Do I need to run each LOI through a lawyer?

June 26, 2025

by a searcher from University of California, Berkeley - Haas School of Business in Oakland, CA, USA

Hi Everyone. Question for more experienced people in the space. what stage in your search process would you suggest finalizing your deal team? Specifically, if LOIs are non-binding anyway, do I need to run each one through a lawyer?

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Reply by a searcher
from New York University in New York, NY, USA

Yes. Full stop. Especially if you're new at this. I thought i could DIY it and I absolutely paid the price. That small investment upfront could save your deal, your money and ultimately set you up for success. It's not a cost, it's an investment. If you want to save money, skip business school.

Reply by a searcher
from Stanford University in Healdsburg, CA 95448, USA

To add a strong caveat - I'm stuck litigating a non-binding LOI right now. Just because the purchase terms themselves state they're binding doesn't mean there's no litigation risk. There are almost always a few elements in an LOI that are expressly binding (exclusivity period, timelines, confidentiality, sometimes prohibitions on poaching employees, etc.) and the other side can always claim fraud in the inducement or file a claim asserting ambiguity. And - like in our present case - there's always the people out there that don't care about the actual language and will litigate to break a nickel or dime off where they can. Having a well-drafted document is the best insurance against this. Defending an adverse claim will always be orders-of-magnitude more expensive than an initial legal review. Everyone is in their own situation and working within their own budgets, but be very aware that an LOI that claims to be "non-binding" doesn't guarantee that (1) it’s actually non-binding or (2) that there aren't binding provisions in the agreement (there almost always are) and (3) the parties aren't being governed by common law. Pay close attention to your own situation, use your judgment and recognize that when these things go wrong they go very expensively wrong.

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