How to train your lawyer
Inexperienced businesspeople often hate talking to lawyers. There are many reasons for this, including fear of:
- High hourly charge-out rates
- Being made to feel ignorant
- Losing control of the outcome
- Finding out later the legal route was not the best way to achieve the desired result.
Surprisingly, the huge volume of business and legal information now available online has not fundamentally improved the situation. Nor has the proliferation of legal services models which continue to enter the market. Self-diagnosis rarely works for medical problems, so why would it work for legal ones?
The simple fact is that to succeed in business, at some point you are going to have to take decisive legal action, and unless you know what you are doing, the results could be disastrous and at best very expensive.
Taking legal action means instructing lawyers. Like doctors, lawyers break down into generalists and specialists. Business lawyers may be transactional, advisory or litigation focussed, and work in one or more areas such as corporate, commercial, intellectual property, real estate, employment, finance, tax etc. Lawyers are bound by ethical principles to put clients’ interests before their own, but being businesspeople themselves, naturally wish to promote the particular services they provide. If you’re not really sure what category your legal problem comes under, it’s hard to know how to go about finding and instructing the best lawyer for your case.
Businesspeople who have been through the hoops and come out the other side tend to have highly developed relationships with the lawyers they need to support their business’s success. Given the often-quoted (and rising) high business failure rate, these appear to remain in the minority.
How can you improve the odds of joining this select group, preferably sooner rather than later? The best way is achieve an early understanding of the legal challenges that will confront your business over its lifetime. The first step is to identify problem areas, and establish when they are likely to come into play. From this can be built a “critical path”, scoping and addressing potential pitfalls (not forgetting opportunities) along the way for your long term business plan. Then, when the time comes for legal action, you are in the driver’s seat and far more likely to achieve the results you need.
Getting the critical path right from the outset can prove a massive cost-saving for business owners, as it can be difficult if not impossible to retrace your steps in business (and business relationships). For example did you:
- Review and identify potential conflicts of interest in your future business partners?
- get the necessary consents to use any intellectual property rights underpinning your business model?
- upset anyone who could block the execution of your business plan?
Without trying to fit every business into a box, there are certain legal areas which are likely to be of greater importance at different stages of a business’s life cycle. A start-up business needs to build a scalable business model, protect its intellectual property, and develop an exit strategy.
A business which has successfully moved from start-up to the next level is exposed to a much wider range of risks. These range from new and unforeseen developments changing the dynamics of their markets, to specific industry risks, as well as those risks to which all businesses are vulnerable.
The last group is growth businesses, which expand internationally once successful at home. As well as looking outwards at opportunities and risks, growth businesses must ensure their core business model is bullet-proof for global markets.
Providing that the correct legal foundations are in place at each stage in these areas, the chances of costly litigation will be much reduced. Self-education also builds a far greater understanding of what can be achieved through legal processes, given the luxury of time and forward planning.