Slave to lawyers

An engagement with one of my clients is wrapping up right now.  They’re in the final stages of M&A, and a sticking point was a account.  Apparently the account my client purchased isn’t transferable, and the purchasing comany wanted us to take it ‘off the bill’ so to speak.  They found out it wasn’t transferable b/c their attorneys read every single contract that my client signed (and they should).

So the process went – we indicated we had a contract – their attorneys read the contract and found out it wasn’t transferable – came back to our attorneys who read the contract and agreed – went back to their attorneys to figure out what to do about it – went to their management to figure out what to do about it – went back to our management for negotiations.

Here’s the kicker for me.  The contract expires in August, and the ENTIRE contract is for $600.  So the value of today till August is what, $150?   We just spent probably 10 times that in legal reviewing it.

I have another client that is caught in a similar situation.  They’re so concerned about legal compliance that every step they’ve made is approved by attorneys first.  EVERY STEP.  I was literally SHOCKED to see the books, they’ve spent more on legal than they have on any other part of the business.

An interesting commonality between these two clients is both of the CEOs come from Fortune 10 companies.  I wonder if that’s coincidence.   Lawyers – you love them and you hate them.

I waiver back and forth on this.  Most of the time I feel it’s better to ask forgiveness rather than permission, and as long as you can show your intentions are good, you can keep yourself out of hot water for the most part.  I think I’d rather get caught in one long battle over an error or omission than spend hours and hours and piles of cash on keeping me out of the little battles.  I bet it’s all a wash in the end.  And I think entrepreneurs need to keep their eye on the ball – SALES.  If you spend all your free time trying to make sure you stay in 100% compliance with the law, you’ll never get to profitability.

(Disclaimer – this posting does not construe legal advice in any way.  Entrepreneurs are responsible at all times for their own decisions and is not liable for any action or inaction in hiring or consulting attorneys – now isn’t it sad that I had to include that statement?)

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