Nov 28

You don’t need a lawyer until you have a legal problem

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It is a waste of good money to pay for a lawyer unless you have a problem. Seems like that makes a lot of sense. Same philosophy applies to “don’t see a doctor until you are really sick” and “don’t do any preventative maintenance on a machine until it breaks down.” Unless of course by the time you consider yourself sick, the disease is now at a stage when it is un-treatable or the machine now needs to be replaced because proper regular maintenance wasn’t done.

Most businesses that don’t have in house lawyers just can’t justify spending money for legal advice unless they really have to. They just don’t realize when that is until it is too late.

For example, Mr. or Ms. Business Owner is going to open another location in a shopping center. He or She has signed and negotiated leases in the past. No need to pay money to a lawyer who is going to charge $300-$500/hour to tell you what you already know. It is a shopping center lease, multiple pages, prepared for the landlord by some other lawyer. It is standard. Everyone in the shopping center signs it. All that matters is what the rental rate is and you know how to negotiate that. The problem is that you may be avoiding spending money now to avoid problems in the future that will cost a lot more later to solve (if they are not already un-solvable at that point).

First of all, leases (like all form contracts presented to business owners) can always be changed. Even though the landlord may have a standard contract the landlord will usually change it to get a good tenant. The landlord is in the business of keeping his rental income coming. The form lease they use is written with every possible aspect being in the landlord’s favor. The time to get the landlord to take out some of the one-sided nature of his form contract is in the beginning when the landlord’s main concern is renting the space to a good tenant.

There are many things that the normal business owner will not even think about at this stage. Experienced lawyers will know from experience that these matters need to be addressed now. How is the CAM charge calculated? Are you paying for the property managers outrageous flat overhead mark-up? What happens if the shopping center remodels or expands? What effect will it have on your business? Will you lose traffic flow, close in parking and/or visibility? Does the landlord have the right to make changes in the center that can cause these problems? Can you get out of the lease if this happens? Lets say you have done your homework and think that this is the best location for your business? What if you are wrong? Did you get an escape clause that allows you to reasonably buy out your lease if you need to? Is the landlord restricted from renting to a competing business in your own center? Who is responsible for repair and particularly replacement of major systems like HVAC, sprinkler systems, electrical, exhaust systems? And this is not a even a complete list.

Companies with in house counsel can have input at every stage of this process. Smaller companies who take advantage of services provided by My Corporate Counsel can too.

What you don’t know can hurt you.