How to… speed sign low value contracts.

Posted on by thelegalknow

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Right, this goes against my lawyer instincts because in my opinion you should always read everything you sign, in as much detail as possible. However, if you genuinely do not have the time and it is a considerably low risk document (so not worth a million pounds/dollars), then here are three things to do before you sign which will alert you of any potential risks and give you some protection going forwards.

  1. Exclusion and limitation clauses – Look for these types of clauses or ask outright if there is such a clause in what you are signing (get them to refer you to it so you can check their honesty). This will list or summarise everything that the contract/document does not include and what the other party is not liable for. The best example of a document riddled with such clauses, is an insurance policy. When you sign an insurance policy, it is important that it covers what you want and one of the quickest ways to confirm this, is to take a quick look at what is excluded. For example Billy asks Janet for an insurance policy for his car. Janet gives him an insurance policy for his car. Billy is in a hurry for a meeting and trusts that he has been given a policy to insure his car, HOWEVER he flicks to the exclusion clause and sees that the policy does not cover RED cars. Billy’s car is maroon, so, arguably red. Billy takes this up with Janet. Janet amends the policy for Billy so that the operative clause clearly states that Billy’s maroon (and therefore not red) car is covered. Always check what a contract expressly excludes.  If it excludes accidental damage and you need it to cover all damage then obviously you are not signing. Another example would be a limitation of liability clause, often found in services contracts. Say for example you hire a professional polisher to polish your silver worth £3,000 but the contract of hire states that liability for any damage arising out of the contract at the fault of the professional polisher, is limited to £500 only. Obviously, you are not going to sign. Who’s going to pay for the remaining £2,500 worth of damage? Always check how liability of the other party is limited. If you sign a contract with a rubbish liability clause, that’s your fault.
  2. Payment provisions – Always check that the numbers are what you agreed. An extra zero here, a missing discount there is BAD for business. If you have agreed a specific discount just take that second to double check that it is expressly in the contract. DO NOT worry if the other party finds it offensive that you are checking, they will respect you for it. Even if my best friend gave me a contract to sign, I would check it right before their very eyes! Also, what happens if you pay late or you have a dispute with a charge? What does the contract say about that? Checking this clause or asking directly about this clause (then getting them to refer you to it specifically) will ensure that the most important thing of all, money, is properly accounted for!
  3. Termination – Imagine your face when you try to switch suppliers and you find that you have signed an indefinite contract! That’s a worst case, silly scenario but hopefully it highlights how important it is to know how to get out of a contract before you sign it (I’ve said this before). Business is unpredictable and you may need to get out of a contract really fast – knowing the termination provisions at the outset can help you to consider all possible scenarios in which you may want to terminate the contract early and therefore judge whether the contract in question is one you want to sign or amend.

I have to also add the obvious cautions, check who you are contracting with. If you are doing business with Joe Blogs Plc make sure it says Joe Bloggs Plc and not Joe Bloggs Ltd. Also, don’t forget the dates, it will take no time at all to make sure the document is dated correctly. Again, these are just TIPS for those of you ALREADY signing standard contracts without checking ANYTHING. If you are one of these people, at least check the above three things or else suffer the consequences. Once you sign a commercial contract, there is very little anyone can do for you if it turns out to be a bad deal. The Courts have no sympathy for business to business contracts because both parties are considered sophisticated.

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Are you clear?

Posted on by thelegalknow

 

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It’s been a while. Like you, I’ve been busy. So much is going on and it is great. I’m learning more and more about the things that people like you (business owners and entrepreneurs) need from their lawyers. However, in the last few weeks something has come to my attention. Lawyers are renowned for it but it appears that we have finally passed it on to our clients….ridiculous speech.

What happened to just saying it how it is? Where is all this diplomacy  (by this I mean, indirect, I don’t want to hurt your feelings kind of speech) coming from? In my opinion, there is no room for diplomacy in business. Business must be clear, direct and concise or else there is a risk of miscommunication, and miscommunication can be fatal. When we don’t understand our offers, counter offers and rejections, opportunities are lost. If you want me to make you an offer for a pink car, DON’T ask me “what else can you do for me?” when I make you an offer for a blue car. Just ask me what my best price is for a pink car! Then, we can have an honest negotiation about what you actually want and what I want to give you because hey, its good business for me!

