Business lawyers often argue that involving a lawyer early on in a transaction is cheaper than fixing a problem later. Clients sometimes want to negotiate a deal on their own and then have a lawyer write it up. The concern might be cost or the attorney’s grasp of the business issues. Further, an attorney who understands how legal strategy fits into your business strategy can provide Legally Informed Strategy, thereby adding value to the transaction.
The Benefit Of Having Legal Advice Early On
In a recent blog post, John L. Watkins, Esq. of Chorey, Taylor & Feil, APC in Atlanta presents a persuasive argument for getting a business lawyer on board at the beginning of the transaction. The problem with waiting far into the deal is that the client may have to remodel or completely tear down what has been negotiated. The process of legal remodeling or tearing down a document can be costlier and riskier than getting legal advice early on.
As to cost, Mr. Watkins notes: “the irony is that involving a lawyer from the beginning and doing the transaction correctly will probably be no more expensive than either a last minute tear down or a remodeling project.”
Mr. Watkins summarizes the legal reasons for getting a lawyer’s advice at the beginning of the negotiations:
Business lawyers are used optimally when they are involved early in the process, and certainly before the key terms are struck. Lawyers can provide valuable input on how the transaction might best be structured. Lawyers can also identify key terms and conditions that should be included to protect the client’s interests. Lawyers can also advise the client on whether terms proposed by the other side are carry unanticipated risks.
Discussion
Bringing in an attorney early on a business transaction usually results in a better outcome for the client. Yet, part of the reason why clients sometimes minimize the lawyer’s role is the belief that the attorney does not adequately understand the business implications.
A business lawyer who understands how the deal fits into the client’s strategy, the competitive environment, and how the client creates and captures value can add value by providing Legally Informed Strategy.
This discussion raises the question: How can attorneys add value to business transactions? We would love to hear your thoughts.
NOTE: DYP Advisors, Inc. has no business relationship with John Watkins or Chorey, Taylor & Feil, APC.
