Wednesday, May 13, 2009

The One Almost Universal Rule

by John Watkins

There are very few absolute truths in the legal profession. For every legal rule, there is at least one exception. There is one truth that is pretty close to universal, however, about how clients use lawyers. That rule is that it is almost always less expensive and more effective to involve the lawyer earlier in the process than later. As a litigator, there are countless examples I have seen in which a client could probably have avoided litigation if it had, for example, consulted with its lawyer about drafting a contract or structuring a transaction instead of trying to go it alone. Although it is not a perfect analogy, it is a bit like preventative medicine.

Many clients, apparently thinking they will decrease costs, try to use a lawyer like a fire axe that is kept behind glass: Break glass and use only in the event of a fire. Other clients try to limit the information they give to a lawyer, trying to "define" the problem, but lacking the training and experience necessary to do so. The result is almost invariably a less than optimal outcome at a higher overall cost.

Clients who achieve optimal results find an experienced lawyer and use the lawyer as part of their business team. Those clients involve the lawyer early in planning and structuring a transaction. As a result, they tend to avoid mistakes in negotiating and in structuring that are more costly to correct at a later date, if they can be corrected at all. These clients also make sure that a contract or relationship is structured as clearly as possible at the outset. These businesses realize that proactive legal assistance is part of their overall effort to reduce risks and to reduce costs. Although structuring a transaction or contract carefully does not absolutely guarantee there will be no future disputes, it lessens the probability. In addition, proper structuring almost always strengthens a company's position in the event of litigation.

No comments:

Post a Comment