I recently had to agree a fee arrangement with a client. It took months. It wasn’t that they didn’t want to pay. They just wanted to pay in the best possible way for their business. I have to admit that I was impressed. These dudes didn’t just take our usual options a, b or c at face value. They demanded an understanding of each option and an examination of why any of those options would be good for them. The solution, a unique fee arrangement where I get paid and my client is happy paying.

SO, strip away the phoney language that you may have learnt in business school or read in the Financial Times and communicate honestly. Try it today, have a plain English (or whatever language you speak) conversation with your business partners. Come back here and leave your comments below. It felt good right? Like the rain had cleared and the sun had come out!

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Show me the MONEY!

Posted on by thelegalknow

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When you are starting a business, you need MONEY. When you are growing a business you need MONEY. Most businesses do not make it off the ground because of cash flow issues. They have no money to invest in their product/service. NOW, I know that financially smart people avoid debt and credit cards etc BUT when it comes to business, debt is your FRIEND.

Debt is cheaper than equity because the lender faces less risk than a shareholder would, and also because the debt interest is tax deductible in the UK (and most other countries too). Debt gives you the means to make a profit. Your profit pays off the debt AND reinvests in your business producing more profit. So, hopefully you can see how you should not be afraid of debt when it comes to your business. Let’s look at some different types of lending.

Line-of-credit loans: These are short-term loans. They allow you to access a specified amount of money that is deposited into your business  account on an as-needed basis. You will only pay interest on the amount that is actually loaned to you. Line-of-credit loans can be used to buy inventory and pay operating costs for working capital, among other things, but usually not to buy real estate or equipment. For example, you have a line-of-credit loan of £3,000. You want to draw down £1,500 to purchase some fresh lobster for your restaurant. So, you provide your bank with evidence of the cost for the lobster and your bank, satisfied with your evidence, approves the the draw down of £1,500. You only pay interest on £1,500.

Overdrafts: Overdrafts are very flexible. They are easy to set up with your bank and you can usually pay back the overdraft, quickly and informally if your company can afford to do so. However, overdrafts are so informal that a bank can usually withdraw an overdraft facility at any time, which could leave a company in financial trouble. Overdrafts are good safety nets for if you come across unexpected liabilities. Every business should have one…in my opinion.

Revolving lines of credit: This loan offers you a certain amount of money in a specified period of time, and allows that certain amount of money to be borrowed again upon repayment within that specified period of time. For example, say you take out a one year loan of £50,000 on 1 January. You draw down the full amount of the loan on 2 January and subsequently pay off the full amount in May. You can then, if you wish, draw down the full amount of £50,000 again, at any time within the life of the loan. You can keep repaying and drawing down up to £50,000 until the end of the loan. This type of loan is great if you want to draw down monies on an as needed basis BUT you also want security that such monies will be available to you unlike with an overdraft or a line-of-credit. You will usually have to pay a commitment fee for the unused part of the loan. The commitment fee is generally specified as a fixed percentage of the unused loan amount.

Bullet loan: A bullet loan is a loan where a payment of the entire principal  (fancy way of saying the “amount”) of the loan, is due at the end of the loan term. For example, if you take out a one year bullet loan of £50,000, the loan repayment is due at the end of that one year term, in one swift BULLET payment. Under these loans, you usually have to draw down the full amount of the loan immediately and you do not have the option of repaying it and drawing it down again. Interest can be paid periodically within the term of the loan OR it can be paid with the principal, in a bullet payment at the end of the term of the loan.

Angel investment:  There is also the option of getting a loan from an angel investor. These investors are usually experienced entrepreneurs looking for the next big thing; they’re in it to win it. Therefore, angel investors typically demand three things: a) equity, b) a high return on investment and c) a well-defined five-year plan in return. If you want a better idea of angel investors, watch the BBC’s The Dragon’s Den.

