Finding the Right Professional for the Task at Hand: Why Your [Insert other Professional] is not your Lawyer…

by Michelle Bomberger | May 25, 2018

We love other professionals and know that our clients are best served if they have a team of professionals to support them as they make decisions, each bringing his or her unique expertise to the table to help formulate a comprehensive plan that looks at all sides of a situation and formulates the right strategy for the business. Maybe this approach is a pipe dream for small businesses – the effort (and sometimes cost) required to pull together the group of experts seems to outweigh the benefit. But knowing who to call for the most comprehensive solution to the problem at hand and heeding that professional’s advice is critical to making informed decisions.

An example from our world is when a client wants advice from us on tax matters. From my experience, I know enough to highlight the issues. I also recognize, though, that I do not know all the repercussions of tax planning for the company and the owners; and our clients are best served if they have a tax professional advising them on tax matters. Each of my conversations includes the statement, “These decisions have both company and personal tax implications, so you need to be sure you talk with your CPA to understand the right approach for you.”

Every now and again, we have a client say to us, “My [CPA/Banker/Insurance Broker] is helping with that…” Sometimes “that” is a business formation, sometimes “that” is a business partnership or Operating Agreement and sometimes “that” is employment law. It’s encouraging that the client has trusted advisors and is having the conversation with someone who works with businesses and may have some experience in the area. The professional can highlight risks based on his or her own experience. However, I’ve come across many situations where other professionals take the action rather than direct the client to the right professional. A CPA may set up the company for the client or a banker may give the client a document to sign for expediency to satisfy “compliance” needs or an insurance broker may review a contract. Some time later, these actions came back to bite the business in the butt because the company did not get legal counsel to understand the broader implications of the decisions made.

While well-intentioned as they may be, these practices are not in the best interests of clients. In law school, lawyers are trained to think about language differently – to look for ambiguity and risk – in addition to the law itself and apply that to a particular client situation. Even “boilerplate” is not standard – it has different implications for different situations. Furthermore, areas of law that seem simple because there’s an online form – such as business formations or trademarks – have lots of decisions that must be made in advance of completing the form. Also, just because you found a contract or form to fill in the blanks doesn’t mean that the form or contract accomplishes what you need it to do nor does it mean that the steps you are taking are legal. We see this regularly in the issuance of stock to investors (securities laws) and terminations/severance of employees (employment law), both of which are highly regulated. Just because a solution was right for your buddy or because your business consultant used the agreement for many other clients, doesn’t mean it’s right for you.

Understanding and interpreting the legal aspects of the business decision, contract or form in light of what a particular company needs is what makes lawyers valuable. And I can say until the cows come home that you’re much better off doing it right the first time and that fixing it will cost loads more than doing it right from the start. That may or may not influence your behavior. But think about whether you’d go to a lawyer to file your taxes or provide you with a business loan. You wouldn’t. So why would you have another professional provide your legal advice?