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A provider of automobile oil filters used to advertise that
“you could pay me now or you could pay me later”.
The advertisement spelled out that it was significantly
more cost effective to pay now, rather than to pay later.
In many circumstances, the role the client allows his/her
lawyer to play will have a significant bearing on how much
they ultimately spend on legal fees. The purpose of this article is to emphasize that the proactive
use of counsel is, almost invariably, the most cost-effective
way to engage of a lawyer.
Letter of Intent
Many transactions are started with a Letter of Intent.
Ideally, this is intended as an expression of interest
and resolves key business issues.
However, a poorly drafted Letter of Intent may restrict
a lawyer’s ability to structure the transaction, by being
an agreement in itself.
Offer
to Lease
Prior to entering into a formal lease for commercial property,
it is customary to sign an Offer to Lease.
As with a Letter of Intent, the involvement of a lawyer
at an early stage may avoid the position being taken later
that an issue has been previously settled.
Hiring/Firing
of an Employee
As many employers are keenly aware from previous bad experiences,
there can be significant cost implications arising from the
termination of an employee.
Involvement of counsel at an early stage can allow
the employer to address many issues.
These issues include the appropriate notice period,
developing a progressive warning system in order to allow
the employer to take the position that the employee has been
justly dismissed, and preparing an employment agreement.
Financing
Lending institutions will commonly prepare a Commitment Letter
to indicate their willingness to provide financing.
In certain circumstances, many of the terms of the
Commitment Letter are negotiable.
For example, the lending institution may be receptive
to a limit on the personal guarantee. Moreover, the lawyer may be able to structure the transaction
to optimize tax and other considerations.
Overview
The foregoing is not an exhaustive list.
The message of this article is that the proactive use
of counsel will almost certainly save the client money in
the long run.
Douglas
H. Hancock is a partner practicing commercial law with
the law firm Daigle & Hancock.
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