So these are the ways in which you can assist cash flow for your business. These are very, very BASIC definitions and as always, lawyers are key in looking over the detail so that you are protected. Also, debt has its draw backs too, for example it shows up on your accounting books as a liability and it comes with unavoidable interest charges. There may also be restrictions imposed on your business whilst it is a borrower of a bank. For example, most banks will require a right to possess and sell your business property if you fail to pay back the loan, or to seize your inventory. Again, this is why you need a lawyer. Think about what type of debt your business needs at the moment and then ask your lawyer to look at your bank’s paper work.

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Legal fees can be flexible.

Posted on by thelegalknow

 

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How many of you pay your legal fees as part of a pay as you go plan? It’s expensive right?The reality is that a good lawyer with some sort of experience, should be able to give you a fee quote give or take a few pounds. They should be able to offer you some sort of fixed fee arrangement . HOWEVER there are circumstances where legal fees can easily spiral out of control and such circumstances tend to arise in litigation. Often lawyers can get away with saying “how long is a piece of string” when it comes to estimating their legal fees in litigation and this is UNFAIR because in litigation there is NO guarantee that you will win. You could easily pay £50k in legal fees and not see a dime from the other side or even have to pay the costs of the other side too! SCARY!

The good news is that there is a way to get lawyers to buy into the risk of litigation and CARE about that piece of string. In the UK there are Conditional Fee Agreements (CFAs) and Damage Base Agreements (DBAs) and they are pretty good at encouraging realistic assessments of litigation, from your lawyer. Here’s a brief breakdown.

CFAs

A CFA is an agreement whereby a lawyer and a client can agree to share the risk of the litigation by coming to a financial arrangement whereby part or sometimes all of the solicitors’ fees will only be payable by the client in the event of success. So for example you might agree that you only pay your legal fees if you win (your lawyer will scream) but in return for the risk that you may lose, your lawyer might say ok but you will have to pay me an additional amount of X% of my fees if you win (you will scream BUT it’s not a bad offer as this only arises if you win). Or you may say to your lawyer I will pay you half of your fees and if I win, I’ll pay the other half. Your lawyer may say ok but, again, if you win, you pay the other half and a success fee of x% of my total fees. Can you see the bargaining power shift and settle in these examples. Each side has a stake in the litigation. You care because it’s your law suit BUT now your lawyer cares because he or she may not get paid!

DBAs

A DBA is an agreement between a lawyer and a client under which the client agrees to pay the lawyer a percentage of its damages if it wins its law suit. So for example you might agree with your lawyer that if you win your claim for breach of contract which is worth £300,000, your lawyer will get half of whatever you recover from the other side. This is  a huge risk for your lawyer as they won’t be getting paid unless you win BUT it forces your lawyer to consider if the claim is actually worth bringing. Your lawyer will be forced to seriously consider whether they will realistically get paid and therefore whether you have a decent case. You can make DBAs more complex too. For example you may say if you win £300,000 from the other side, your lawyer gets 50%, if you win £200,000 from the other side your lawyer gets 40% and if you win £100,000 your lawyer gets 30%.

Also do not forget FIXED FEE arrangements. If you are instructing your lawyer to do some standard conveyancing work or some corporate work, get a fixed fee! They do that kind of work all the time so the variables never really grant a “pay as you go” regime. If you are not in the UK I’m sure that these payment plans exist in some form or other in your country, so look it up!

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HOW TO… be an entrepreneur in your day job.

Posted on by thelegalknow

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Some of us are not quite at the point of saying goodbye to the salary and entering the world of risk and unpredictability. However, guess what? You don’t have to kick the day job in order to start honing the skills of an entrepreneur. Whilst you are planning your future business, you can start to test your entrepreneurial ability now, at your desk, under the nose of your boss.

