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."
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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.