Lawyers are not nearly as necessary for negotiating contracts as they want people to believe.
Lawyers, by reflex, attempt to insert themselves in the middle of processes, and naturally tend to create conflict. (This is according to my experience, and the experience of many others.) If a lawyer can do this, the negotiation will naturally take longer, generating billable hours.
Secondly lawyers all know that the person who is in a hurry to get a contract is going to get a worse deal, and so will NEVER be in a hurry to close the deal. But there are times when "winning" this negotiation is simply not worth the delay.
Now step back and look at it from the point of view of a company. Paying lawyers fees is not good. Creating conflict with someone you want to cooperate with is not good. Making negotiations take longer is not good.
Making this concrete, I was in a recent negotiation for a pay for performance compensation. Because it was pay for performance I could quantify how much delays cost the company versus what I will get paid. Their lawyers' delays cost them several times what I will get paid. On my side I did not let my lawyers negotiate. I told them to identify everything in the drafts that I should object to. Then I negotiated without them. Once there was nothing that made me unhappy, I signed. And what I got was pretty much the deal that we agreed to up front, in person, which I emailed to them months earlier.
Limiting my lawyers' role saved me thousands of dollars. If the company had limited theirs, they would have saved thousands of dollars. And would have had a contract faster.
TD;LR, just because your lawyers want to be involved, and try to convince you that they should be, doesn't mean that they are providing value.
Those are valid points, and I've seen it from both sides - as a lawyer and as a businessperson. But one of the things missing from your comment is that good lawyers are protecting their clients from the possibility of things going wrong in the future.
Contracts are often unclear and are often broken. Sometimes things just don't work out. Regardless of how, litigation often ensues. That's when the value of a lawyer becomes apparent. It's easy to complain about lawyers during the negotiation - they often needlessly inject themselves into the process - but it would be worth considering that a good lawyer is trying to protect you in case things go wrong. Look at the Frank McCourt case for an example of where the lawyering was poor and it had a disastrous impact: http://www.minnlawyer.com/jdr/2010/09/17/legal-malpractice-c...
I agree. I think it would be stupid to sign any moderately complex agreement without a lawyer having been through it, and having informed you about what you are signing. (I certainly wouldn't sign that.) I also think it would be stupid to have a moderately complex agreement that was not drafted very clearly. And if things go south, you definitely need competent legal counsel.
My entire point was that lawyers like to inject themselves into the process of negotiation, often feel like they are generating value, but in reality tend to generate billable hours and negative client value at the same time.
On the flip side of the coin, lawyers can also mediate between the big egos on the business side that can cause a deal to fall apart over relatively small issues (this happens very often--executives are a lot more personally invested in the process than their lawyers are).
Ultimately, the fact is that you don't need a lawyer to negotiate a contract. Yet people use them almost universally in contract negotiations. Is it for irrational reasons? I like to think not, but who knows.
There are very rational reasons to use lawyers. If the other side is using lawyers, you can be sure that they have tried to slip in terrible terms that you really don't want. They won't look that bad, but they will be bad. Relying on yourself to find them is just stupid.
And once you're using a lawyer, that lawyer will naturally be inclined to try to turn the negotiation into a gravy train.
Try this. The next time you are part of a negotiation and want to redraft the agreement, ask yourself who you are doing it for. Are you serving your client's best interests? Or your interests?
Here is another exercise. The next time you see the need to mediate between "big egos on the business side", think carefully about how those egos got unhappy in the first place. I'll give you even odds that the issue they got upset over is one that was introduced by a lawyer. Could the conflict have been avoided entirely if it was negotiated differently? My guess is that, more often than most lawyers would want to admit, the answer is yes.
> And once you're using a lawyer, that lawyer will naturally be inclined to try to turn the negotiation into a gravy train.
So negotiate a fixed fee, with a bonus for the deal closing. Or find a lawyer that you trust to not run up the clock. There are a lot of things you can do as the client to guard against that sort of behavior.
> Here is another exercise. The next time you see the need to mediate between "big egos on the business side", think carefully about how those egos got unhappy in the first place. I'll give you even odds that the issue they got upset over is one that was introduced by a lawyer.
People get mad at their dentists for telling them to floss, but that doesn't mean anything by itself. The business people on a deal are optimistic--they think the deal will go well and is a good idea, otherwise they wouldn't be doing it. Lawyers are pessimists. They want to hedge against all the ways the deal can go wrong. They don't have a personal investment in the deal that can cloud their judgment of all of the ways it could blow up.
You seem to have confused me with someone else. But feel free enjoy your straw man argument with an imagined opponent.
My point was simply that "negotiating for you" is not the best example of how a lawyer provides real value to clients. (Though the activity is undoubtably very profitable for lawyers.)
Comments
Lawyers are not nearly as necessary for negotiating contracts as they want people to believe.
