The Importance of Using a Lawyer Before You Encounter a Problem
Legal disputes can be very expensive, very risky, and very time consuming. In my experience, most disputes could have been avoided if the client had sought the assistance of a lawyer before they entered into the agreement or transaction that was the basis for the dispute. Unfortunately, many people don’t see an attorney until after a dispute has arisen. At that point, it is often too late to undo the damage and the client spends substantially more time and money addressing the dispute than they would have if they had sought the assistance of a lawyer before they signed the contract or started the project.
Such experiences cause me to think of the old Fram Oil Filter ads – the ones that said, “You can pay me now or pay me later.” Fram’s message was that you ought to pay a small amount of money to regularly change your oil filters rather than a whole bunch of money later to fix the problems caused by not maintaining your oil filters. The Fram Oil Filter ads imply, as I advocate in this article, that it makes better sense to pay a little for some prevention early on rather than paying a whole bunch more later when a problem develops. I believe the same can be said for the use of lawyers.
Before signing a contract, entering into a transaction, or starting a new venture, you should weigh the risks of the actions you are about to take. You should also perform a cost-benefit analysis to help determine whether you need to use a lawyer to assist with addressing the risks in the contemplated venture or transaction. The more risks you take on, the more important it is to use a lawyer to assist with the transaction or business venture. This may even be more important in the current economy when profits are not as easy to come by as they were a few years ago.
While it may only take a few hours for a lawyer to review a contract, form a business entity, or provide you with advice about a transaction, the amount of hours necessary to prosecute or defend a business dispute can be staggering. Many disputes that I have seen could have been avoided if the client had an attorney provide them with a few hours of advice before they got involved with the project. In addition to providing specific legal advice regarding the contemplated transaction or business venture, the right lawyer can also provide valuable general advice based upon their years of experience and experience with similar matters.
In addition to providing legal advice about a contemplated venture or transaction, I also have some general advice I’ve found to be valuable to clients regarding contemplated transactions or business ventures:
-Listen to your gut and the gut of your business partners and spouses. I have seen a number of disputes where one or more of the parties affiliated with our client felt early on that something was not right about the transaction or the parties with whom they were dealing. In hindsight, clients have informed me many times that they wished that they had listened to their gut or the gut of their business partners and spouses;
-Be very careful when the other party to your venture or transaction asks that you do things differently than you have done in the past. This is a red flag. Watch out. If you have never previously dealt with the other party, you may want to require that the venture or transaction be handled in a manner similar to how you have handled it in the past.
-Be very careful if the other party to the contemplated venture or transaction tries to require that you utilize a contract or documentation that differs from what you typically use for similar transactions or makes you feel uncomfortable. If there is a dispute regarding the transaction, the written contract and related written documentation will be the primary documents upon which the judge or arbitrator will render their decision. Also, make sure that any changes to the agreement or transaction are documented in writing.
If used in a preventative manner and timely manner, you can get good value from a lawyer. If, however, you wait until after a dispute has arisen to see a lawyer, it will likely be much more costly and time consuming. I suggest that you take the advice of the Fram Oil Filter guy and pay a lawyer a little for some legal advice before entering into the transaction or business venture. Otherwise, you will likely have to pay the lawyer a whole lot more later after a dispute arises.