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Managing Your Lawyer: Some Finer Points

Answers to some common questions that may arise when dealing with a lawyer
January 6, 2003
URL: http://www.entrepreneur.com/article/58378

I've been getting a lot of e-mails lately from readers who are having trouble communicating with their lawyers. While few people actually enjoy dealing with lawyers, or paying their fees, they are a necessary part of growing a business in these highly regulated, lawsuit--happy times. Sadly, a lot of lawyers (among other professionals, let it be said) aren't very good at dealing with the business aspects of what they do. Sometimes you have to help them to do the right thing.

"A friend and I want to start a business together, and we don't have a lot of money. We asked a lawyer if he could form a corporation for us, and he said he would, but he insists that my friend hire his own lawyer. I'm afraid that if we do that, it will double our legal bills and possibly create animosity between us where none exists today. Is there any solution?"

People make lawyer jokes all the time, but the fact is that lawyers are held to a higher standard of ethics than most normal folks. In this situation, there is no way the lawyer can represent both of you, as doing so would create a clear conflict of interest for him or her. If the two of you disagree over any issue, no matter how slight, the lawyer cannot be in a position to "take sides."

While there is a risk that having two lawyers involved will double the amount of work and the cost, it is the better way to go. If it is absolutely impossible to use two lawyers, then you and your friend should both tell the lawyer you are willing to "waive" the conflict of interest in writing, agreeing not to sue him or her for any impropriety that may arise out of the joint representation. Many states will allow such a waiver as long as the lawyer explains the risks of giving one. Don't be surprised, though, if your lawyer is still squeamish--these days, every professional has at least one hand on his malpractice insurance policy while practicing with the other.

"I'm starting a software development business and need some standard form contracts. I saw some great contract forms on the web, downloaded them, and made a few changes. I want an attorney to spend not more than an hour or two reviewing them to make sure I did everything right, but so far every attorney I've spoken to has turned me down, saying they would prefer to use their own forms. What's up with this? Is it just ego or is something else going on here?"

Like all professionals, attorneys sometimes get very comfortable with their own way of doing things and don't want to spend a lot of time learning someone else's ways. Some attorneys will tell you that it actually takes more time (and therefore costs more) to review and revise someone else's form contract than it is to develop one for you using their standard "templates," and there's some truth to that.

In dealing with lawyers and other professionals, it's best to remember that they are businesspeople just like you. Don't ask them to give you a deal that you yourself would not offer one of your customers. In this situation, I would offer the downloaded form contract to the attorney as "a good guide to the type of agreement I would like to use, if possible," and let them decide whether it's better to work off that contract or use one of their own. Just be sure you let them know your budget first, so they can make that decision intelligently.


Cliff Ennico is host of the PBS television series MoneyHunt and a leading expert on managing growing companies. His advice for small businesses regularly appears on the "Protecting Your Business" channel on the Small Business Television Network at www.sbtv.com.