BUSINESS FUNDAMENTALS

Selecting an Attorney & the Role of the Small Business Attorney© all rights reserved by:COLEMAN JACKSON, PC

Professional Legal Services Corporationwww.cjacksonlaw.com

214-484-6003

GENERAL GUIDELINES FOR SELECTING AN ATTORNEY

Review Carefully the Following Important Factors

Credentials• Knowledge is a process of piling up facts; wisdom lies in

their simplification. --Martin Fischer American philosopher, poet, and essay

• All business proceeds on beliefs, or judgments of probabilities, and not on certainties. --Charles W. Eliot quotes (American University President of Harvard University for 40 years, 1834-1926)

• A reputation once broken may possibly be repaired, but the world will always keep their eyes on the spot where the crack was. --Joseph Hall English, Clergyman Quotes

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Conflicts

• The lawyer should not deal with others having a similar interests in the same or similar matter, or with competitors of the prospective client or client without clearly disclosing such conflicts and requesting permission from the client.

• Conflicts are one of the first areas a business owner should explore when seeking to hire a new business attorney.

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Competence

• Competence is possessing or acquiring the knowledge that enables the attorney to counsel or advocate for the client’s benefit to the fullest extent of the law with requisite, skill, ability, and good judgment.

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ProfessionalismHonesty, Veracity & Integrity

• Do not steal, Do not lie, Do not deceive one another. --Leviticus 19:11

• The secret of life is honesty and fair dealing. If you can fake that, you’ve got it made. --Groucho Marx quotes (American Comedian, Actor and Singer, 1890-1977)

• I have found that being honest is the best technique I can use. Right up front, tell people what you’re trying to accomplish and what you’re willing to sacrifice to accomplish it. --Lee Iacocca

• I hope I shall always possess firmness and virtue enough to maintain what I consider the most enviable of all titles, the character of an honest man. --George Washington

• There are no degrees of honesty. --Unknown

• The supreme quality for leadership is unquestionably integrity. Without it, no real success is possible, no matter whether it is on a section gang, a football field, in an army, or in an office. --Dwight David Eisenhower quotes (American 34th President (1953-61). 1890-1969)

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Fee Structure• Hourly Fees

– A set attorney rate based on attorney time spent working on the engagement

• Fixed Fees

• Hybrid Fees– Some alternate fee arrangement that might mix hourly, contingency

or some other compensation method

• Contingency Fees– Contingency Fee agreement must be in writing and must contain

certain information about how the fees are to be computed and the treatment of expenses and other costs.

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Availability

• If a lawyer is so busy that your legal needs cannot be prioritized, it does not really matter how affordable or able the lawyer is.

• A Small Business needs a lawyer that can respond quickly to changing circumstances and possibly novel legal challenges on short notice.

• A Lawyer with Business Experience is extremely helpful in helping the Lawyer to be a more effective Team Player in a Small Business Environment.

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DemeanorValues & Attitude Towards

Representing Small Business Entities• Large versus Small Law Firm

• Background of the Lawyer

• Attitude of the Lawyer towards small business

• Empathy of the Lawyer towards small business

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Capacity & Capabilities

• Legal Capabilities

• Legal Experience

• Legal Issues– Ability to Identify the Issue– Ability to Understand the Issue– Ability to Apply the Law to the Issues

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Confidentiality• The attorney-client relationship affords confidential treatment to

information received by a law firm and advice given by a law firm to a client or prospective client.

• The client can destroy this protection by intentional waiver or inadvertent waiver.

• The attorney-client relationship requires candor, precision, simplicity and clarity in communication in order for an attorney to represent the client to the fullest extent of the law.

• Ambiguity, dishonesty and vagueness invites confusion, ineffective representation and disputes.

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Request References

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Perform Due Diligence

• All lawyers are not alike. Do not rely on stereotypes, movie renditions and gossip.

• Investigate and decide on an attorney after performing due diligence.

