Lots of lawyers and legal websites harp on about being “commercial”, but what does this mean in reality ?
It can mean understanding that legal advice is not just about law, it also includes good business advice. It also tends to mean that costs should be proportionate to the business and legal risk perceived by the client and the necessity to get a contract or a transaction completed as soon as possible, not getting overly bogged down in minutiae.
Perhaps it’s even simpler than that ? At a first meeting, whether prompted by a client or by the lawyer (where the client is inexperienced but the lawyer is experienced, really the lawyer should take the initiative), time should be spent on 2 simple issues :-
- what is the client’s objective
- what are the potential legal risks
Objectives are often the easier part of the discussion. Where lawyers and clients can clash, often further down the line, is on the issue of legal risk. The lawyer may be aware, via experience and knowledge, of risks that a client simply doesn’t perceive.
If objectives and possible risks are discussed at length at the beginning, followed up by a detailed letter, perhaps incorporated in a retainer letter, this may reduce conflict later. Everyone knows where they stand – the client gets what they want at the price which is acceptable and the lawyer covers his or her backside by explaining the trade off between cost and risk coverage.
Short form or long form documents or agreements ?
For example, let’s say a client comes to me for a shareholder agreement. He or she has a fairly small and newly established business with 1 other shareholder. My firm, like most commercial law firms, has a number of precedent or template shareholder agreements. Do we use the 50 page “warts and all” template as our starting point or can we use our shorter form 10 page version ? Most clients would opt for the shorter one, for obvious reasons.
Explaining the potential risks , at the earliest possible stage, and setting things out in writing, giving clients options and choices is a great way of listening to what the client wants and reacting accordingly.
Houston we have a problem
But, hang on, there is a problem – negligence law doesn’t see things like that. I am talking here about professional negligence law. It perceives that almost all clients must be treated paternalistically by lawyers, that clients shouldn’t have the choice to set the objective with the solicitor and to pay a fee based on that agreed objective, perhaps even where the client has been fully briefed. Professional negligence law, in effect, says that the solicitor must do what’s necessary, comprehensively, to protect the client, regardless of the clients objectives and budget. This is a big problem and one which needs to be addressed and resolved – an example of this problem, in practice, was the subject of an earlier blog post from us.
What to do – how to be commercial ?
Based on the reality that, even where a solicitor and client have fully discussed and agreed objectives and risks and a client, with full knowledge, opts, for business reasons, to save time and money by not having a “belt and braces” service, the lawyer can still be liable later, should lawyers accept this risk as part of practice ? Should lawyers and law firms, as part of the necessity if being “commercial” accept that, through no fault of their own, they may face some insurance claims ?
This in turn creates further problems – most clients are blissfully unaware of just how much solicitors, even those with a very good claims record, pay annually for professional indemnity insurance. It’s a lot. A few claims can make that premium shoot up very quickly and much higher. So it’s not just clients who need to look at objectives and risks – solicitors, under the current law, which does not reflect the reality of what clients often want, need to consider whether their objective of being seen as dynamic, commercial lawyers, who think like clients, merits taking the risk of the professional indemnity hit.
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