Always Use an Attorney, but Understand This First

There are as many types of attorneys as there are types of doctors. Everyone specializes in something different, and this is great because no matter what industry you’re in, you can find an expert. I’m thankful for attorneys! They understand the law down to the nuances of your industry and are equipped to offer great legal advice. I am a big advocate for using an attorney, but how you use one makes the difference.?

The role of your business attorney is to provide legal advice, not make your business decisions. In other words, they aren’t there to tell you if it’s a good deal, just where the risks are so you can judge the potential success. They are meant to provide the facts of a deal, merger, acquisition, or business situation as seen through the lens of the law.?

Legal Advice Versus Business Advice?

I was once working on a deal where an attorney was purchasing a property. To my surprise, he skipped over the legal documentation and only looked over the business terms. I asked him why, and he responded, “As long as you pay your mortgage, you’re fine. If you don’t, well, of course, you’ll be in trouble.”?

He joked not to tell his clients that he didn’t negotiate the legal terms.?

He was only joking and had the experience to make that decision, but this is a great illustration of how much more important the business terms are to take into personal consideration. If your attorney gives their stamp of approval, it’s likely it is a good deal—but it’s only one side of the equation. And if your attorney brings up potential legal risks, it also doesn’t immediately mean it’s not a good deal.?

“The main business of a lawyer is to take the romance, the mystery, the irony, the ambiguity out of everything he touches.” —Antonin Scalia

The attorney’s purpose is to alert you of the possible legal risks of going into a transaction or deal. It’s your job to weigh out the risks versus rewards and make the business decision. The truth is that the attorney doesn’t have any skin in the game. You’ve hired them to advise you, but they do not have to walk out the consequences of the investment.?

I’ve talked about trusting your gut regarding decision-making and how to know when a risk is worth taking. You want to be wise. You want to seek counsel, but at the end of the day, the decision to go for it or let the opportunity move on to someone else is up to you.?

Even If the Attorney Says—

I once had a client who wouldn't move forward with a deal because his attorney advised him there was a clause that needed to be changed. The bank had a strong offer on the table, but he wouldn’t agree if the clause wasn’t adjusted. I talked to the bank, and they agreed to waive all the fees, lower the rate, and give my client another million dollars—but they had to keep the clause.?

I told the client, and he gladly agreed to move forward.

“What happened to your attorney?” I joked. The thing is, every business owner knows in their gut when it’s a good business decision. He understood the risks from his lawyer, but he was able to weigh out the pros and cons and make the ultimate decision.

This is a great example of why you have to stay in the driver's seat of your business!

There are plenty of lawyers out there who are more than happy to share all of their thoughts on a deal, legal or otherwise, but that still doesn’t make it sage business advice. If a lawyer is trying to pressure you into a specific decision, don’t lose sight of the fact it’s your business, not theirs. You will live with the financial repercussions.

"Most people ask questions because they want to know the answer; lawyers are trained never to ask questions unless they already know the answer." —Lani Guinier

I have had many people—qualified people—doubt ideas that later produced my business millions. You have to trust your instincts and evaluate the risk versus reward for yourself!?

Never give up your authority as the decision maker for critical decisions. Whether you’re working with a lawyer, financial adviser, or consultant, listen to their counsel and let them reveal any facts you’ve missed, but the decision is yours. Remember, if the attorney was a businessman, he would have left law and started his own business.

The buck stops with you.

I’ll leave you with a few final pieces of advice:

1. Never go into a deal without an attorney first reading over the documents and explaining the legal ramifications. Always understand the risks.
2. When choosing an attorney, you want an attorney that understands you—someone that thinks like you. Find an attorney that gets your vision and specializes in your niche, and use that attorney to review all contracts before you ultimately make the decision.?

I’m curious… Do you use an attorney for ALL your business deals? Why or why not??