  1. Respond to a request with a suggestion – If you are planning on leaving your day job, it is often because there is something about it, maybe how it is run or what it actually does, that you do not like. SO since you’re planning your exit, why not challenge some of those things that drive you nuts. When asked to negotiate that sale or purchase on the usual terms, suggest a different tactic. If you are asked to, yet again, make that same salad for the Monday customers, suggest changing the ingredients a bit, for example adding a bit of chilli? If you are asked to do the rota for whatever, suggest a change that makes that rota better. Start to challenge the norm. That’s what you do as an entrepreneur right? You see what others do not and you push the boundaries.
  2. Be yourself – This one is difficult in an office environment or a store where you are reminded daily that it is better to conform than to be yourself. But hey, you’re about to go it alone so you may as well shine and encourage others to shine too. I have a few clients who are unapologetically themselves. They ask you the most direct questions or they decline to come to an event you’re hosting because they, in their words “can’t be bothered with that sort of thing”; I respect these clients. Try to be the person you want to be and see how people respond. Do those under you work harder for you? Do those above you listen more? You can then get a feel for how you will be perceived by others when you are running your own business.
  3. Get to know everyone – When you eventually go it alone, you’ll need to be a people person. You will need to let everyone know who you are, where you are and what you’re up to. You will need to market yourself. So why not start now? Start marketing who you are. If you’re in a big organisation, go and talk to other teams; pop up to the third floor and say hello to the person you email in accounts every Monday. Basically, start honing your networking skills.
  4. Say yes – If you are asked to do something new, do not shy away. If it is out of your comfort zone, step up and take the challenge. Sink or swim that’s what you’ll be doing as your own boss with no one to delegate to. You’ll be doing new things daily, from attending events to speaking at events, from negotiating contracts to drafting strategies. Just do it and get used to a) the initial fear and b) the adrenaline once you realise that, whether you’re doing it well or not so well, you are trying and you are learning.
  5. Ask for help – When you set up on your own it is all about resources. You will be calling in favours and hiring professionals at a competitive price. SO whilst you are still in a day job, get used to asking for help from the people who know how to do what you can’t. If you don’t really know how to use your computer, ask IT for help. If you’ve never been part of a pitch and want to learn, ask a colleague who has done one before. Get used to asking for help, NOW.

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Do you need a break?

Posted on by thelegalknow

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When you’re running an up and coming business, costs are always on your mind. The less costs you have, the more profit you can make. So what do you do? You look for savings, HOWEVER, one of the biggest overheads of any business, often gets overlooked; RENT. In the UK most businesses rent their premises from a landlord as tenants under a lease. When the market was booming (pre-credit crunch) landlords had the upper hand setting high rents and long leases however in today’s challenging economic climate, landlords and tenants have found that long leases and high rents are no longer sustainable; there needs to be a compromise. This is why most commercial leases contain a BREAK clause which enables either the landlord or the tenant or BOTH to end the lease early and seek better terms elsewhere.

How does it work?

Say for example, you own a restaurant. You have a three year lease. In year one, business is booming however in year two, it’s not doing so well because the government has got rid of a big housing estate next door causing footfall to significantly decrease. You still have to pay your rent which in year one, was a piece of cake but now in year two, is a massive burden. You review your lease agreement but ALAS you’re locked in until the end of year 3. You go to the bank to apply for a loan. Whilst doing this you spot a great  empty space in a shopping centre round the corner. You know that your business would thrive there. You review your lease again, alas,  NOTHING HAS CHANGED, you’re STILL locked in until the end of year 3.

In the above scenario, not having a break clause in your lease prohibits you from getting out of a high rent deal in a poor area for your business. Your overheads increase and your profits decrease. Let’s look at this scenario WITH a break clause.

You have a three year lease. As soon as business starts to fail in year two you begin to review your options. You look closely at your lease agreement and to your joy you see that you have a break clause that kicks in after 18 months. You serve a notice to your landlord in accordance with the lease agreement, notifying him that you want to end your lease early. Your landlord accepts and at 18 months you move out of the premises and into the space that you spotted in the shopping centre. HAPPY DAYS.

Can you see the benefits for your business in having a break clause? It gives you some leeway to reassess one of your business’ biggest expenditures. In some circumstances where the location and premises still suit your business needs but the rent is just too high notifying your landlord that you are thinking of sending a notice to activate your break clause could help to bring your landlord to the negotiation table and agree a more sustainable rent. Landlords are business people too and what they value more than anything else is reliable tenants. However, as with everything in law (and that’s why you need a lawyer) there is more to it than just having a break clause and sending a notice. Here are a few considerations to bear in mind:

