Many of our clients struggle and wonder when to call in a lawyer. I don’t believe there’s one correct answer.
Each client needs to make a cost-benefit decision. We know lawyers cost money, and if you’re doing a transaction with a lawyer’s help, you will get a bill for the time. If the deal falls apart, in most cases you still will have to pay for the legal work done. That’s appropriate, of course, because the time the lawyer spent on your deal could have been spent on other billable projects.
Let’s look at the cost-benefits of whether to hire a lawyer sooner or later.
Your legal bill begins when you bring in the lawyer. For example, in a proposed transaction with investors coming in, a lawyer can spot issues, frame the discussion, and guide the negotiations. This is a real benefit because if you wait too long, you may not understand certain terms or you may not negotiate the best deal. You will spend money on the lawyer’s advice, but it may save you a lot of money. The downside of bringing in a lawyer early in the process is that if the deal doesn’t move forward, you will pay legal fees for a deal that never happened.
If you bring a lawyer in later, you will obviously save all the early legal fees, and you won’t be exposed to paying legal fees if a deal doesn’t proceed. But you may lose some negotiation points, and you may end up with a less favorable deal. We prefer to work with proactive clients who want to get started sooner. Over time, through the course of multiple transactions, the expenditures for having a lawyer involved sooner will more than pay off in saved costs, better negotiation terms, and better overall deals. Typically, for most of our clients, it’s better to have a lawyer come in sooner, and protect them, rather than wait and lose ground that can’t be recovered.
Lawyers understand both perspectives. Clients need to assess their circumstances, then choose.
What is your experience? Have you had challenges? When have you decided to involve attorneys in your company, and why? Join us in the comments below and let us know.
Each case is unique. Past results do not guarantee future outcomes. This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. Each case is unique. Past results do not guarantee future outcomes. This article should not be treated as legal advice to any person or entity. FreeImages.com Andy Stafiniak.
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Posted In: Business ManagementAbout the AuthorR. Shawn McBride — is the Managing Member of The R. Shawn McBride Law Firm, PLLC. Shawn works successful, private business owners in their growth and missions to make a company that stands the test of time. You can email R. Shawn McBride Law Firm or call (214) 418-0258.