Five Biggest Mistakes Made in Hiring and Utilizing Your Attorney

In my most recent article, I discussed the need for building your Dream Team of advisors to help you with buying or selling your business. One of the most critical members of your Deal Dream Team is your attorney. Hiring the proper attorney for your transaction, and utilizing his/her services and advice properly, can be the difference between a successful and unsuccessful transaction.

Based on CFA’s 60+ years of transaction history, we have extensive experience working with all types of attorneys. Furthermore, through my own participation as the only non-lawyer in the International Business Law Consortium (www.iblc.com), I have been afforded a unique perspective into how attorneys and their firms are best selected and utilized in a variety of transaction types. My experience working with attorneys allows me to share with you the Five Biggest Mistakes Clients Make When Hiring An Attorney.

1. Lowest Price Does Not Necessarily Mean Lowest Cost. Often when our clients ask for a referral to an attorney, they are concerned about fees. Just as often, these same clients are more worried about cost than quality, assuming all attorneys are alike.
   Unfortunately, the hourly rate (or total project cost) quoted by the attorney(s) you interview may not directly correlate to the quality of work/service provided. Attorneys in larger markets (New York, Boston, Chicago, DC, LA) typically charge much higher rates than lawyers in slightly smaller markets (Cleveland, Dallas, Detroit, Omaha, Portland).
   Furthermore, while one transactional attorney may have a higher quoted hourly rate than another, he/she may be more efficient and will be able to get the work done in less time. Time and again, we have seen experienced attorneys accomplish a task in half the time of their less experienced colleagues, thus reducing the overall cost of their services. Accordingly, higher rates do not always lead to higher costs. It is also important to remember the more complex the transaction and the more “moving parts,” the higher your legal bill.
2. No Relevant Experience. The following quote may terrify the other members of your Deal Dream Team: “My (brother/sister/child/fraternity brother/next-door-neighbor) is an attorney, he/she will be happy to work on this transaction for me.” Yes, any attorney who has passed the Bar exam is allowed to work in any area of the law, but you are wise to hire an attorney who has significant, and relevant, transactional experience.
   An analogy we often use is: Imagine a situation where a loved one (your child, your spouse, your parent) sustained a serious head injury. Would you entrust their care to a heart surgeon or a dermatologist? Of course not! You would seek the services of the best neurologist you could find. So why would you retain an attorney to guide you through a complex M&A transaction who does not have relevant experience?
3. No Bench Strength. Deals today are very complex and getting even more complex by the day. Whereas 20 years ago the simplest asset sale could be completed with a 10 page Definitive Purchase Agreement, today, the Agreement for the same deal would have 10 pages of definition of terms!
   When interviewing an attorney for your transaction, it is important to determine the strength of his/her entire firm. Given the complexity of deals, it is impossible for one attorney to be an expert in all aspects of a deal; they will need to call upon their colleagues in the firm to support them in the specific disciplines in which he/she is less familiar.
   We have seen situations where our clients insist on using the services of their local, one-man law firm. These hardworking professionals can do a great job, but they can be overwhelmed by the transaction. Make sure your legal team is up to the task or you risk getting outmaneuvered in the deal.
4. Only Hiring Local. Given the preponderance of technology used in business today, the days of having to hire a lawyer in your backyard are gone. Furthermore, because of technology, it is rare indeed for opposing counsel in transactions to meet face-to-face anymore. Of course, the attorney you use must be cognizant of the laws of your local jurisdiction, but at least in the USA, a sharp attorney in Kansas City can close transactions across the country.
   Hiring an attorney from a lower-cost region can provide you the opportunity to retain a top-flight firm at a lower overall cost. Also, if you live/work in a smaller market, looking outside the region may provide you with a larger pool of experienced M&A attorneys from which to choose.
5. Not Trusting Your Instincts. Hiring and retaining a transactional attorney is a personal experience. You will be spending a great deal of time speaking with and listening to this person. While they do not have to be your best friend, you do have to trust and respect them and their opinions and counsel.
   Too often, we see clients who hire their attorney for all the wrong reasons (most often price/cost driven). If you do not genuinely like and trust the person you are contemplating hiring, your experience will be poor and you will not be satisfied with your attorney’s work.If you are successful in your business, you have been successful because of your ability to make difficult decisions. Hiring an attorney is not an easy decision, so you have to take proper precautions to make the right decision, including putting faith in your ability to listen to your “inner voice” and trust your intuition.