  1. Form and Service of Notice – You must comply exactly with method and form of service of a notice to exercise a break clause. Also once the notice has been served, it cannot be withdrawn. If the notice complies, you WILL be moving out so consider it seriously.
  2. Timing – It is important when drafting and negotiating the break clause that it is clear when the break date is and what the required notice period is. A break clause may occur on one or more specified dates or be exercisable after a specific period of time has elapsed. Your lawyer can help you work out what works for your business. Landlords usually never want to lose a tenant so they will hold you to strict compliance with the break clause notice provisions; the best thing is to diarise them so that you always have them on your radar and  consider them well in advance.
  3. Break conditions – These conditions must be strictly adhered to. If these pre-conditions are not complied with, your break notice may not be accepted. The most common pre-condition is that all rents due under the lease must have been paid. You must make sure that your lawyer negotiates this condition carefully. A lot of money is wasted in court where it is not clear whether a tenant has to pay a full quarter’s rent or just the apportioned rent up to the date of the break clause. There have been instances where a tenant has had to pay the full rent with no refund. Another pre-condition is that the tenant must give up vacant possession meaning the premises should be EMPTY. Take all your stuff and go.

So do you need a break? Yes! Make sure that you are always giving your business options and do NOT forget to use them.

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How your business can help the world.

Posted on by thelegalknow

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Ok so what does business facilitate unintentionally, every day that can assist in breaking down barriers, prejudices, discrimination etc in one swift swoop…they bring PEOPLE, all kinds of crazy, different people together! Admittedly the intention isn’t initially to get everyone to hold hands and appreciate their various differences but it certainly ends up that way. You see in our common quest to make money, we end up fostering relationships with everyone and anyone because money doesn’t care about gender, sexual orientation, faith or race and that’s THAT. Anyone can make it.

Manufacturers and suppliers are all over the world, we drop an email to China, New York or London with a click. If there is a big event in our industry, we doll ourselves up and go and meet the cool kids with eager hand shakes and smiles of “give me your business“. In business, we don’t care whether your hand is black or white, if you are paying we will shake it and if you are talented we will hold it. Take McDonalds for example, there is a restaurant in pretty much every country with an airport. I’ll never forget the joy of seeing those golden arches after almost 3 months of eating spicy food (delicious as it was) for breakfast, lunch and dinner in beautiful India. I ate three McChicken sandwiches in one go at a familiar table, in a familiar decor and with a familiar service, nevertheless they also had masala fries and tandoori nuggets; amazing. McDonalds know that DIVERSITY and CULTURE is good for business.

Even the legal industry in the UK has recognised this. Traditionally pale, stale and male with degrees from Oxbridge only, the English legal profession is now more diverse than ever. In fact, globally, major law firms are continuously expanding all over the world, recruiting from oversees and right round the corner. Just go on to the website of Clifford Chance, Norton Rose Fulbright or Linklaters and have fun clicking on the sites of their many global offices. Even the ordinary pop star knows that culture and diversity pay, if you ever meet Beyonce, ask her where she HASN’T performed or Justin Bieber how many endorsements he has done in Japan! Ok you get it, but how does this HELP?

You see, in recognising that diversity and cultural awareness is good for business you help the world to stay connected and to integrate. Entrepreneurs, businesses and startups are key tools in building a community of human beings and not a community of “us and them” which politicians love to exploit. Imagine how much more we can achieve if we actively encouraged diversity and it wasn’t just a by product money making. If you own a restaurant and your beef suppliers are a farm in Scotland, a work trip to Scotland could really encourage relationships and mutual understanding. Or if you manufacture your clothes in China, going over and seeing with your own eyes, the place where your stock begins could encourage your Chinese team and also enlighten you to improving conditions for workers over there (this is an issue for another post on another blog). I’m sure this can all be put more elegantly but you get the gist right. I did a post on Corporate Responsibility which touched upon this BUT this post isn’t about your branding or your promotion its about YOU consciously making your company an educator to its employees and a friend to its customers; that’s how your business can help the world.

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Drag-Along/Tag-Along

Posted on by thelegalknow

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In business there are times when you will actually want to drag others along or to tag along yourself. Drag-Along and Tag-Along clauses are very, very, (one more) VERY useful clauses when selling your company. Essentially these clauses ensure that neither the business owner (usually the majority holder of the shares) nor the investor (usually the minority holder of the shares) in a company gets held up or left behind (respectively). Let’s take a closer look so that you can appreciate the beauty of these legal mechanisms.

