This is from my perspective as an owner of multiple businesses that’s gone through starting a company, growing a company, hiring and firing people, and selling a company. Done this in a few different industries, including Information Technology consulting, starting a cryptocurrency, owning commercial real estate, and owning a pine plantation. Had the opportunity to go through many different activities with legal counsel over the years.
So I don’t consider myself an expert on attorneys, but I can tell you what I look for in an attorney that I hire.
The basic thing is to work with an attorney who knows the law and can tell you when what you’re doing or looking to be doing is not legal. An attorney should also be able to warn you about risk. A better attorney is good at analyzing contracts and writing contracts that are advantageous to their client, but not so overwhelmingly one-sided that the other party’s attorney pukes all over the document and makes it require lots of revisions. For example, in creating a document for providing ongoing services to a client, my preference is to have it be full of mutual protection. On the other hand, in a single transaction like a purchase or sale to be as one-sided as possible in my favor, while still being approved by the other side.
Attorneys make their money by billing hours, and I’ve noticed that attorneys like to spend a lot of time talking about risk, and they also like to email redline documents back-and-forth with the other party. This racks up their billable hours, which is okay up to a certain point, since you want to be an important client to your attorney. But you don’t want to be too important! By the time the redline document has gone back-and-forth three times the attorneys need to get on a phone call and get it figured out, else they are not serving their clients properly.
For many years, our main attorney firm was one that was very good at all aspects of business, and I enjoyed working with them. The only part I didn’t enjoy is that every time we had a meeting scheduled at one for an hour and a half it was basically one hour and 20 minutes of our attorney telling us how risky and dangerous everything was and then a 10 minute discussion to wrap it up at the end. I did recognize this was their way of both providing service and billing hours at the highest rate.
What I consider to be an exceptional attorney from a small business perspective is one who can consult with the client and understand their business enough that they can make recommendations on how to accomplish what the client wants to do legally.
For example, one of the attorneys I work with, who is not part of a larger firm, specializes in creating business structures that minimize taxes legally, and also protects the assets of the client from potential loss. Every few years I pay for him to look at my business structures and make recommendations on how they can be improved. This requires another level of knowledge and creativity that many attorneys just do not have. If you can find an attorney like this, make sure you keep working with them!
Something to realize is that attorneys have different specialties as well as different industries they work in. Some attorneys are good at doing paperwork, some are good at negotiating, and some are good litigating. Ideally, I’d want to work with a firm that has counsel on staff that can accomplish all these different things. And then if they have a lower cost attorney that they can sub a lot of the work too, so you don’t get billed crazy amounts, that’s even better.
You definitely want to work with a legal firm that has experience in the things that you want to accomplish. As a small business owner, one gets involved in real estate, employment, and client and supplier legal agreements quite a bit. Your main attorney should have experience in these areas.
If you’re looking to take on investment or sell your company, then the type of attorney to work with is one that has experience in doing those types of transactions. When we sold our business, I was pleasantly surprised that our primary attorney introduced us to his business partner who specialized in acquisitions, and we worked with him and his team during the business sale process.
Unfortunately, one time I made a mistake in having my regular business attorney work with me to close on a forest land purchase. They did it, but I don’t think it was a very tight contract.
For the next forest land purchase that I did, I asked for the recommendation of the forestry real estate company I was working with, and they directed me to an attorney that specializes in land acquisition. I had a much better experience working on that transaction with that attorney.
There is also an intersection of interests between your attorneys and your accountant. It is sometimes difficult to determine which person to consult regarding things like minimizing taxes. I’ve found that they normally don’t want to talk to each other. But if you are doing something that your attorney recommended in order to provide protection from litigation or of your assets, or for reducing taxes, it may be worthwhile to get them on a call with you to work it out.
So as a business owner, over time you’re going to build up a few different legal firms that you work with, and specific people at those legal firms. One of the most important things you can do is to retain the appropriate legal counsel at the appropriate time.
If you’re intending to do something new, make sure you schedule a consultation with the right attorney before beginning it so that you both protect yourself and can optimize the business transaction.