Many, if not most, people go through life without seeing the inside of a courtroom or having to deal with a legal dispute. This is a good thing. Those who have not been so fortunate know first-hand that even a minor legal dispute can be expensive and disruptive. For businesses that have been around for a while, needing legal assistance is typically a matter of “if,” not “when.”
If you have no prior involvement in civil litigation, or if your past experience left you dissatisfied, here are some tips for a productive and cost-effective experience with your attorneys.
At Proctor Brant, we’ve found that when clients hire an attorney sooner rather than later, gather case-related information promptly, and communicate openly with their attorney, it typically leads to more positive results all around. Let’s look at these three recommendations in some detail.
1. Hire an Attorney Sooner Rather Than Later
While people are understandably reluctant to incur the expense of hiring an attorney and tend to push it off as long as possible, the best practice is to be proactive when you encounter a legal issue. Hiring an attorney early in the process can save you money in the long run and give you more information and options to address your legal situation.
A smoldering campfire can be extinguished with a few splashes of water. However, that same campfire, if left unattended, can turn into a raging and catastrophic forest fire. Similarly, hiring an attorney early in the process may give you the opportunity to douse a legal fire with a splash or two of water. And yes, delay or inaction can lead to a radically different and much more challenging environment. Here are a few examples of when “sooner rather than later” is very important:
Commercial Real Estate Leases
Before entering into a commercial real estate lease, be sure to hire an attorney to review it. Leases are typically drafted by the landlord and, accordingly, are heavily weighted with landlord-friendly terms. A skilled attorney can identify any problems, and you may be able to negotiate more favorable terms with the landlord.
And even if the landlord is unwilling to compromise, you will at least know the consequences of entering into the lease and can then weigh the risks and rewards. If problems arise after the lease is signed, much of your negotiating power is gone and it may be necessary to litigate, which will be much more expensive.
A past client of ours discovered this the hard way after negotiating a commercial lease without hiring an attorney. During negotiations, the landlord proposed improvements to the property that were needed for the business to operate effectively. The parties signed the lease, which did not include any obligations on the part of the landlord to actually make the improvements.
Further, the lease included a merger clause, which stated that the lease was the final and complete agreement between the parties, disclaiming any prior discussions not mentioned in the lease. When the landlord refused to honor any of its prior promises, litigation followed at a significant cost to the parties. If the tenant had hired an attorney to review the lease prior to signing, the differences between what the client expected and what the lease obligated the landlord to provide could have been addressed.
Defending Against a Lawsuit
If you or your business is served with a lawsuit, consult with an attorney right away. Litigation is deadline driven, and you may find your legal position compromised by delay, even if your position is strong. As a primary example, if you fail to respond to a lawsuit in court after you’ve been served with suit papers, you risk being in default and waiving valid defenses to the claims made against you. We have met with a number of prospective clients who waited to consult an attorney until after a default judgment (sometimes for a significant dollar amount) had entered against them. At that point, you must ask the court to set aside the default judgment (which can only be done in exceptional circumstances) before any valid defenses to the merits of case can be considered at all.
Also, with delay, each party’s litigation expenses accumulate and can be a barrier to settlement, particularly in a dispute involving a contract with an attorney fee-shifting provision in favor of the prevailing party (which means the “loser” of the lawsuit has to pay the “winner’s” attorney fees and costs in addition to the loser’s own attorney fees and costs). Further, early consultation with an attorney will allow them to explore whether you may have insurance coverage in place to cover the fees and costs of defending against a lawsuit.
Deadlines for Legal Claims
If you fail to meet a legal deadline, you may compromise or foreclose your ability to recover on a legal claim. Generally speaking, most legal claims have a deadline by which time they must be brought; this deadline is referred to as a statute of limitation. For example, claims for breach of contract must be brought within three years of the breach.
Many people and businesses tend to put unpleasant tasks (like pursuing an overdue invoice) at the bottom of their “to do” list. However, if you wait too long, your rights to collect the unpaid amount could be compromised. An attorney can advise you of any available claims and the deadlines to bring the claims.
Unfortunately, delay can also impact the collectability of a judgment, as past clients of ours have discovered. Their prior attorney stole millions of dollars from the clients, an elderly couple, over the course of several years. Because the attorney was a trusted friend, the couple delayed in seeking an attorney to recover their stolen money. By the time the clients retained an attorney, the money had largely been spent, compromising efforts to trace and recover the money.
