HOW TO…reduce your legal bill!

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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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HOW TO…negotiate.

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In business, negotiation is a very important skill. You negotiate practically every day! From getting better wholesale deals to giving a pay rise. We are surrounded by negotiation. Negotiation leads to improvement and progress so it is important that you know HOW to negotiate effectively! Here are some tips from my experience as a city lawyer!

  1. Do your homework – You know that saying fail to prepare, prepare to fail, that basically sums up negotiation. You cannot just turn up and blurt out what you want. You need to know a) who you are going up against and b) what they want. This is the only way that you can determine a best case (your dream outcome)/worst case (your bottom line) position for yourself. Study your opposition’s motivations, obstacles and goals. Research them and ASK questions in the negotiation, ask and listen and think about how you can manipulate that information to get what you want. FOR EXAMPLE, Bob is negotiating better wholesale prices from his fish supplier for his restaurant. Dave, the supplier, cares about getting rid of his entire catch of the day on the same day. Bob knows this having done his homework and so agrees a 30% discount on prices if Bob buys the remainder of the catch of the day at the end of the day.
  2. Don’t be afraid to ask for what you want – If you don’t ask you don’t get, simple. That’s not to say that your requests should be outrageous. They should be considered requests based on doing your homework above. Start by listing what you want from the negotiation and why. For example, following on from our example above, Bob may have listed that he wants cheaper prices for the fish that he buys so that he can offer cheaper prices to customers and attract more business. Dave may have listed the fact that he no longer wants to have to chuck away leftover stock at the end of each day. When an opportunity arises to discuss anything on your list of wants, leap in and talk about it. The trick is to always go in with your best position; start with your hopes and dreams then work down to your bottom line (but this is still better than where you are).
  3. Persuade them – So following on from the above, you have your list of wants but how can you get the other side to buy in to them. You present them as a solution or a benefit. Think of everything you want out of the negotiation and how it can actually help the other side. Having done your homework, you should always try to present your wants in the best possible light, not as things that the other side is giving away but as things that HELP them. HOWEVER this will not always be possible. Some things you want are just things you want BUT you can attach them to other potential benefits for the other side. For example, Bob might decide that he doesn’t need all types of fish in Dave’s catch of the day. He may only need Cod and Plaice so that’s what he bargains for. Dave is annoyed because ideally he wants a guaranteed buyer for all of the remainder of the catch of the day. Dave is losing out with this proposition. He may have a catch of the day that is all Cod or that is Cod, Haddock and Mackerel, he still faces wasting produce and losing money. Bob addresses this concern by saying “hey, you’re still getting a guaranteed buyer for Cod and Plaice which you catch REGULARLY.
  4. Don’t be in a hurry – The reality is that some negotiations take longer than others. Some issues are more complex. Some concerns affect more than the parties negotiating. If you face such a negotiation, you won’t get anywhere rushing the process. You have to go in at a realistic pace. Rome wasn’t built in a day and a sensitive negotiation can’t be agreed in a day. If you push too hard you could chase the other side away leaving you at square one. It is ok and a smart move to suggest “some time to think about it“. This shows the other side that you really want THEM to consider YOUR WANTS because you are serious or that YOU really want to consider THEIR WANTS because you are serious. You  can suggest a night, a couple of days or even a week to “think about it“. The amount of time will depend on the issues being negotiated.
  5. Keep your cool – DO NOT under any circumstances rise to negativity from the other side. Keep your cool! It will intimidate them. If you’re met with a stone wall or ridiculous counter arguments, take a minute and think about what the other side is saying. Then make them defend themselves. Ask them WHY they take a position. What’s their rationale? In most cases they can’t do this and hey presto, you’ve shifted the balance of power in making them realise that they can’t defend their ridiculous idea. In exposing the fact that they cannot actually defend their position, you then have the opportunity to launch into what you want, eloquently explaining your rationale and persuading the other side as to why they should agree.
  6. Stay flexible – Do not LIMIT yourself to a single strategy. You should have done your homework so well that you give yourself different ways to get to a solution. If you are met with heavy resistance to one option, build in the next and work on that. If the other party makes a demand, ask them to explain the reasoning behind that demand then brainstorm. Think – how can I get there another way?

