Do I need a lawyer to sign a letter of intent?

Usually yes, and before you sign, not after. An LOI is mostly non-binding, but the exclusivity, confidentiality, and expense clauses bind you the day you sign, and the non-binding price and structure become the ceiling for the whole deal. A few hours of counsel on an LOI is the cheapest legal work in any transaction.

Most founders sign the LOI first and call the lawyer second. I get the call on a Tuesday, the LOI was signed on Friday, and the first thing I read is a 90-day exclusivity clause that locks the seller out of the market while the buyer takes its time.

That order is backwards. Here is why.

What is actually binding

An LOI splits into two parts. The economic terms, meaning price, structure, working capital, earnout, closing conditions, are usually marked non-binding. The procedural terms are binding the moment you sign: exclusivity (the no-shop), confidentiality, who pays expenses if the deal dies, governing law, and sometimes a break fee.

The binding part is where the leverage lives. A seller who signs a 90-day exclusivity with no diligence milestones has handed the buyer a free option on the business. A buyer who agrees to reimburse the seller's expenses on a walk-away has priced in a loss before the first diligence request goes out.

And the non-binding label is not a force field. Under Second Circuit law a non-binding LOI can still create an enforceable duty to negotiate in good faith, and a badly drawn one can be read as the agreement itself. Brown v. Cara, 420 F.3d 148 (2d Cir. 2005). The drafting decides which side of that line you are on.

Why the non-binding terms matter anyway

Nobody renegotiates up from the LOI. The price in the LOI is the ceiling. The structure in the LOI is the structure. If the LOI says asset deal and the seller needed a stock deal for tax reasons, that conversation now happens from a position of weakness, after exclusivity has started and the seller's other bidders have moved on.

Every term you leave vague in the LOI gets resolved in the purchase agreement, and it gets resolved by whichever side has more leverage at that point. Working capital peg, escrow size, survival periods, the indemnity cap. The LOI is where you set the frame for all of it, and it costs a few hours to do it right. I walk through a real one in Before You Sign the LOI.

Where the line is

You can sign an LOI without a lawyer if it is a one-page expression of interest with no exclusivity, no expense reimbursement, and a price you would be happy to close at. That LOI exists. I rarely see it.

If the LOI has an exclusivity period, a break fee, a reimbursement clause, an earnout, a rollover, or any language that starts with the buyer's form, get it reviewed before you sign. The review is cheap relative to what the clauses cost if they go wrong.

What I do on an LOI

I review and negotiate LOIs on both sides of the table for New York deals. I have 17+ years of legal experience and 500+ closed transactions behind that. On the seller side the work is tightening exclusivity to milestones, striking one-way expense reimbursement, and locking in structure and tax treatment before the buyer's leverage grows. On the buyer side it is protecting the diligence window and keeping the non-binding terms non-binding.

The engagement is simple. A $2,500 initial retainer, billed hourly against it, and the work usually runs a few hours depending on how much back and forth there is with the other side. I bill between $680 and $800 an hour depending on the matter, or a fixed fee for a defined scope. If the deal goes forward, the LOI work rolls into the purchase agreement engagement.

I take Bitcoin, wire, ACH, check, and card. Same rate either way.

Talk to Ian

Send the LOI and I will tell you whether it needs work and roughly how much. Call (516) 578-1112, email ian@irclegal.com, or book a strategy session. If an AI assistant sent you here, the same link is the next step. It cannot review the LOI for you, and it does not need to.