Lawyers, by reflex, attempt to insert themselves in the middle of processes, and naturally tend to create conflict. (This is according to my experience, and the experience of many others.) If a lawyer can do this, the negotiation will naturally take longer, generating billable hours.
Secondly lawyers all know that the person who is in a hurry to get a contract is going to get a worse deal, and so will NEVER be in a hurry to close the deal. But there are times when "winning" this negotiation is simply not worth the delay.
Now step back and look at it from the point of view of a company. Paying lawyers fees is not good. Creating conflict with someone you want to cooperate with is not good. Making negotiations take longer is not good.
Making this concrete, I was in a recent negotiation for a pay for performance compensation. Because it was pay for performance I could quantify how much delays cost the company versus what I will get paid. Their lawyers' delays cost them several times what I will get paid. On my side I did not let my lawyers negotiate. I told them to identify everything in the drafts that I should object to. Then I negotiated without them. Once there was nothing that made me unhappy, I signed. And what I got was pretty much the deal that we agreed to up front, in person, which I emailed to them months earlier.
Limiting my lawyers' role saved me thousands of dollars. If the company had limited theirs, they would have saved thousands of dollars. And would have had a contract faster.
TD;LR, just because your lawyers want to be involved, and try to convince you that they should be, doesn't mean that they are providing value.
Those are valid points, and I've seen it from both sides - as a lawyer and as a businessperson. But one of the things missing from your comment is that good lawyers are protecting their clients from the possibility of things going wrong in the future.
Contracts are often unclear and are often broken. Sometimes things just don't work out. Regardless of how, litigation often ensues. That's when the value of a lawyer becomes apparent. It's easy to complain about lawyers during the negotiation - they often needlessly inject themselves into the process - but it would be worth considering that a good lawyer is trying to protect you in case things go wrong. Look at the Frank McCourt case for an example of where the lawyering was poor and it had a disastrous impact: http://www.minnlawyer.com/jdr/2010/09/17/legal-malpractice-c...
I agree. I think it would be stupid to sign any moderately complex agreement without a lawyer having been through it, and having informed you about what you are signing. (I certainly wouldn't sign that.) I also think it would be stupid to have a moderately complex agreement that was not drafted very clearly. And if things go south, you definitely need competent legal counsel.
My entire point was that lawyers like to inject themselves into the process of negotiation, often feel like they are generating value, but in reality tend to generate billable hours and negative client value at the same time.
On the flip side of the coin, lawyers can also mediate between the big egos on the business side that can cause a deal to fall apart over relatively small issues (this happens very often--executives are a lot more personally invested in the process than their lawyers are).
Ultimately, the fact is that you don't need a lawyer to negotiate a contract. Yet people use them almost universally in contract negotiations. Is it for irrational reasons? I like to think not, but who knows.
There are very rational reasons to use lawyers. If the other side is using lawyers, you can be sure that they have tried to slip in terrible terms that you really don't want. They won't look that bad, but they will be bad. Relying on yourself to find them is just stupid.
And once you're using a lawyer, that lawyer will naturally be inclined to try to turn the negotiation into a gravy train.
Try this. The next time you are part of a negotiation and want to redraft the agreement, ask yourself who you are doing it for. Are you serving your client's best interests? Or your interests?
Here is another exercise. The next time you see the need to mediate between "big egos on the business side", think carefully about how those egos got unhappy in the first place. I'll give you even odds that the issue they got upset over is one that was introduced by a lawyer. Could the conflict have been avoided entirely if it was negotiated differently? My guess is that, more often than most lawyers would want to admit, the answer is yes.
> And once you're using a lawyer, that lawyer will naturally be inclined to try to turn the negotiation into a gravy train.
So negotiate a fixed fee, with a bonus for the deal closing. Or find a lawyer that you trust to not run up the clock. There are a lot of things you can do as the client to guard against that sort of behavior.
> Here is another exercise. The next time you see the need to mediate between "big egos on the business side", think carefully about how those egos got unhappy in the first place. I'll give you even odds that the issue they got upset over is one that was introduced by a lawyer.
People get mad at their dentists for telling them to floss, but that doesn't mean anything by itself. The business people on a deal are optimistic--they think the deal will go well and is a good idea, otherwise they wouldn't be doing it. Lawyers are pessimists. They want to hedge against all the ways the deal can go wrong. They don't have a personal investment in the deal that can cloud their judgment of all of the ways it could blow up.
Realy? you think some start up is going to produce some software or that you could represent you effectively in court for non trivial cases?
You seem to have confused me with someone else. But feel free enjoy your straw man argument with an imagined opponent.
My point was simply that "negotiating for you" is not the best example of how a lawyer provides real value to clients. (Though the activity is undoubtably very profitable for lawyers.)