Ultimately the worst negotiators are those who never move from their best case or shout down the other side instead of listening. Just remember that negotiation should lead to progress, negotiation is successful when a compromise is reached. HOWEVER there will be circumstances where it just won’t work, the parties interests are just not aligned. This is when you 7. WALK AWAY. Never ever force it. Good negotiators know when to cut their losses and walk away. In my opinion such negotiators have still won as they have been able to definitively rule out a business relationship thus freeing them to focus on another.

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Introducing the Companies Act 2006


If you are a UK company, the Companies Act 2006 is the main piece of legislation that GOVERNS YOU in the UK.

With approximately 1,300 sections, the Companies Act 2006 was passed in order to modernise and simplify company law, codify directors’ duties, grant improved rights to shareholders and simplify the administrative burden carried by UK companies. It is basically your “go to” for all things company law! Although some lawyers criticise it for being too detailed and trying to cover every eventuality, I actually kind of like it! You can navigate it relatively easily and well, it’s all there! SO if you have a UK company and are at a loss with UK Company Law, the Companies Act 2006 is a good resource to turn to. You can access it right HERE for FREE.

So what can you look forward to educating yourself about in the Companies Act 2006? Well, amongst many (many, many, many – it is the longest piece of legislation in the UK) other things, it sets out the following:

1. a company’s formation (modernised to facilitate incorporation over the Internet…so er…what are you waiting for?);

2. a company’s duties including those that can be fulfilled electronically (YES, so much easier);

3. a company’s communications with its shareholders (this can be done electronically via a website – again, way EASIER);

4. directors’ duties (codified for the first time) including an obligation to promote the success of the company (yup you are OBLIGED to do this by  English LAW), to consider the community and the environment (this is CORPORATE RESPONSIBILITY), the interests of employees, and to be fair to shareholders (this is arguably why Google restructured its business);

5. the rights of indirect shareholders, including the right to sue the company’s director(s) if fraud or negligence is suspected;

6. company naming rules and company governance e.g. limited companies are no longer required to have a company secretary, and can be run by one director;

7. company ‘model’ Articles of Association, provided by Companies House (this is your company’s CONSTITUTION);

8. share capital rules (simplified for private companies); and

9. formalities for execution of documents.

This epic piece of legislation may be very detailed and a bit daunting at first BUT I think it is incredibly useful – it is basically Wikipedia for UK Company Law. If you have a query about your company and its operations, skim through the index of the Companies Act 2006 and see what you can find out THEN follow up with your lawyer IF you have to!

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Before you sign: Termination

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In continuation of the “Before you sign” series, I present the third potentially deadly clause for your review…TERMINATION. A termination clause is effectively your get out of jail FREE card in any contract so long as you DRAFT it that way. This is why you need to understand your contract so that you know a) what you want (life is good and business continues as normal) and b) what you do not want (often that the deal has soured and you need to end it). Termination clauses set out WHEN either party can LAWFULLY terminate the contract. The consequence of UNLAWFULLY (so not complying with the termination clause) terminating the contract is that you are most likely sued by the other party/parties to the contract for damages (compensation).

There are different circumstances in which you may want to terminate a contract. You may just want to try out a business relationship and give yourself the option to walk away if you don’t think there is a future in it. In this instance your termination clause should specifically enable you to end the contract on a short period of notice, for example 3 months after a fixed initial period of 6 months – this is termination for convenience or “without cause”. Either party can walk away after a set period of time simply because you have given each other the opportunity to do so. Of course it is also possible for a contract to just end naturally for example by effluxion of time (the contract runs its term), or by both parties performing their obligations under the contract. For example A contracts with B for delivery of 70 tennis balls on X date in return for A paying B a fee, once B delivers the 70 tennis balls in accordance with the contract and A pays B, the contract is over.

