Making It Legal:

“The meter is always running,� is a perennial complaint of small business owners when dealing with their attorneys.  And yet, if our attorneys aren’t properly informed about what we’re doing, they can’t give us the appropriate advice.  The latest plaint I’ve heard is:

My lawyer charges me so much money whenever I call him. I try to refrain from calling him but sometimes its important to give him updates. I pay all my bills to him. Are there lawyers that exist that don’t charge you like this for phone time? I feel taken advantage of… 

As business clients, there are a few things to keep in mind. 

1. This is a business relationship.  Your attorney sells his or her expertise, often measured in terms of the time spent.  Would you expect to regularly give of your own expertise without compensation?  Would that be fair to you? 
2. As I mentioned in my post, “Why Can’t My Attorney Be My Friend? � think carefully about why you are calling the attorney.  Are you looking for advice, or do you want to vent ad get general business advice?  If the latter, there may be more appropriate professionals whose time is not as costly. 
3. Many things can be negotiated with an attorney.  I don’t know what hourly rate you are paying, but you could ask for a reduced rate (or no charge) for things like listening to voice mail messages – particularly if the attorney is going to call you back any way to find out more about the situation.  Or, if the purpose of your call is just a status update (and not an in-depth exploration of your attorney’s expertise), a reduced rate might be appropriate.
4. If this particular attorney’s fees are breaking your bank, find another attorney whose fee structure fits better within your budget.  After all, you wouldn’t lease a Rolls Royce if you could only afford a Kia.  There’s no shame in making the price part of the reason you are choosing to work with someone.

The “Case of the $65 Million Pants� got me thinking over the holiday about how small business owners can protect themselves against crazy lawsuits.  Often, it’s not just (1) operating as a corporation or limited liability company to shield your personal assets, or (2) having the right contract provisions, or (3) knowing how to move a lawsuit along quickly (see my business partner, Ron Paltrowitz’s, article, “Shooing Away the Frivolous Lawsuit Pest�).  

Often, what can make the difference between surviving the nightmare and having it drown you is insurance.  And not just the kind of insurance that covers a claim (although I think it would be hard for a dry cleaner to anticipate a $65 million claim).  I’m talking about defense coverage.  This is (or should be) a part of your policy that will pay for some or all of your legal fees in the event that someone sues you for a claim that is covered by your insurance policy.  Generally, fee disputes aren’t covered.  But if your business insurance coverage protects you against your negligence in providing your product or service, defense costs may well be included.   

If you don’t have business insurance, get it.  As you can see, people bring lawsuits for cockamamie reasons, and there’s no law preventing them from doing so.  If you do have insurance, make sure your defense costs are paid by the insurance company.  If they are excluded from the policy, you could end up footing the bill out of your own pocket!  And if defense costs are included, find out if there is a deductible and how much it is.  Sometimes, you may get a better overall rate on a policy by accepting a higher deductible.  But, once again, the deductible is money that you will have to pay out of your own (or your company’s own) pocket.  And those amounts can be in the thousands of dollars!  Yes, insurance deductibles are tax deductible . . . but as a tax attorney friend once cautioned me, “Tax deductible does not mean free.�  Weigh the pros and cons of paying a little more over time against being hit hard with an unpleasant surprise.

As a lawyer, I love what I do.  I’m proud of how I do it.   

And sometimes, I hear about members of my profession who just make me want to spit.  On them. 

From the Annals of the Preposterous, here’s a story which, if true (I have not personally verified the pleadings) is an appalling addition to the “lawyers are [expletive]� files.  I can’t imagine what would possess a judge to bring such a lawsuit against a dry cleaner.  Nor can I explain why, after two years, this wasn’t laughed out of court long ago.  Nor can I possibly fathom how a pair of pants (and the ensuing distress at losing them) could be worth $65 million, consumer protection laws notwithstanding.  (That must be some tailor!).   

So this is a plea.  As Grace Kanoy reported, The American Association for Justice has taken action on this case.  But remember:  you hear these stories precisely because they happen relatively seldom.  That’s why it’s called “news�.  This is one meshugge apple among hundreds of thousands of decent, hard-working, caring people involved in the legal and justice systems.  And on behalf of the legal profession, I’m sorry. 

Well there’s absolutely no reason that she can’t.  Many attorneys are fun, interesting, caring people (you have to be, to go into a profession to solve people’s problems)!  But the “I thought my attorney was on my side . . . until I got the bill� plaint has come up a few times since I published my “Even the Big Players Complain About Legal Bills� post.  As Lauren commented: 

I started using my attorney for everything and felt so covered and so safe BUT then I got the bill. I was charged for things like “Listening to clients voicemail” and I couldn’t believe it.  

