Working with your lawyer

Kearon O’Connor is a practicing lawyer, working for Brown Rudnick and has worked with many entrepreneurs across a variety of sectors. Stephen Armstrong is a former lawyer turned entrepreneur.

S.A. In my previous career as a lawyer I spent 20 years in the City, but a year ago I was tempted to take part in a management buyout. The decision was a bit of a no-brainer because, even as a lawyer, I’d been trying to understand, from a business perspective, how best to get legal advice and how best to use the legal profession as an entrepreneur.  Over the last year I’ve turned that completely around. As a group, we employ about 4,000 people in 11 countries and turnover is about €800 million so we spend a lot of money on legal and it’s been quite an eye opener to me on this side of the fence as there’s a variety of quality you can get in the legal profession. I think the lawyer has a unique angle on what’s happening in the business. He can be genuinely independent and can give, especially if he has experience, another view. A lawyer can therefore be an invaluable tool in the development of the business if used properly.  

Now that I’m buying legal services I want someone who’s got the technical know how and who can also give actual real advice. I don’t want stacks of paper that tell me what I can learn by reading the documents.  I don’t want lawyers giving me a lease report that tells me what’s in the lease. I can read a lease. I’m looking for advice. I’m looking for, “If you were in my shoes, what would you do on this point? How would you negotiate that?” There’re very few lawyers, actually, that can do that.

K.O.: Stephen has a new point of view as an entrepreneur. But look at it from my point of view. If you were going to hire me to do your job, which is buy a company or some such thing, my interface with you is to sell you the ability to do a job. Internally, I’ve got to marshal a whole stack of resources in a whole number of areas to do a whole stack of separate things that I, as an individual, am not capable of doing. You have to remember that law has become such a commoditized little thing and that there’re people who only do that thing; therefore, the word ‘lawyer, in my opinion, is a sort of abstract concept. There is no such thing because what you’re actually looking for, as your interface to the legal profession, it’s not a lawyer but rather a manager of the provision of legal services. That means somebody who knows how to get you legal services at the level you require and at the price you require. Perversely that’s what you become as a lawyer through experience.  

Here’s another thing, and this is the other point that I think Stephen touched on, there is a price and value issue to which there are two separate answers. The hard answer, from a lawyer’s point of view, is ‘I want your money hour-by-hour,’ but the soft answer is, ‘I want an on on-going relationship.’  If you look at Silicon Valley during the technology boom there were several law firms who said: ‘Oh, we’re far too busy at the moment and we’re not taking on any new clients.’ Those firms aren’t in business anymore; they’re gone, so it’s dangerous to get sucked into a rigid legal firm mentality. You have to approach things from your own personal point of view.

S.A.:  I agree with Kearon on this. I as a lawyer would never want to charge by the hour.  Now obviously, if I want to make money, yes, but if you want to give advice and you want to be respected for that advice, and you want the client to come back, you’ve got to give a value for money service. You’ve got to explain what’s involved at the outset. Where the crunch points are, and what it is they’re paying for. That’s what I expect to see; this is the biggie you’re paying for. This is either the indemnity policy, or it’s the key piece of advice, or the key items in negotiations.

Comments

K.O.: Of course in my ideal world I would meet a client, tell them my hourly rate, work for 4,000 hours a year and then have them pay me for those hours multiplied by the hourly rate. But guess what? That doesn’t happen and you’d be amazed if I could get away with that, in fact I’d be amazed. Here’s a piece of free advice from a lawyer. If you’re paying a lawyer by the hour, go home, have a cold shower, have a big drink, and think again. I would seriously stress this, because what I’m going to suggest to you is this; the only person that’s getting value out of that, short-term, is the lawyer. What I would suggest is that you’re not actually looking for legal advice; you’re looking for relationship advice. In this country, the traditional approach has been that you get this advice from your accountant. But increasingly people are not getting this from their accountants and it’s the lawyer that has to assume this role.

S.A.: If I’ve invented something, I’d want to spend all of that on protecting the invention, nothing else. Making sure I’ve got the IPs absolutely sorted out. If my business was mowing lawns, I’d probably want some terms and conditions that I could use that would ensure I get paid. All I’d be concerned about is getting paid for mowing somebody’s lawn. That’s what I’d concentrate on. If I was renovating property, I’d spend it on the conveyance, and make sure that I’ve got the lease. You need to focus on the things that you can’t do yourself.

B.T. If you’re an entrepreneur and you have five thousand pounds to spend on legals, where would you spend it?

K.O.: It’s Property Rights, one way or another. Protecting your property.

N.E.: Going back to the early stage business, you said an interesting thing. You seem to imply even employment contracts may be unnecessary? So, you’re an entrepreneur, you’re setting up, what’s realistic? Should I have a shareholder agreement, yes or no?

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