Drag-Along

You have a company in which you hold the majority of the shares. The minority of the shares is held by your investor. Your company has been doing well BUT you want to move on and branch out into other industries. You consider selling your majority shareholding to a buyer – Buyer A.

Buyer A offers you a great price BUT he wants ALL the shares in your company. Your investor thinks the company is doing well and doesn’t want to sell its shares. How do you get around this? You review your investment  or shareholder contract and you see the following clause:

“If the holder of majority of the Shares in issue for the time being (Selling Shareholder) wishes to transfer all (but not some only) of its Shares (Seller’s Shares) to a bona fide purchaser on arm’s length terms (Proposed Buyer), the Selling Shareholder may require all other Shareholders (Called Shareholders) to sell and transfer all their shares (Called Shares) to the Proposed Buyer (or as the Proposed Buyer directs) in accordance with the provisions of this clause (Drag Along Option).”

You realise that you can MAKE your investor sell his shares to Buyer A. The Drag-Along clause enables a majority shareholder to force a minority shareholder to join in the sale of a company. The only catch is that the majority shareholder doing the dragging must give the minority shareholder the same price, terms, and conditions that it is receiving. This is a very basic example of a Drag-Along clause. A good lawyer would make this way more sophisticated for you and your investor. For example, there may be a trigger for the clause so that the offer from Buyer A must be above a certain amount before the Drag-Along clause can be activated or the majority shareholder may need board approval.

Tag-Along

As with most things in life there is a FLIP side. What if you are the investor, a minority shareholder in a company, and the majority shareholder wants to up and sell its shares to a buyer – Buyer B. You may not want to go into business with this strange new Buyer B or, recognising that it would be difficult to sell a small number of shares for a decent price, you may want in on the great price being offered to the majority shareholder; this is where you TAG along. You are protected by the following clause in your investment or shareholder contract:

“If,  in one or a series of related transactions, one or more Sellers propose to transfer any of the Shares (Proposed Transfer) which would, if carried out, result in any person (Buyer) acquiring a Controlling Interest in the Company, the Non-Sellers may also transfer their shares as part of the Proposed Transfer.”

You are ecstatic because due to the fact that Buyer B is buying the majority shareholding giving it a “controlling interest”, you realise that you have a right to tag along to the sale to Buyer B. If you activate this right, the majority shareholder has to include your interest in any negotiations with Buyer B and Buyer B has to buy your shares too.  You have tagged along.

Essentially Drag-Along and Tag-Along clauses are all about protecting the parties on a sale. These clauses also help to keep the value of the company up; it would be very hard to sell a minority shareholding at a competitive price and likewise it is usually more attractive to a buyer to be able to buy the entire shareholding.

So there you have it, as with many of my posts, you just cannot beat the experience of a good commercial lawyer. So, whilst I hope this post has been helpful in furthering your legal knowledge and assisting you in instructing your lawyer more intelligently, DO NOT do this yourself. The examples in this post are extremely basic. In reality these clauses are complex and there are many wonderful things your lawyer can recommend to you depending on the particulars of your business – family run, startup with friends, employee shares involved etc.

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What UK Apprentice 2015 winner, Joseph Valente, taught us.

Posted on by thelegalknow

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I’m going to be honest and say that this year’s UK Apprentice crop were not the best. My guilty pleasure, I was hooked from the start but I struggled to get behind one of the candidates and cheer them on. HOWEVER, a late bloomer but still a bloomer, Joseph Valente came to the forefront. With his comic moustache (which he later shaved), baby face and cheeky grin it was initially easy to dismiss him as someone contending for the “experience” but he soon proved us all wrong. Joseph had something that guarantees success in one form or another; Joseph had PASSION.

I’m not a plumber (I’m a lawyer as you may have guessed) but Joseph made me WANT to be a plumber! He made me believe that plumbing was the future, the only future. I began to think “hey maybe I could get a van and set up a plumbing business using his business model”. THAT is the POWER of passion. If you are passionate about your business you are always winning. You win investors, you win employees, you win customers, you WIN!