So let me add this to the subject.  Because of the stress of entrepreneurship, many business owners look for support.  That’s perfectly natural (and wise!).  Being part of an entrepreneur’s advisory team, a small business attorney is a natural place to look for it.  But sometimes, business owners may be looking for emotional support even more so than professional support.  Take the example of “Susan,” a consultant who worked with a difficult client.  Susan was upset that the client didn’t pay all of the fee . . . but what’s even more galling is that the client is complaining and wants her money back.  Susan spoke to an attorney (me!) and unleashed a torrent of information about the client, how she’s crazy/inconsistent/unrealistic/hasn’t a leg to stand on.  Part of what Susan was seeking was emotional support and validation, of the “Yes, you’re right, the client is crazy; you’re not being treated fairlyâ€? variety.  Susan wasnted to vent to a sympathetic ear (don’t we all?).  After all, who understands the trials and tribulations of her business better than her attorney?  However, attorneys sell their time, and the more you lean on an attorney in a quasi-therapeutic capacity, the higher the charges for telephone calls will mount. Here’s a way to manage that: 

• As I mentioned before, get really clear before beginning the attorney-client relationship on what the attorney will charge you for.  Use Lauren’s example (“listening to client voice mailâ€?) as a launching off point.  Ask for cost (and time) estimates for the services you’ll want performed.  You’d do it with a web designer – why not with your attorney?  If you want to be sure that the attorney’s style and demeanor is “simpaticoâ€? with yours, arrange for an initial in-person meeting where you can clarify many of the “how-will-we-work-together?â€? issues.
• Before you call your attorney, think carefully about what you want to say and why you are calling.  Are you looking for your attorney’s advice?  Or are you calling because you want to do the talking?  You are paying an attorney for her expertise, not just to listen to you talk.  If you real need is to be listened to, think about using a business coach or therapist instead to clear the emotions out of the situation.  You’ll then be able to use the attorney more effectively for, and with greater focus on, the business problem-solving. 
• Join networking and mastermind groups.  Your attorney can help you solve a business problem – and even prevent them from occurring in the future.  But for ongoing emotional and business strategy support, you should also cultivate a team.  Networking and mastermind (also called “peer advisoryâ€?) groups can help you develop and find members for your “Support Squadâ€?.
• Cultivate the attorney relationship “off-lineâ€?.  There are ways to develop a comfort level with your attorney other than taking time on the telephone.  Ask to be placed on an invitation list if she gives seminars or teleclasses on business-related subjects.  Subscribe to a newsletter or other publication list that she publishes.  You’ll not only learn a lot; you’ll have a better idea of the questions you should be asking her when you next speak on the telephone.  And that will help keep your costs down!

There’s the old (sad, pathetic, and worn, I might add) joke “whaddaya call 500 lawyers at the bottom of the ocean?  A good start.�  And I know that SOMEone will point me to a treasure trove of other lawyer jokes.  J   

So let me shed at least a little illumination on how to work with this prickly group of professionals.  As a business owner, you need them.  Like you need water to drink.  Sure, you could live your life drinking Fanta®, or even pineapple juice, but you won’t be as healthy as you could if you drink (what’s the current count?) 8 glasses of water a day.  Same way that you could do your own legal work, or even rely on your accountant to handle some of it (egads!), but your business won’t grow up big and strong.   

Here’s a handy little article hailing from the San Diego chapter of the National Association of Women Business Owners: What’s a Business Lawyer for Anyway? And if you have any questions, let me know!

Everyone has a favorite “whipping boy,� and for entrepreneurs, lawyers and legal fees often fill that role.  Sigh.   

Well, entrepreneurs, you’re not alone.  Seems a study of in-house and general counsel of major corporations in the UK have a similar gripe -– in particular, that the bills are padded with junior associate time.  There are ways to handle the legal fee situation without foregoing legal help altogether. 

• Ask detailed questions about billing structure before you start.  You have every right to ask, and you certainly don’t want to be surprised.  Who will actually be doing the work on your matters?  What is their billing rate?  Are you charged for inter-office communications, that is, two attorneys talking to each other about your situation? 

• Get clear before you call.  While an attorney can (and should!) help assuage your fears and anxiety, attorneys are like many other consultants:  they often sell their expertise in time-based increments.  And have a little sympathy; we can only (legitimately) sell the same 24 hours.  Every hour an attorney spends listening to the vengeful fantasies of a wronged client is an hour that can’t be spent on someone else’s matter.  So if you have a question, ask it; if you want to chew the fat and be “chummy,â€? try to find another alternative – take your lawyer out to dinner or drinks, or save the therapy hour for your friends.

• Set a budget.  Unquestionably, you don’t want to drown in legal fees, but it’s not reasonable to expect to get everything for free.  You expect to be paid for your products and services, yes?  And to be paid a fair amount (like, not 50 cents on the dollar just because someone doesn’t like what you charge)?  Discuss in advance what you can reasonably expect to pay for the services and how you can help keep costs down. 

• Raise billing questions immediately.  If there is anything you see on the bill that you don’t understand, ask about it.  There’s no shame in doing so.  My mother had a saying (about, for example, the diamond necklaces that would sparkle in Tiffany showcases): “If you have to ask [the price], you can’t afford it.â€?  Not only do I disagree totally, but in the business world, that’s a senseless attitude.  You want to know that you’re getting value for your money.  And people do make mistakes.  For the same reason, you should check your bank and credit card statements carefully every month.

You’re an entrepreneur – be fearless!  Don’t let the prospect of attorneys and their possible fees (you could be pleasantly surprised) deter you from seeing the help you need.  Here’s a shameless plug for a resource I have created on my Wise Counsel Press website – a free podcast on savvy strategies (and questions to ask) for choosing and using attorneys.  Check it out and let me know what you think!