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SummarySelect An Attorney Who Is:

• Affordable

• Available

• Able

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MEMORIALIZE THE BUSINESS ATTORNEY RELATIONSHIP IN WRITING• A written contract clearly reduces the possibility

of future misunderstanding-– Over Fees– Over Scope of Work– Over Staffing of the Work– Over Special Expectations– Over Prosecution of the Work– Over Other Particulars

– Note: The contract is generally written by the lawyer you are hiring. You need to review it thoroughly.

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Identification of the Parties

• Who is the Client?

• Who is the Attorney who will be handling the matter?

• Who is the intended beneficiary of the legal services?

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Scope of Services

• What is the scope of the services to be rendered?

• What measure will be used to determine whether the services have been rendered?

• What areas of practice are specifically excluded from the representation?

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Staffing

• What firm attorney will be primarily responsible for the engagement?

• What staffing personnel will be involved and what will they be doing on the engagement?

• What external professionals will be hired for the engagement?

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Special Responsibilities & Expectations

• Updating should be clearly spelled out in writing. For example if there is a desire that the attorney update an estate plan periodically, it must be set out in writing;

• Continuing Matters- if the project is not completed, representation has not been terminated, the scope of the engagement must set out all the parts of the engagement;

• Any responsibilities expected of the client, such as, attendance at meetings and conferences, and approval of strategic focus should be clearly identified.

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Fees, Disbursements & Other Charges

• A clear description of the method of determining attorney fees and/or the factors to be considered in determining attorney fees should be clearly identified and documented in writing;

• All disbursements and other charges need to be identified, at least by type; and who will be responsible for paying these charges and on what schedule need to be identified;

• If it is not apparent from the relationship, who is responsible for paying the attorney fees and other charges need to be clearly identified in writing.

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Dispute Resolution Procedures• Mediation is an informal, nonbinding and

perhaps very cost effective way of resolving disputes between the client and attorney;

• Arbitration is a formal, binding and perhaps cost effective way of resolving disputes between the client and attorney;

• Civil Litigation is a formal method of resolving disputes and can be very expensive. This is a court action.

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Conflicts of Interest• The attorney has a duty to represent the business

client to the fullest extent of the law. Therefore it is very important to identify conflicts of interest that will or could prevent or interfere with the attorney’s loyalty and commitment to the client’s interest.

• The business client should inquire regarding conflicts early on when they first contact the attorney and prior to making compromising disclosures.

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Terminating the Relationship• The Business Client should reserve the right to terminate the

attorney’s services for any reason or no reason at all;

• The Ethics Guidelines governing Attorney’s will typically allow the attorney to withdraw from further representation for-– Evidence discloses that the client’s claims are meritless;– Evidence discloses that the client is uncooperative;– Evidence discloses that the client is not paying the attorney as agreed;– Any other professional or ethical reason that leads the attorney to

conclude that he cannot proceed with the representation.

– Note: If a matter is pending in a court or other adjudication proceeding, the judge or judicial officer must approve the termination of the attorney.

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THE ROLE OF A BUSINESS ATTORNEY

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Advocate• The lawyer is often hired to be the business client’s

advocate. The advocate role of an attorney is one that most people are familiar with. The advocate takes an active role in pressing the business’ legal cause by argument and persuasion. In this role the lawyer actively assists, defends, pleads, prosecutes or otherwise vigorously supports the business’ legal position.

• Advocacy can be in writing or through oral presentation.

• Advocacy can be before judges in courts of law, arbiters in administrative hearings, or any other forum where disputes between feuding parties are heard and resolved.

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Counselor

• The lawyer is hired by businesses to use their legal knowledge, experience and skills to serve as a counselor. The legal counselor takes an active role in providing advice, guidance and representation to the business client regarding regulatory matters, contract issues, tort concerns, and any other legal matter that the business may face.

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Team Member• In-house Lawyers are sometimes hired as employees of a

business to provide legal advice and representation only for that business;

• Some businesses will hire outside attorney’s to serve in the capacity of an in-house counsel, especially, young start-ups with limited financial means to hire permanent in-house counsel, or for limited assignments or on specific projects.

• Whether in-house or contract, these lawyers usually work closely with the management team of the business entity.