You also develop and push boundaries. Joseph grew his business over ten years, straight out of secondary school. Stopping and starting in reaction to every closed door and new direction. His passion gave him persistence to keep going, to keep trying  and eventually to succeed. But what is success when you have PASSION? Joseph was continuously being told that he already had a successful business so why did he need Lord Sugar’s investment? Joseph answered them with “I just want the world and everything in it”. What Joseph taught us is that success continuously changes when you have passion because as you begin to achieve your goals, your passion drives you forward to create and achieve new goals. It’s remarkable. Passion drives you to 1) achieve; 2) learn; and 3) grow continuously.

If you haven’t watched the UK Apprentice, just watch the penultimate episode in which Lord Sugar’s pals interrogate the candidates. What do you notice? Joseph isn’t scared and Joseph doesn’t have to lie. He knows his business inside out. Even when weaknesses are highlighted, he still leaves every interviewer BELIEVING in him. Whilst the other candidates appear flushed and annoyed, Joseph is EXCITED!

Now I’m not saying that the other candidates did not have passion, they did BUT it was not nearly as convincing as Joseph’s and that’s why he won!

So this was a different but essential post. As business owners you need to keep the fire burning. YOU are the fuel for the whole thing. It’s that age old saying, “if you don’t believe in yourself, no one will.” As a lawyer, I can tell you that it is so EASY working for the passionate ones. Often more demanding and involved they INSPIRE me and bring out some of my BEST work. Have you noticed what I’m passionate about? Read the “About” page.

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HOW TO…reduce your legal bill!

Posted on by thelegalknow

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A legally smart business woman asked me to write a post about how to reduce her legal bill. As a City lawyer, here are my best tips on how to get the most out of your lawyer for less!

  1. Give legally smart instructions – Of course I would start with this one! The smarter your instructions the sooner your lawyer can get to work; they don’t have to waste billable time trying to figure out what you want. For example compare “Hey Cara please can you draft us a contract to buy apples from Fruit Ltd on a weekly basis” to “Hey Cara please can you draft us a contract to buy apples from Fruit Ltd on a weekly basis for X amount per box. In each box there will be X apples. We want the contract to last for a year with a right of renewal and we want it to be governed by English law and the English courts have jurisdiction. We also need a clause that states we have a right to terminate if the apples are Y. Delivery should be on Y of each week….” The former encourages a huge bill, the latter demands an efficient bill.
  2. Ask a junior lawyer to do it – Unless you are giving a complex instruction there is no reason why a junior lawyer should not be doing the bulk of the work. A senior lawyer only needs to give it a once over to make sure there are no glaring mistakes. When you give a standard instruction request for a junior lawyer to do the work in the first instance, if the law firm insists that a more senior lawyer is needed ask WHY and make them JUSTIFY the senior lawyer’s input BEFORE any work is carried out. You may just find that they back down.
  3. Request to see the narratives – Lawyers bill by an hourly rate. As part of that billing structure we are required to write narratives. If your lawyer has spent 7 hours reviewing a contract, ask to see the narratives. They should be detailed enough for you to say “fair enough” BUT if the narratives do not convince you, challenge the bill! This will either a) get you a discount on that very same bill or b) get you a fairer bill next time because that lawyer, terrified, will work as efficiently as possible for you. Most lawyers get annoyed when a client asks to see the narratives BUT its YOUR money and when you’re a growing business every penny counts!
  4. Agree a fixed fee structure – If you prefer predictability, agree a fixed fee arrangement! This means that, unless something unexpected pops up in the process, you know exactly how much you are paying each time. For example, if you have a standard sale contract that your lawyer reviews every time you engage with a new customer, agree a fixed fee for this repeat review i.e £50 per contract. You can also agree a fixed fee for a one off instruction. For example, if you need a lawyer to attend a negotiation with you, ask them to do it for X amount and not by an hourly rate. Hint to the lawyer that if they agree to this, you will send other work their way and watch your proposal be snapped up! Lawyers care more about a longterm business relationship in which they receive frequent work than being able to bill full rates on a single occasion.

Now go read “5 ways to spot a bad lawyer” and “3 ways to get the most out of your lawyer” to learn how to get even more out of your lawyer!

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