HOWEVER more likely than not you will want to make sure that you can terminate the contract when the other party BREACHES (messes up) the contract. Here are some examples of when that might be:

  1. The other party has committed a MATERIAL breach of the contract that CANNOT be remedied – so this is when you receive something SUBSTANTIALLY DIFFERENT from what the contract specified, for example, if the contract specifies the sale of a box of tennis balls and you as the buyer receive a box of footballs. Or you hire an artist to perform the piano at your event but they turn up with a guitar. Such a fundamental breach should entitle you to terminate the contract immediately without notice to the other party. 
  2. The other party has committed a MATERIAL/SUBSTANTIAL breach of the contract that is capable of being remedied but has failed to remedy that breach within a set period of time – so this is when the other party has breached the contract AND the breach is fixable HOWEVER the other party has  failed to fix it within the set period of time. In such circumstances you will want the right to terminate the contract. For example you order pink balloons and the other party delivers blue balloons. You still have balloons but they’re not the right colour, you will notify the other party giving them a chance to send you the correct colour balloons by a certain time in accordance with the contract (say 7 days). The other party fails to send the correct balloons by your deadline OR sends white balloons. You will want to terminate the contract and sue for damages. Please also note that even where a failing party manages to remedy its material breach within a set period of time, the innocent party could still seek damages for any loss caused by the breach. For example You have a restaurant that requires 100 burgers and 100 hot dogs but you only receive a delivery of 70 burgers and 70 hot dogs from your supplier. By the time your supplier has delivered the remaining 30 burgers and 30 hot dogs, you’ve missed out on business or you’ve had to buy more expensive burgers and hot dogs at short notice from another supplier to meet the demand of your customers. You will want to sue for the loss you suffered during this time even if you continue the contract with your original supplier.
  1. The other party persistently breaches the contract in MINOR ways which altogether have a negative impact on the performance of the contract E.G continuously delivering goods late, being late with services without a reasonable excuse, persistently making late payments (this can affect cash flow) or continuously failing to meet sales targets or sales quotas within a period of time. You will want the right to pull the plug on the contract after a while. It will be up to you to determine, in your contract, when enough is enough in respect of these minor breaches. For example you would not want to terminate the contract for one late payment but you might want to terminate it for three consecutive late payments.
  2. The other party has become insolvent or bankrupt or is in the process of becoming so – the other party has gone bust or is clearly in financial trouble. You will really want to get out of the contract in this situation so you must make sure that your contract allows you to do so.
  3. You anticipate that the other party is about to breach the contract (an anticipatory breach) – so this is where the other party has made it known that they will not be carrying out the agreed work or they effectively stop acting in accordance with the contract, leading the other party to believe that they have no intention of fulfilling their part of the agreement. For example the other party persistently fails to produce an ordered item or refuses to accept payment. You will want to end the contract and sue for damages WITHOUT WAITING for the actual breach to occur.

Termination clauses are complex and this is where you really need a lawyer’s help. If you do not expressly make provisions in your contract for the different scenarios in which you want to terminate the contract, your contract will be subject to common law (this is the case in the UK but check the consequence in your country). Common law is law developed by judges through decisions of courts and similar tribunals that decide individual cases. If you leave your contract to the mercy of common law you could end up spending heaps of money paying lawyers to work out which case law applies to your particular contract’s circumstances and then even more money when the other side says your application of the common law is wrong and takes you to court! 

Basically, ALWAYS make express provision in your contract as to when it can be terminated.

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Be smart but don’t cheat…

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There is a reason why mega successful businesses spend thousands, sometimes millions of pounds/dollars on legal advice. I cannot tell you the number of times that I have almost cried because a client has brought me a problem that could have easily been avoided IF legal advice had been sought in the first place. In the long term, getting proper legal advice could save you so much MONEY and isn’t that what it’s all about – MONEY? You know that saying, what’s worth doing at all is worth doing well…it’s said for a reason! I don’t feel good billing you for my time when it’s for an issue that really shouldn’t have ever become an issue!

Think of it this way, when you have a tooth ache you go to a dentist -you don’t pull out the tooth yourself. When you feel sick you go to a doctor you don’t diagnose yourself. SO, if you need a contract drafted, guess what, you DON’T do it yourself. You go to your lawyer! You should be focusing all your energy into your product/service/idea not struggling to draft a 30 page contract or represent yourself at Court.

So what am I saying? I’m saying be smart BUT don’t cheat.

I am a lawyer and it took me 6 years of training to qualify to be one (a 3 year degree, a 1 year professional practice qualification and a 2 year training contract at an international law firm in the City). You cannot read this blog and become a lawyer BUT you CAN read this blog and become legally smart so that when you seek proper legal advice you are not doing so blindly. You are firing out questions and demanding the best service possible!

It’s quite simple, do things properly at the outset and you will reap the rewards later.

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