Opening scene:
It was a nightmare for my friend Mary.
Over the past decade – she and her business partner had created a thriving real estate development firm. With what had been until recently a great working relationship.
Now her business partner was in the early stages of Alzheimer’s.
Across from Mary that morning sat her business partner’s wife and adult children. They were understandably upset. They seemed scared. And they were making demands of Mary relating to the firm’s future.
Then Mary reached into her briefcase.
Flashback to 10 years earlier:
The phone rang on my desk at a law firm in Manhattan. It was my friend Mary – with great news: She was about to launch a real estate development firm in another city – and she’d be doing this in partnership with one of her business school professors.
Exciting prospects.
But Mary was concerned: How do I protect myself legally? What are my duties to a co-owner? What are my obligations to third parties in connection with the firm?
And this would be her sole livelihood. She was going to be very much on her own.
I didn’t talk legal technicalities.
Not at that point.
The first order of business was to find Mary the right lawyer – a go-to attorney who had successfully guided others through what she and her business partner were about to launch.
So I introduced Mary to Jack – an experienced corporate lawyer – in the city where Mary was to co-found her firm. Jack had been through the business wars. Jack was the right guy.
(I was just two years out of law school and regarded Jack as a mentor. I’d graduated from a prestigious law school and was working at an important Wall Street law firm. But even if Mary’s business had been located in the city where I was then practicing, I would not have raised my own hand to take this assignment. Because I was way too early in my learning curve as an attorney.)
Back to Mary’s meeting with her partner’s family:
What Mary removed from her briefcase that morning was Jack’s handiwork — drafted and signed a decade earlier.
It was a partnership agreement. A written contract that clearly and thoroughly expressed Mary’s and her business partner’s decisions about their business:
- Who would own what?
- Who would have what duties to whom?
- What were the specific allocations of decision-making and governance authority?
- We have a good relationship now – looking forward to co-founding this firm — but what if something bad happens?
The family read the agreement. Their demands ceased.
Together Mary, her business partner, and her partner’s family had faced a personal tragedy beyond anyone’s control.
But because of measures taken by my entrepreneur friend and my lawyer friend before launching the firm – this personal tragedy was not compounded by financial calamity.
Or by a courtroom brawl.
Or by ill will between Mary and her business partner’s loved ones.
The point:
Many of my posts address aspects of the legal industry that don’t work so well.
These problems arise mostly in the way that lawyers deliver their services to business:
- Assignment of lawyers to tasks — too heavy on inexperience (see post here), or duplication of effort by design (see post here),
- Pricing of their work — the perverse incentives of hourly billing (see post here) and the “associate leverage” business model (see post here), and
- Poor design of work flows — attorneys in both law firm and in-house contexts don’t think in terms of business processes but instead tend to throw “bodies” at tasks (see post here).
But there are some business tasks for which you absolutely need an excellent, experienced lawyer who — like Jack — has “been through the business wars” and has your interests at heart.
So bear in mind that — while vigilance is always warranted when you deal with the legal industry — some of what attorneys do for your business can be worth its weight in gold.
(Just make sure that your gold goes only to legal help that really adds value to your business. Not to any of the three forms of waste detailed above of the sort that most lawyers in law firms and in-house have embedded in the way that they deliver their services.)