Paying a lawyer may be the last thing you want to think about. But when it comes to keeping your company afloat, seeking counsel can be your life vest.
During troubled times, you need an adviser who understands your business and your leadership personality. While many CEOs see trips to the lawyer’s office in terms of dollar signs, keeping ahead of the legal curve will pay off in the long run.
“Companies can really save money by recognizing that an attorney’s true values are in problem avoidance and risk management,” says John Slagter, managing partner, Cleveland office, Buckingham Doolittle & Burroughs LLP.
Your attorney can be a valuable member of your cabinet who provides strategic advice to boost your bottom line. By viewing your lawyer as a business partner and his or her fee as an investment in your company you can capitalize on your lawyer’s legal training and experience.Develop an effective relationship
By understanding where you’ve been and where you’re headed, your attorney can help you navigate the corporate waters and avoid legal icebergs. But the only way he or she is going to acquire that knowledge is through open discussions.
“In order to have the best utilization of your lawyer, it’s very important that your lawyer really understands your business and how you make money because you are asking them to give you advice on decisions that impact your business,” says Steven C. Karzmer, partner, Calfee, Halter & Griswold LLP.
While some matters, such as tax tips, can result in tangible savings, others may not show an immediate fiscal return. Still, it’s hard to image what costly bumps you may encounter without the foresight of a seasoned professional.
“Consulting with a lawyer can either save you money because you’re in a good situation or help you make more money because you’ve structured something in a beneficial way,” Karzmer says.
The best advice at the right time can save a bundle. However, you can’t be shelling out for unnecessary discussions. Thinking through an issue before calling your lawyer makes the best use of his or her time and your money. Routine situations, such as hiring matters, may be handled by your human resources department, where more complex situations, like harassment claims, require immediate legal attention.
If a matter requires a meeting with your lawyer, prepare notes, gather documents and create an agenda in advance. Sending information to your attorney ahead of time lets him or her come prepared to address the issue. Ensuring that the appropriate people are in the meeting or available on-call can avoid a costly follow-up.
“It’s good to have an initial in-person meeting or at least a phone conference to discuss the best strategy to address the issue and to develop a cost estimate or budget for the procedure,” Slagter says. “Then, during the process, the attorney and client should work together.”
Investing in appropriate communication builds a long-term partner. However, it’s important to trim away excess chatter. Designating one contact person in your company eliminates the chance of your lawyer giving the same advice twice. If you have a recurring document, such as a purchase agreement, ask your attorney to approve a form you can use repeatedly, without getting his or her OK each time.
“If you have a business that has a lot of purchase orders or certain contracts, those should be initially developed by the attorney,” Slagter says. “Once you have those forms in place, your personnel can use those forms.”
If you are hesitant to call your lawyer for fear of being charged by the hour, you may find relief in negotiating a flat rate for some services. Flat fees work best with a finite project, such as trademark filings. With many companies anxious to budget their costs, most attorneys will discuss fee structures.
“The legal industry is beginning to move toward what they term value-based billing procedures, which include flat rates for routine services,” Slagter says.
The billable hour makes sense when it is unclear how much attention the matter will require, such as litigation. In hourly situations, it’s wise to ask for the person with the lowest billing level who can perform the work well. A junior associate can handle smaller issues in exchange for a slimmer bill. With complex matters, it is more efficient to pay a higher hourly rate for a fast-working, experienced partner.
No matter the billing structure, be sure to get a written contract that includes not only the services and the rate but also builds in checkpoints where the lawyer will call to discuss progress.
“In my mind, it all comes down to a value proposition,” Karzmer says. “Whether a flat fee or billable hour, if someone provides service and gives me a bill and I say, ‘That was well worth it,’ then I feel like I got a good value for my money.”
When your business is moving along, it’s beneficial to check in with your attorney at least once a year. Such interactions make you a household name in the firm and can result in better overall service.
“At a minimum, it is a good idea at least for there to be an annual meeting so the parties can update each other and have some communication about the status of the business,” Slagter says.Find the right fit
Before you turn over your spreadsheets, make sure your attorney complements your style. You may be eager for your day in court, but your attorney is best in settlements. Being on the same page is imperative to long-term success.
“I think it’s beneficial to view your engagement of a lawyer as a potential long-term relationship,” Karzmer says. “You want to make sure you pick the right person and you’re comfortable with this person’s judgment.”
Finding a legal mind that matches your corporate spirit is no small task. As with other services, it’s wise to get recommendations from your colleagues. Referrals from your current professional team, such as your banker and accountant, can be especially helpful.
“When I try to pick a service provider, such as an accountant or stock broker, I go to people I know and trust and say, ‘Do you have any experience with anybody?’” Karzmer says.
Consider where others in your industry get their legal advice. Intimate knowledge of your market is priceless when it comes to staying on top of regulatory changes. And the legal relationship is bound by attorney-client confidentiality, so you can sleep easy knowing your company’s dark secrets aren’t being broadcast.
“There is an abundance of lawyers and an abundance of legal talent, but companies need to work with attorneys who have specific experience in handling the issues that that the company is facing and that are in the industry that company is in,” Slagter says.
Once you’ve identified a few lawyers, schedule brief meetings with each. While many firms can handle the technical work, it’s important to find someone you feel comfortable with. Ultimately, the better you and your lawyer know and understand each other, the more hazards you can avoid.
“You should try to be developing a long-term relationship,” Karzmer says. “When you develop that relationship … it is go od for the attorney and the client.”