3 Attributes to Look for in Your Lawyer

I often wonder if, on balance, being an entrepreneur was a good choice in my life. People frequently discuss the downsides of entrepreneurship by citing the risks and costs involved, such as the amount of time you have to put in and the possibility of losing your net worth or your credibility. These are worthy considerations but, to me, the fact that they are frequently covered makes them less dangerous.

Other issues are not addressed as often and are therefore more risky. One of these is that, to be an entrepreneur, you have to be highly competent in many things and sufficiently competent in many others. There is little room for gross incompetence in any material area to running a business. This is why it is important for would-be entrepreneurs to develop partnerships.

One partner you need is a good lawyer. I did not realize this before I started Sageworks and I thought (like a lot of people think) that lawyers were largely necessary only for items like setting up a partnership or corporation or suing someone.

But, as we have scaled our company, we have required outside legal counsel for many issues such as intellectual property, human resources and contracts. Most attorneys are qualified to execute the raw mechanics of legal work, but that’s not necessarily where you need them most, so I’m going to try to explain what to look for in a lawyer or a law firm:

1. Your lawyer should be excellent in working with people.

There are many times when you will need a lawyer to jump on the phone with a prospective buyer, seller, employee, vendor, customer, shareholder, board member, etc. Lawyers are just like other people–some of them are good with people and some of them…are not. For example, our corporate lawyer, Lee Kirby with Smith Anderson (Raleigh, N.C.), has all of the requisite legal expertise (domain knowledge, Harvard law degree, etc.), but that’s not what has helped me the most. Our company can refer him to any outside party with the complete confidence that he can work with people and come to an endpoint without the vestiges that often attach themselves to professionals–ego, posturing, proffering opinions without expertise–things that usually piss people off or, worse, misdirect their energies.

Many people think that lawyers need to be combative, which I suppose is true for litigators, but litigation should be a very small part of what you deal with in business. If it is a large part, you have the wrong law firm or wrong lawyer or you may even be a bad person, which falls outside of my expertise to remedy. Anybody can litigate; it takes real skill to play nicely with others and compromise. It is imperative to have a lawyer who can work with people and who knows what to say, when to say it, or even whether to say it.

2. Your law firm should be a true long-term partner with you.

Most law firms claim this, but I doubt it is the case very often. When we were starting out, we didn’t have a lot of cash for legal fees, and our law firm was very reasonable on their fees. I suppose this may be part of a business model to charge less in the beginning, but few law firms have the foresight to actually do this. If your law firm is on a meter, they don’t care. Much more importantly, if you cannot trust your lawyer, you’re going to regret it sooner or later. I’m not talking about trust in whether he or she would do something unethical or illegal. Rather, this goes to whether you can trust them as a person and friend and know they really have your best interests in mind. This is important because, as most companies scale, there are dozens of issues that come up where poor advice could be dispensed, not out of neglect, but out of a professional not truly caring about you and your business.

3. Finally, your lawyer should have sound judgment.

My dad never went to college, but he used to say something I don’t forget: You can’t teach good judgment. This thought is so profound that it needs to be a book, not encased within an article by someone like me. This idea is also not only about the legal profession, because I see it in many top MBAs as well, where everyone has a baseline of education but few people are good at applying judgment in complex situations. There are many times when I’ve had to rely on the judgment of my lawyer on a legal issue or, more often, on an issue tangential to the law. These are situations on the margin that are not just a matter of legal items but are also about business strategy. This might be the toughest point of all, because I can’t really explain how you know someone is a good decision-maker, but I felt confident in our lawyer’s competence in the beginning, and it was validated by the first few complex issues we ran into.

I also recommend that you read, “Lawyers and Thieves,” written by Roy Grutman, the late husband of one of my friends, Jewel Grutman. It is easy reading and incredibly helpful for any businessperson dealing with legal issues. Roy was a famous celebrity litigator, and his book is a very practical guide to dealing with matters of the law for laypeople. It is a rough-out of how businesspeople should approach the law and lawyers.

Lastly, don’t feel bad if you have made mistakes in this area or really in any area of your business. It is extremely difficult to build a business, and none of us can be great at everything. One of the reasons I love writing for Inc. is that I am an expert in making mistakes–actually a good vantage point from which to help people.