There are so many stereotypes about attorneys. Some of them are true, of course, but most of them are not.
Some attorneys are, for instance, sharp dressers, every bit the models for the top designers that you might expect, with perfect hair and a packed brain to match, but not all attorneys look like they belong on the cast of some courtroom drama that moves through its story arc each week in 44 minutes flat.
Some attorneys are fast and slick and out to make a quick dollar or a quick couple of thousand dollars but not many.
And, yes, some attorneys are blindingly intelligent and able to rattle off laws, statutes, regulations and court cases long since decided as if it was their job because, well, it is.
Your attorney is not a heart surgeon, a rocket scientist or a neurophysicist. They might as well be, though, to handle the level of work and degree of difficulty required during the last couple of years. After all, you have probably rarely called your attorney for something casual during these strapped economic times. Calls always seem to be reserved for something expensive and stressful that has to be handled correctly.
“Managing the tough times is always harder,” says Vincent J. Garozzo, principal, Greensfelder, Hemker & Gale PC. “I think businesses are trying to use their legal counsel in a more efficient way. They don’t want the simple problems to have to go to the business lawyer for resolution. They think they’re able to handle those themselves.
“What you’re seeing is that, when a business owner calls us, the problem has either escalated to the point where it’s in need of damage control or it’s so mind-numbingly complex that the business owner doesn’t know where to start.”
You might be in the midst of one of those swelling problems at the moment. A majority of attorneys say this is an opportune time to think, then think again, about your business strategy and to examine the economic landscape, because there are opportunities available right now, even in slower industries, that will not be available for long. If you can afford to, this is the time to move. And if you have a good attorney on your team of advisers no stereotypes here you already have about as good an ally as possible to help steer you forward.Remember the past
The last couple of years have provided you with a new set of challenges. Perhaps you needed to lay off a percentage of your employees, close a branch of your business or just do more every day with an already overworked, if not smaller, staff. Odds are your attorney was with you during many of those moments because even if you didn’t work more with your attorney in order to save legal fees, you probably called and talked more often.
That is, at least, what many attorneys are saying.
“Our relationships have been more related to general corporate counseling, specific to litigation needs, and in the areas of general business and litigation, it has probably experienced a bit of an uptick just because there have been things that needed to be addressed,” says Austin L. Hirsch, partner, Reed Smith. “We are viewed as a business adviser as opposed to someone who is providing a task, and these are the times when that really counts, these are the times when it really shows whether you have a relationship.”
The amount of work and communication required of some attorneys will also likely increase through the rest of 2010 and during the early months of 2011.
“I think a lot of companies are really focused on cleaning their own house in anticipation that when market conditions improve, they’re going to be in a better position either to profit or potentially sell themselves through a liquidity event,” Garozzo says. “So they’re doing what I call an internal audit looking at all their contracts, their personnel files, their financial statements because that makes the business more valuable.”
And that makes for more work for attorneys. Until then, the existing bump in bankruptcy, commercial litigation and corporate reorganization sure signs of an economy that has seen better days, months and years will likely continue.
And valuations are still historically low though not as far in the cellar as they were during much of 2009 which means now is still a good time to examine and consider estate and succession planning. What will your business do after you’re out of the top spot? Who will own the business? Who will be in charge? And were you able to take advantage of a down market to pass it along at a better rate?
There are plenty of other things you should consider with your attorney before the economy starts to bump up a little more.Look ahead and plan
Did you manage to obtain any sort of credit during the last two years? If so, congratulations. That is quite an accomplishment. If not, no worries, because not many other companies did either. That said, some good news for the coming year is that credit is expected to be more available in 2011 than it has been in several years.
More credit is just one of the major points of interest for attorneys during the next six to 12 months. Because of those increased lines of credit, much of the next year will likely include a focus on mergers and acquisitions. Some attorneys say that M&A activity increased during the first half of 2010 before slowing some during the last four months, but no matter your city or region and St. Louis is expected to be no different M&A activity will likely be prevalent by the time the calendar turns.
“In the last couple of years, there has been less merger and acquisition activity on both sides, for buyers and sellers, particularly in the upper middle market,” Hirsch says. “But certainly, if the economy does pull itself out and we’re starting to see some of our more successful clients step out because they’ve been more profitable during this time more businesses will start to think strategically about opportunities in the marketplace.
“If that trend continues, there will be more M&A activity in the course of the next year.”
Alternative fee structures and arrangements or at least discussions about them are also expected to increase in 2011. Some firms have provided them for years as an option, others have added them only during the last couple of years as clients asked for them, but there does seem to be a split between clients who are more open to alternative fee structures and those who hold tight to the hourly rate.
Even if you have no interest in alternative fee structures and will renew your proverbial subscription to the hourly rate, at least starting a conversation with your attorney or legal team about some other option might not be a bad idea, especially with the economy and cash flow still in flux.
“We hear and see in the news a lot about how clients want to get away from the billable hours and move to alternative fee structures,” Garozzo says. “But when I sit down with a client and try to discuss an alternative fee structure, 95 percent of the time, we wind up back at the billable hour. My astute business clients like the billable hour rate for business law services. I have not had one come up to me and say, ‘Would you consider an alternative fee structure?’ Now, in litigation, that’s happening every day.”Ensure your value
How can you be certain that you will receive as much value as possible from your partnership with your attorney? Communication, of course the seemingly simple center of every conversation and great relationship remains the top priority. If you do not talk regul arly with your attorney or if you rarely, if ever, ask questions or send recent documents and forms, you need to communicate more.
Most attorneys say they like to talk with clients at least once per month, just a casual meeting for breakfast, lunch or coffee to sit down and talk about you and your company, especially if they work with you more as an adviser than as an auditor though every relationship is different.
“I like to use the term ‘staying sticky’ with your clients,” Hirsch says. “I think it is something in which you try to continue to meet with the clients regularly to go over strategy. Now, you have to tailor your relationship. It’s hard to say that every client relationship is the same, but clearly, there are benefits that we can provide by going out to lunch, by going out to a client’s place of business, by sending articles of interest that will stir and stimulate thinking about different tactics or approaches for their business or their customers.”
If you are not pleased with the quality or the nature of the relationship you have with your attorney, for any number of reasons, the time to consider a move might be now. Rates are historically low, and this is perhaps the best buyer’s market of any of our lifetimes.
“If you don’t have qualified corporate counsel and you’ll know if you have it by dealing with them you need to change out of that right away,” Garozzo says. “If you’re working with lawyers now who are narrow in scope and who can’t advise on what I call multidiscipline issue tax, accounting, corporate you probably need to move on in any economy, because your dollars are too precious.”
You might want to consider a change if you have just outgrown your firm and need a firm with a larger regional, national or international footprint.
You might also consider asking your attorney about any changes in rules and regulations for 2011 and beyond. Asking whether the firm offers any corporate education that you and your employees might be able to put to use would also be a good idea. And asking for a review of your corporate structure, especially for possible inefficiencies, would not be a bad use of time or money. What are your employees earning? What are your executives earning? What else are you paying for? And is it really worth the cost?
“A good business lawyer will work with his client to keep him ahead of the curve, knowing that the economy changes on supply and demand and that how a business reacts to that will affect the bottom line,” Garozzo says. “And staying ahead of the curve is the goal.”
Because in a world and an industry filled with so much change during the last couple of years, something needs to stay the same.