If a lawyer is serving his client faithfully and well, and if a client is using his lawyer effectively and appropriately, then a legal contract should allow for the same flexibility and ongoing goodwill as a handshake deal. Mark H. McCormack – The Terrible Truth About Lawyers
Businesses acquisitions come in all types and sizes, and so do lawyers, law firms and legal services. Hiring a good lawyer is very important because they can have a great amount of input over the success, or lack of success in purchasing a business. Careful selection of the right lawyer to guide you through the process of buying a business is critical. Most people spend more time shopping for groceries than they do for selecting a good lawyer.
Whether you are hiring an individual lawyer or a legal firm, there are certain steps you should follow.
1. Interview the Lawyer. Your interview should be polite but not deferential; never forget that the legal market today is a glutted market. Make your needs clear. What type of work does the firm or attorney handle? Are they familiar with small business sales and acquisitions? Ask whether there are any malpractice suits pending. This will allow you to determine their candor. Approach hiring a lawyer just like you would for hiring a manager to manage your business. Can you work with them? Will you feel comfortable making demands of them? Keep interviewing until you find someone with whom you are comfortable.
2. Check References. Ask for references of buyers they have represented in buying similar sized businesses. Before using any firm or individual, be sure to ask those former clients questions like:
a. Did the firm or attorney understand small businesses and understand the difference between giving guidance and making personal recommendations?
b. Were you satisfied with the firm's or attorney's service?
c. What bills and costs did you pay?
d. Did the firm or attorney meet deadlines?
If you can't get the names of references, keep looking.
3. Negotiate the Fee. A retainer is an anachronism in today's glutted legal market. As a business person you have a better bargaining position with attorneys than you might think. Legal services are a buyers market and the fee arrangement with an attorney should be negotiated with this in mind.
Once you hire an attorney they need to understand your philosophy. They are there to give you guidance and counsel. Define the assignment carefully. For example, you may want to know if the broker's purchase contract can be used with minor changes. Otherwise, you are likely to find yourself paying $20,000 for a lawyer to draft a new contract from scratch. A $20,000 contract that is new, sometimes overly complex and unproven, not a contract that has successfully closed thousands of business sales.
Remember the following in any contracts:
1. Keep it simple but make it complete
2. You want the contract to forge a relationship with a seller, not kill one.
3. It should reflect the quality of your mind
4. And, if it doesn’t sound like you, it’s going to be insincere to the Seller. You don’t want to be explaining what you meant to say, to someone who has a contract that has in it what you did say.
Defining your needs and narrowing the scope of assigned legal tasks is one way of saving legal fees and quickly closing on the business of your dreams.
Never forget that buying a business always contains risks. Owning a business contains risks. The determination you need to make, not your attorney, is whether or not those risks are reasonable and risks that you are prepared to assume. Lawyers can make a deal so complex and so frustrating that it can ruin a buyer-seller relationship. After you've closed on the business you are going to want a good relationship with the seller, therefore any contracts should help forge a relationship not kill one. You want the seller to be an ally, someone to call upon for advice when you run across problems or a change in the business happens. The odds are pretty good that the seller has successfully survived similar problems and similar changes.
A good attorney can give you guidance and counsel but make it clear to your attorney early on – preferably in writing – that you intend to retain sole and final discretion for any and all decisions. Never delegate any authority to your attorney.
