Lawyers are innately risk averse. They abandoned their pretensions to become journalists, footballers, or entrepreneurs because of the risk of failure, despite the chance of success. However, believe it or not, legal advice can be a risky business. Get it wrong and there is a good chance of being sued.
We all know that the traditional lawyer likes writing and talking because the more he writes and talks, the more money he makes. The fear of being sued, however, makes him want to write and talk even more, setting out every risk - no matter how remote - and recommending no particular course of action, just in case it goes wrong. Such advice tends to take the form of a lengthy memo and is a regular source of frustration for SME clients.
Lawyers are becoming more sophisticated these days and are repackaging their services in a variety of charging structures
To solve this problem you need to do a trade. Accept some risk in return for punchy advice that makes clear recommendations. In other words, instruct your lawyer to deliver advice in the form (by email or telephone call) and style (punchy; with recommendations) that you require, omitting the de minimis risks. It may seem paradoxical but the more you absolve your lawyer of legal responsibility, the more value
the advice will deliver.
The legal profession's notorious ‘on-theclock' charging model passes the risk of project overrun from lawyer to client. It has a double-whammy effect too by rewarding the lawyer for project overrun. As such, it drives the wrong behaviours and encourages your lawyer to deliver more service than you require. If you cannot avoid being ‘on-the-clock', flush out the credibility of an estimate by asking for the budget to be supported by a short work plan. If your lawyer cannot or will not support the budget with a work plan, the budget (and arguably the lawyer) has little or no credibility.
Your lawyer should offer a fixed price when the scope of the job is clear. However, fixed prices are not a panacea. They shift unquantifiable risk from the customer to the supplier and are even more unhelpful than on-the-clock, causing quality of service to slip and disputes to arise regarding what is in and out-of-scope.
Look for charging structures that share risk, not shift it. Lawyers are becoming more sophisticated these days and are repackaging their services in a variety of charging structures. Shop around and find a service that is suitable for your business.
For example, Beachcroft offers a Legal Helpdesk for SMEs with a flat annual fee for an unlimited number of day-to-day queries. One month the Helpdesk gets hammered (and we lose); the next month the Helpdesk is quiet (and we win). As we are operating under a flat annual fee, we are encouraged to deliver succinct advice.
Your relationship with your lawyer is just that: a relationship. The most successful long-term business relationships are partnerships, they share financial risk and reward. The relationship between lawyer and client is too often characterised by the shifting of risk, not the sharing of it. Address the problem of risk allocation and your lawyers will be better placed to deliver value for money.
For more information please vist www.beachcroft.com [1]