As another example, suppose a buyer contracts with you, the seller, to buy 500 units of your product, but then refuses to honor the contract. Under the Uniform Commercial Code, the seller is required to mitigate its damages by attempting to sell the product to another buyer and then recovering the difference. However, if you, as the seller, were to simply sit on your hands and let the product gather dust, the buyer could argue that your damages should be reduced because you failed to mitigate them.
Terminating a Contract
We always recommend consulting with an attorney before you terminate a business contract. Over time, business relationships change, and it may, in fact, be time to sever ties with the other party. However, there also may be irreversible and expensive consequences to unilaterally terminating a contract. For example, the contract may include a liquidated damages or acceleration clause which may subject the terminating party to costly penalties for ending the contract early. Keep in mind that there may be ways to address your contractual issues without having to resort to termination. An attorney can help you make informed decisions and navigate the process.
Sharing Proprietary Details About Your Business
Consult with an attorney about the need for a non-disclosure agreement (NDA) or a confidentiality agreement before sharing detailed proprietary information about your business with others. An NDA can facilitate open communications with prospective business partners and protect you from detrimental consequences if the potential relationship falls through.
We have consulted with several prospective clients who learned this lesson the hard way. Excited about a unique, original business idea, the prospective client shared details about their business idea with a potential partner or investor (whom they presumed was acting in good faith) without an NDA. However, after the business opportunity fell through, the potential partner/investor “stole” the prospective client’s idea and started their own separate business or adopted the idea into their existing business, leaving the prospective client in the lurch. Consulting an attorney prior to engaging in prospective business communications with others may prevent this type of scenario altogether or at least give you protection to take legal action if it does occur.
2. Gather Case-Related Information Promptly
You can help keep legal expenses down by promptly responding to your attorney’s requests for documents and electronically-stored information. In order for your attorney to properly advise you, he or she needs to have as much information as possible about the matter and can identify the relevant documents (e.g., contracts, invoices, etc.) that are important.
The sooner you can provide this information to your attorney, the sooner he or she can evaluate the merits of the case, and the sooner that your attorney can discuss the matter with the other side or their attorney. Ultimately, the earlier there can be a meaningful discussion of the dispute, the better the possibility of resolution without incurring further expenses.
3. Communicate Openly With Your Attorney
While there are a few rarely-applied exceptions, your communications with an attorney are confidential, and neither you nor your attorney can generally be compelled to testify about those communications or produce any written communications, a concept known as the attorney-client privilege. This privilege exists for your benefit, and its primary purpose is to ensure candid and open discussion by the client without fear of disclosure.
Share All the Facts of Your Case (Even the Bad Ones)
The attorney-client privilege protects the communications between attorney and client, but facts themselves (e.g., what you saw, what you heard, etc.) are not privileged. This means the underlying facts of any litigated legal dispute will typically be discovered through the disclosure and discovery process, even if such facts are unfavorable to you. It is critical that you share all the pertinent facts with your attorney, unflattering as some of them may be.
Your attorney can deal with “bad” facts, but he or she can’t help you with bad facts they don’t know about. Facts dictate strategy, and your attorney needs to know every relevant piece of information, whether good or bad. Do not be overly concerned with shame or embarrassment when seeking the help of an attorney. Whatever your situation, most seasoned attorneys have probably seen and handled much worse.
Ask Questions If You Have Them
Legal disputes can be complex, and at times, it may seem like your attorney is speaking a different language. Attorneys often do speak a different language (Latin) or use jargon specific to the law or their area of practice. The important point is this: If you find yourself confused or needing more information, ask your attorney to explain what they’re talking about in plain language.
More generally, there are typically several available approaches to any legal dispute you may face, e.g., resolution through settlement, mounting a vigorous challenge, etc. Differing approaches have different risks and benefits. It’s important for your attorney to understand your wishes, and it’s also important that you understand how your attorney intends to pursue your goals.
Don’t hesitate to ask questions if you do not understand your attorney’s approach or the legal concepts involved. Your attorney will be better able to assist you, and you will be better able to assist them, when there is a mutual understanding between both of you.
The attorney-client relationship works best when it is a true collaboration focused on the client’s best interest. Following the steps outlined above will help you to reach your best attainable outcome in an efficient and cost-effective manner.
If you have legal issues that you’d like to review with an attorney, please contact any of the attorneys at Proctor Brant to schedule a consultation.
 For example, the attorney-client privilege does not apply to communications made in furtherance of a future crime (or a present continuing crime), when advice of counsel is used as a basis for a claim or defense, or in certain will contests.