Every CEO will find themselves in a position in their career where they require the assistance of an experienced attorney at some point. And when those times arise, you’d like to think that your lawyer’s interests are totally aligned with your own. You’d like to assume that your lawyer has your best interests in mind. When you hire a lawyer, unfortunately, you need to be aware of a couple of dynamics because, if you ignore them, you may find that you are forced to make decisions that aren’t exactly beneficial to you and your interests. If you ignore these dynamics, you may find yourself forced to make decisions that aren’t exactly beneficial to you and your interests.
When it comes to managing the connection you have with your lawyer, you need to take into consideration two aspects: revenue, and the avoidance of risk.
Read More: How to Hire an Attorney for Your Business
Even if they are employed by a larger firm, individual attorneys nonetheless operate their practices as sole proprietorships. Indeed, the majority of legal practitioners are employed by more prestigious firms. However, it is still comprised of a group of individuals billing for their own job. In point of fact, the way that lawyers are valued in a large law firm is determined by how many dollars they bring into the company, either through the acquisition of new clients or the amount that they have invoiced their existing clients for.
This provides attorneys with every possible incentive to increase their earnings, which is not exactly aligned with your interests, which are to reduce your legal bills at a minimum as much as possible. You need to keep an eye out for a couple of different areas in which attorneys may attempt to increase those fees.
When you find out that your lawyers have invited some of their colleagues or partners to attend the call with you, this is one area that you should keep an eye on. You should be aware that even though the additional attention may make you feel flattered, you will be billed for the time that each individual spent on your case. This is especially important to keep in mind if you are communicating with a senior partner in a company, since they may invite a few associates who report to them to participate on the call. Not only do they make use of opportunities like that to educate more junior attorneys, but the partner also receives credit for the billable hours worked by the associates. Their function, just like a mother bird’s, is to provide food for the young birds.
I recall a business deal in which the opposite side had retained the services of a law firm with headquarters in New York City. For my part, I was solely assisted by a single lawyer throughout the entire process. On the other hand, this other law company had many attorneys on the line for every call that we took, and each one charged more than one hundred dollars an hour. In the end, we were successful in closing the agreement; nevertheless, during the negotiation process, the other side incurred additional legal bills amounting to tens of thousands of dollars.
Read More: Types of Lawyers: Roles and Practices
Another thing you should be on the lookout for is being billed for “research.” Another instance of an experienced lawyer attempting to bill you for the training of a junior associate is presented here. For instance, I had a problem with an HR contract several years ago and needed assistance with it. I needed legal assistance, so I looked for the most qualified and seasoned attorney in my state. On the other hand, when I received my bill, I noticed that there was a line item for an associate’s 10 hours of “research” on employment law in my state. This fee was contested by me. I asked my attorney why I was paying for him to have a junior associate do legal research when the reason I hired him in the first place was because of his experience. The attorney, to his credit, negotiated a lower charge. On the other hand, this should serve as a warning to you that you need to be on the lookout for the various ways that lawyers may discover to rack up billable hours on you.
Risk aversion is something that just comes naturally to lawyers. And they consider it an essential part of their duty to do all in their power to keep risk levels as low as possible by including client-protecting language, conditions, and clauses in any agreements they make. You may argue that as a customer, that is a positive thing for you. However, there will come a time when the benefits you receive from your efforts will begin to decrease. The amount of money you are spending to eliminate that risk is not a good return on your investment. If you don’t have a lawyer with a lot of experience, they might come up with legal structures that are extremely protective but also completely impracticable.
However, attorneys will continue to cost you for their services under the premise that they are continuing to reduce the danger that you face. However, at some point in your tenure as CEO, you will reach a point where the level of risk is satisfactory, and you will realize that it is time to stop harping on the problem (and paying those mounting attorney fees). It is not the role of your lawyer to advise you whether or not you have minimized risk “enough;” it is your responsibility.
You are likely to come across this situation, in particular when interacting with attorneys who work for large corporations that are traded publicly. Large corporations strive to minimize their exposure to risk, in contrast to the risk-taking mentality of entrepreneurs. They have no problem with shelling out extravagant sums of money on legal representation in order to mitigate danger.
Therefore, if you are interacting with your attorney, it is in your best interest to have an understanding of what drives them while also ensuring that your own needs are addressed and that you do not spend more money than is necessary.