Lawyers are expensive. Even lawyers know that. What isn’t well known is that lawyers like me are far less expensive than lawyers like my partner. My practice involves setting up companies, putting together contracts and employee agreements, transactional work, and working with clients to advise them on compliance, both in business and regarding health care, which increasingly touches all our lives. I even try to work with my clients on a “concierge” basis, where I’m already a part of their team on a flat rate basis. In fact, I’m their least expensive “employee.”
My partner, however, charges $350 per hour to fight cases out in Court. 4 hours to draft one complaint (not unusual) will cost $1,400, and you’re just getting started.
We have recently had a run on clients with businesses that they feel are being “stolen” out from under them, or that weren’t properly formed in the first place. Now we have to try to solve the problems and, as you can imagine, it’s a very emotional and tense situation. Everyone believes that they are in the right, and everyone believes that the other side should have to pay.
Let me give you some examples. I have a client who formed a company with a partner, where they were both supposed to invest the same amount of money to start. It was a significant amount of money, over $100,000. The other partner got married, and now my client was in a partnership with the husband and wife, which he never intended, of course. They ended up in a dispute and the husband and wife team would not provide corporate records, as required by law. The company ended up in receivership and had its assets frozen. For a “savings” of a few thousand dollars in attorney fees to properly structure the business and set up dispute resolution terms and buy-out provisions, each side spent tens of thousands and the business was destroyed.
Another client went to sell her business to a former employee. The two of them spent a great deal of money and time putting together the Purchase Agreement and negotiating over price, non-competes, payment terms, guarantees and other material terms. Then the buyer told my client she didn’t need an attorney to close it, the attorneys were taking too long and they could just do it themselves. If you’re trying to work out an agreement with someone and they tell you that you do not need an attorney, run, don’t walk.
The sale of that business was to be for $250,000 over a 3-year period. Each side spent over $120,000 in attorney fees to try to do what would have been done for at most a couple of thousand dollars if they had just used their attorneys.
Another client agreed to do their partner a favor. Their partner had some personal liabilities and a bankruptcy. The client agreed (prior to my even meeting them) to take all the ownership of the company. The actions of the partner turned out to be fraudulent and the client got hit with an IRS tax liability, a State of Florida Department of Revenue Unemployment Tax liability, and the threat of criminal prosecution if he didn’t pay tens of thousands of dollars in taxes and penalties he did not owe.
Those are the problems. Next time, we will look at the solutions.