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Vetting

• Businesses often hire lawyers to vet candidates for executive positions or management team membership, such as, Chief Executive Officer, Chief Operating Officer or General Counsel or Chief Financial Officer. The types of employees, contractors, or customer investigations conducted under the vetting label are limitless.

• In the vetting role the attorney investigates the candidate, perform due diligence, interview the candidate and make recommendations to the business team.

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Selecting

• Serving in the selecting role, the attorney performs similar tasks as in the vetting role. The biggest difference is that when performing the selecting role the attorney may be tasked with selecting the employee, management team member or supplier.

• It is suspected that the attorney is usually merely making recommendations and not serving in the candidate selecting role.

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Investigations• Businesses often hire attorney’s to conduct an unbiased

investigation, especially one regarding alleged employee malfeasance, misconduct or other internal operating complaints. The attorney is also hired to investigate negative stories and gossip in the public medium, such as, online postings and news reports that are or potentially damaging to the business reputation.

• Businesses also hire attorney’s to respond to investigations by governmental bodies, such as, Texas Comptroller’s Office regarding sales & use tax, franchise tax and receipts and other taxing matters, or the Internal Revenue Service regarding tax deficiency inquiries; and Securities & Exchange Commission or FINRA Investigations dealing with securities and public offerings, or a host of other governmental inquiries and audits.

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LEGAL & PRACTICAL CONSIDERATIONS

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Professional Licensing, Ethics & Bar Admissions

• State Licensing Requirements- The business must select an attorney who has authorization to practice in the jurisdiction;

• The Attorney must be in good standing with the Bar;

• The Attorney must be admitted to practice before the tribunal that has jurisdiction of the matter in question

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Multi-Party Involvement• Multi-Party involvement exist whenever the attorney owes loyalty

to more than a single business. This could occur if the attorney represents the business entity and the business owner. A conflict could arise between the business entity and the business owner.

• Note: Typically the attorney is hired to represent the business entity and not the shareholders, employees or others associated with the business entity.

• But there are times when the attorney is hired by the business to represent the business interest and key employees, such as, in succession planning, tax matters or other estate planning issues. These types of arrangements should be thoroughly discussed, understood and approved in writing by all parties involved.

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Deadlines & Limitations• Accrual- There are deadlines and limitations placed on causes of action. This means that the

business’ right to pursue the action accrues (or the clock begins to tick on the right to bring the action at a given point in time). The accrual period for each cause of action varies by statute or otherwise depending upon the nature of the cause of action.

• Tolling- Listed below are some of the things that could toll or stop the statutes of limitation clock:– Absence from the jurisdiction,– Death (Defunct Entity),– Disability or incapacity,– Jurisdiction defect of some kind,– Misidentification and Misnomer (wrong business identity)

• Stale- An action can no longer be pursued if the time for pursuing the action has expired and the action has not been tolled.

• Note to the Wise: It is important that businesses get their lawyers involved as early as possible in any dispute or adverse legal situation because a statute of limitations is a ‘lock on the court door or lost password to the court’s filing system’. Don’t play with statutes of limitations!

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Size or Scope of the Engagement• The business should always perform a cost-

benefit analysis when hiring the services of an attorney.

• Will the perceived benefits justify the cost of the attorney and litigation expenses, for example;

• How long will it take for the matter to come to some form of resolution and at what cost in terms of business treasure, management time and employee distraction.

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Cost-Benefits Analysis(Judgment Proof, Amount in

Controversy, etc)• Is the adversary judgment proof, i.e., what is the likelihood

that a judgment will be collectable if won?

• How much does the adversary owe the business?

• Sometimes it is best not to spend good money trying to recoup the money that is lost.

• The business should not pursue adversaries at the expense of the pursuit of its business goals and objectives.

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Other Professional Options• Certified Public Accountants

• Appraisers

• Economist

• Business Consultants

• Financial Advisors

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QUESTIONS & ANSWERS

Coleman Jackson, P.C.Professional Legal Services Corporation

CJ PC

Fax: (214) 481-7041 Phone: (214) 484-6003740 East Campbell Road, Suite 450

Richardson, Texas 75081

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