- Why Saving Money on Attorney's Fees Can Cost You a Fortune
- October 31, 2013 | Author: Eugene M. Rubinstein
- Law Firm: Jerry L. Freedman A Professional Corporation - Westlake Village Office
- We are litigation attorneys. A large percentage of litigation we handle is a result of friendly business arrangements gone bad. The parties often either have no written contract at all or have “saved money” by failing to retain an attorney to help them with the preparation of a business contract. Saving money is a good idea, but you have to be careful that you are not saving money in areas where you need to spend money. Having an attorney draft or review a business agreement is a “waste of money” much like paying your insurance premiums is a “waste of money” - you will never need the coverage until there is a fire, and by then it will be too late.
Most of the time, business disputes are not a matter of one party simply trying to swindle the other. However, swindlers do exist and if you do enter into a contract with a party who is trying to take unfair advantage of you or your business, a contract clearly identifying the rights and responsibilities of all of the parties to the contract will go a long way toward protecting you. More often than not, business disputes involve a genuine disagreement as to what the rights and the responsibilities of each party actually are under the contract.
Businesspeople are good at making deals which present new business opportunities. They are usually not very good at writing contracts which clearly identify what the rights of each party to the contract are, what their responsibilities are and what happens down the road. As the saying goes, “the devil is in the details.” This is where lawyers come in - figuring out the details is what lawyers get paid to do. So while it is tempting to save a few hundred dollars, or a few thousand, in legal fees by either writing your own contract or simply signing a contract someone else’s lawyer prepared without having your own lawyer review it, those “savings” could cost you enormously down the road. If the cost of having a lawyer draft and negotiate a contract hurts your wallet, imagine the hurt resulting from the cost of litigation. If you have to resort to the courts to resolve a dispute, you are looking at potential expenditures measuring in tens of thousands of dollars or more in legal fees. In addition to the legal fees involved, a lawsuit requires a significant amount of time and effort from you; time and effort which could and should have been spent on your business. The mere existence of litigation involving you or your company can, and often does, scare away potential business partners, investors and opportunities for new business. Add the fact that litigation can, and often does, take years to resolve and it is clear that the effects on a business can be devastating and sometimes leads to the closing of a profitable, successful enterprise which took years of hard work and dedication to build. And that’s if you win your case.
Of course, no attorney can guarantee that a well-written contract will prevent all business disputes. However, an agreement which clearly sets forth the rights and responsibilities of each party can go a long way toward resolving disputes before they get to the litigation stage. Even if litigation turns out to be unavoidable, a well-written contract can help reduce the potential financial exposure, limit the areas of disagreement and lead to a faster settlement which allows the business person to get back to running her business.
In Part 2, we’ll take a look at some of the other benefits of a contract being drafted by a lawyer and some examples of nasty surprises which we have been able to help our clients avoid.