When you think about purchasing a product for your dealership, does the acquisition of a new alignment machine, for instance, receive more analysis than choosing a law firm to represent your company?
Let's face it-interactions with lawyers are as necessary a part of operating in today's business environment as a piece of equipment. Few outside contacts can negatively or positively affect your business like the lawyer who represents you in a business transaction.
Since lawyers are here to stay, it's up to your management to get the ``best deal'' for the ever increasing lawyer's fee ``buck.''
Choosing a law firm
Lawyers are not ``one size fits all.''
The most common mistake we have seen in our consulting practice is the tendency to choose a law firm or lawyer for all the wrong reasons. That friend of yours who is a lawyer may be a great guy to get you out of a speeding ticket for a quick $250 and a visit to court. However, he may not be the right lawyer to complete the ``due diligence'' for your next acquisition, respond to an employment lawsuit or defend your dealership when it's named in a product liability lawsuit.
Lawyers typically focus on a certain area of the law. Larger law firms tend to offer many areas of expertise while smaller firms may specialize in only a few areas.
We have had the experience of speaking to a lawyer who clearly just ``wrote a letter for his buddy to see if he could shake up the company tree and see how many dollars would fall out.'' When talking to a lawyer like this, you and he both know that he is at a disadvantage because he doesn't really have more than a general understanding of a particular portion of the law.
Your dealership should avoid this common mistake by choosing the right lawyer and law firm to represent your business.
So how do you choose a lawyer/law firm to meet your dealership's needs?
Take a realistic look at your company's plans over the next five to 10 years. Consider the likelihood for acquisitions, growth or shrinkage of staff, change in ownership potential and the overall growth and profit potential for the business.
Ask some of your trusted customers which law firms they use. Ask them what they think of the service and if the lawyers have taken the time to become familiar with their business.
Call the well-known, elite, larger firms as well as the smaller ones and tell them your company is looking for a new law firm. Give them a specific topic on which the company may need legal advice and ask to meet with a partner over that particular area of law.
The firm's principals will typically invite you to their office. Two key members of your management team should attend the meeting. One could be the point person and the other could do the observing. Often one person will make observations the primary person may not notice because he or she is busy giving the history of the dealership or talking about the particular problem that requires legal counsel.
Develop a list of questions. They can include the law about a particular area of interest-or a specific problem your dealership is facing. However, your questions also should review the following topics:
* The firm's philosophies on relationships with clients. Do their philosophies match up with how you do business? Are they a more conservative firm-strictly within the speed limit-while you tend to operate with a bit more risk and view the ``letter of the law'' as a point of reference but prefer to operate on the fringe?
* The longevity of their respective partners. Beware of firms that cannot keep at least a few of their managing partners around for the duration.
* Their list of long-time clients with contact names and numbers. Call a few of these contacts. Of course, if they are on a list of references provided by the firm, you can bet they will be positive. However, take this as an opportunity to ask the person on the reference list about their experience regarding all the topics listed here.
* Their billable hours structure. What you are looking for here is the firm's ability and willingness to give you a blended rate for work accomplished.
For example, a paralegal who bills at $125 an hour may be adequate to accomplish research on a particular topic. An attorney who bills at $200 an hour may interpret the research and the managing partner, who could bill anywhere from $250 to $500 an hour, may need only an hour of his time to take this interpretation and apply it to answer your particular question.
* Ask for experience and policy on establishing a legal budget for your dealership. An upfront agreement that monthly billing will not exceed a certain dollar amount for a particular matter without prior authorization by the dealership may be arranged. This arrangement is similar to when your service manager has to call a customer to review additional repairs that were more than the initial estimate.
* Do they have electronic billing? Do they have billing capabilities by topic? If they can provide you with a ``a running total'' on a certain topic, you can make a decision on the ``cost of fighting vs. the cost of settling.''
c Ongoing client communication. Many law firms provide newsletters to their clients regarding new and proposed rules that could positively or negatively affect their business environment. Some firms provide periodic seminars ``free of charge'' to their legal clients. Ask the firm if it provides similar services. This can help your management stay current with the legal environment without any additional expenditures.
Meet on your turf
Once you have narrowed your selection to one or two firms, invite them to visit your dealership.
Good lawyers will be willing to invest non-billable hours visiting a customer's business. They should want to understand the nature of your operation and the company principles of your dealership.
Walk them around the dealership. Ask your key salesperson-or your assistant who ``reads'' people well-to purposely ask them philosophical questions regarding law and how it relates to business.
My experience has been that some lawyers have an excellent sense of the law but very little business acumen. In order to establish a productive working relationship between an attorney and your dealership, the lawyers you choose need to understand business.
Once the dealership visit is complete, the firm's references have been checked, you've determined that their average billable rate is affordable and you've received feedback from your key employees who have been involved in the firm or store visit, go ahead and choose a firm to represent you.
And once you have made that choice, make a point of keeping them in the loop of your business progress.
Attend their free seminars and semi-annual or yearly social events. Ask them to attend any of your dealership's social events or customer appreciation events.
Make them a part of your business so that if they hear of a change in the law which could affect your business, know of another dealership that may be for sale or, perhaps, a really great tire salesman who may want to switch employers, they will think of you.
Remember, in many legal transactions your law firm speaks on your behalf. To make sure it represents you in the best possible manner, first do your homework before choosing the right firm.
The future of your business could depend on it.
If you have personnel-related questions you'd like Ms. Miles to address in future columns, e-mail her at [email protected] or use the ``Speak Up!'' card in this issue.