and you hold an implied licence that could be narrower than you assume and may not survive a sale of the business.

Do this now. List everything the business runs on that somebody outside the company created — branding, website, code, photography, product designs — and find the signed assignment for each. Where there is none, get a short written assignment while the relationship is still warm. It is cheap today and awkward during a funding round, when the freelancer has moved on and has worked out that you need their signature.

3. The shareholders' agreement — before the next person joins the cap table

If you have co-owners, this is the document you will most wish you had signed early. It covers share transfers and pre-emption rights, leaver provisions, which decisions need more than a bare majority, drag and tag rights on a sale, dividends, and how a 50/50 deadlock gets broken. Every one of those is easy to agree while everyone is aligned and the company is worth little, and the cost of agreeing them rises directly with the value of what a leaver would be giving up. Leave it and the same conversation happens under pressure, usually because an incoming investor has forced it.

In practice — illustrative example

The due-diligence surprise

A SaaS startup lines up its first serious investment. Due diligence finds that the core code was written by a freelancer two years earlier with no IP assignment — on paper, the company does not clearly own its own product. The deal stalls while the developer is tracked down and the rights re-assigned, and by then the founders are negotiating from the back foot with an investor wondering what else is missing. A short assignment at the time, costing next to nothing, would have prevented it.

The rest of the list, in order

Employment paperwork. Every employee must get a written statement of particulars on or before their first day — Employment Rights Act 1996, not a nicety. Add IP clauses so what staff create at work belongs to the business, and restrictive covenants drawn no wider than is needed to protect a genuine business interest, because an over-broad covenant copied across the whole team protects nobody.
Supplier and subcontractor terms. What they deliver, by when, to what standard, who carries the liability, and who owns what they create for you. A subcontractor who builds part of your product with no IP assignment can end up owning the thing you sell.
Data protection. A privacy notice that describes what you actually do, and data processing agreements with the suppliers who handle personal data for you — typically your CRM, email platform, IT provider and accountant.

If you are pre-revenue, do the opposite order

Founder and IP documents get harder and dearer with every month of value you add, so do them while the company is worth little and everyone is aligned. Customer terms and employment paperwork can wait until you are actually signing clients and hiring, because they have to describe a business that exists. The mistake is rarely doing things too early — it is leaving the founder and IP documents until a funding round forces them.

What it costs and where to start

The published fixed fees: business terms and conditions from £695 +VAT, an employment starter pack from £895 +VAT, a shareholder agreement from £1,250 +VAT, HR policies and a staff handbook from £1,495 +VAT. A single contract review starts at £249 +VAT. If the work will be steady through a growth phase rather than one-off, Business Legal is £249 +VAT a month and includes up to three contract reviews a month.

You do not need all of it at once. Send three things — your standard customer contract, a list of who built what, and your articles if you have co-owners — and book a legal review. You get a straight read on which of them is actually a problem and one fixed price for fixing it, agreed in writing before anything starts. Prices are on fixed-fee work; the detail sits in our guides to business contracts and shareholder agreements. Almost all of this is non-reserved work, so a solicitor is not legally required. What does need one is anything reserved or contentious — a court claim, conveyancing on new premises, a founder dispute that has turned adversarial — and that goes to RHF Solicitors (SRA no. 324115).

This is general legal information, not advice on your situation. For advice tailored to your business, book a legal review. Buzz Legal provides non-reserved business legal support; reserved legal activities are carried out by RHF Solicitors, authorised and regulated by the SRA (no. 324115).

Common questions

Which contract should I sort out first?

Your customer terms, because they protect the income everything else depends on. Second, intellectual property ownership, because a business that does not own what it sells has a problem that only surfaces when someone valuable is looking at it. Third, if you have co-owners, the shareholders' agreement. That order changes if you are raising money or preparing to sell, because due diligence hammers IP and the shareholders' agreement hardest and a gap in either can slow or reprice a deal. If you only do one thing this quarter, make it getting your terms in front of customers at order stage rather than afterwards, since terms that were never incorporated protect nobody.

We are pre-revenue. Is it too early for this?

Some of it is cheaper and easier now than it will ever be again. Intellectual property assignments from founders and freelancers, and a founder or shareholders' agreement, are far simpler to agree while the company is worth little and everyone is aligned — the cost of agreeing a leaver provision rises directly with the value of what a leaver would be giving up. Customer terms and employment paperwork can wait until you are actually signing clients and hiring, because they need to describe a business that exists. The mistake is rarely doing things too early; it is leaving the founder and IP documents until a funding round forces them.

A freelancer built our website and logo. Do we own them?

Not automatically, and paying the invoice does not change it. Copyright arises for the person who created the work, and an assignment of copyright has to be in writing and signed by the assignor to transfer it. Without one, the freelancer or agency usually keeps the copyright and you hold an implied licence to use the work — which may be narrower than you assume and may not survive a sale of the business. The fix is a short written IP assignment: quick and cheap now, awkward and expensive to chase during a funding round when the freelancer has moved on and has worked out that you need their signature.

What do investors and buyers actually check?

The boring documents. Whether the company owns its intellectual property, with signed assignments from every founder, employee and contractor who created anything. Whether there is a shareholders' agreement, and whether the share register and the Companies House filings agree with it. Whether your customer contracts are signed, assignable, and free of change-of-control clauses, and whether the terms you rely on were ever properly incorporated. Whether employment contracts exist and employment status was handled honestly. Gaps rarely kill a deal outright. They cost you time, warranties and often price — and every item on that list is cheaper to fix now than under a deadline with someone else's lawyers reading it.

Do I need a solicitor for all of this?

No. Contracts, terms, employment documents, IP assignments and shareholders' agreements are all non-reserved work, so a solicitor is not legally required to draft any of them. What does need one is anything reserved or contentious — a court claim, conveyancing on new premises, a founder dispute that has become adversarial — and those go to RHF Solicitors (SRA no. 324115). The honest position is that most pre-scale legal work is drafting and thinking rather than litigating, and paying regulated hourly rates for drafting is a choice rather than a requirement. Start with a review and we will tell you which of your documents is actually a problem, rather than working through a generic checklist.

What does getting this sorted cost?

Using the published fixed fees as a guide: a set of business terms and conditions starts at £695 +VAT, an employment starter pack at £895 +VAT, a shareholder agreement at £1,250 +VAT, and HR policies with a staff handbook at £1,495 +VAT. A single contract review starts at £249 +VAT. If you would rather spread it, Business Legal is £249 +VAT a month and includes typically four to six matters and up to three contract reviews a month, which suits a business generating legal questions steadily through a growth phase. Either way you get one fixed price for your job, in writing, before anything starts.

When exactly should we do the shareholders' agreement?

Before the next person joins the cap table. The terms are a negotiation, and the leverage in that negotiation shifts every time the company gets more valuable or somebody new arrives with their own view of what is fair. Agreeing vesting, leaver provisions, deadlock and reserved matters while everyone is aligned turns a difficult conversation into a document; leaving it until there is tension turns a solvable disagreement into a stalemate with no mechanism to break it. If you already have co-owners and no agreement, that is the job to do this month rather than the one to do when a reason finally appears.

The contracts to sort out before you scale