Budgeting for a deferred disaster

If you don't have budget for essential legal work (like good contracts), you are budgeting for deferred disaster.

— Paul Jacobson (@pauljacobson) August 12, 2013

I’m not sure if it is poor form to quote your own tweets in a blog post but I feel like I keep repeating myself when it comes to important legal frameworks for businesses. I’m about to do it again.

I’ve spent the better part of a couple years thinking about ways to impress on small and medium-sized businesses the need for good contracts and other legal documents. My new strategy for a business within Web•Tech•Law is all about that, in many ways, and I have found myself actively working on a “business case” for an offering along these lines in the last few days to boot. So, a conversation I had today with a terrific contact and head of an innovative agency (which was pretty similar to conversations I’ve had with other people I’d love to work with and who run other innovative agencies) came at a perfect time to inspire my, admittedly, profound and nicely expressed tweet above.

This is a typical conversation:

Client: We need help with our contracts, they don’t seem to be very good.

Me: Sure, I’d love to help you out with this. It is exactly what we do. I’ve looked at your contracts and they are not that great. They just don’t support what you do and are trying to achieve with your clients.

Client: Nuts, what can we do about this? We really need to sort this stuff out and have good legal documents. I know we need this stuff, it’s important.

Me: We can prepare better documents for you that integrate with each other and are designed to work with your existing proposal and other workflows as much as is possible. We will also review those processes and help you streamline them to make them more effective. Here is my quote … $$$ (we quote project fees for this sort of thing).

Client: Hey, thanks for your quote. We know we need to get this stuff done and that it is important but we just haven’t budgeted for this sort of cost right now. Can we get back to you?

A couple things stand out for me. For one thing, most of my clients (and prospective clients) recognise the need to have good contracts and other legal documents, especially good contracts and other legal documents that are designed to support what they want to do. Yes, this is a not-so-subtle sales pitch but only because that is how we (and other smart lawyers) approach our work.

Where it gets tricky is that the fees we charge for our work are not what you would expect to pay if you walked into a local stationery shop and bought something off the shelf (or even if you walked into Acme Attorneys in your area, mostly likely). We charge serious fees for what we believe is good quality and creative work. We almost always underquote given the effort we put into our work and I am ok with that. It means we give more value than we receive.

It is tricky because it isn’t always apparent to clients why they should pay so much for what we give them. That often changes when we take clients through what we have done and what they are getting but, even then, it can be a bit of a challenge conveying the significance of what we deliver and which is based on a decade and a half of experience and learning to people who don’t have legal knowledge (and who are otherwise pretty smart people). As I said in a previous post titled "In defence of lawyers and their fees” –

The law is complex and it becomes more and more complex each year due to new legislation (lately, increasingly poorly drafted legislation), new developments and trends and changing norms which require a lot of skill, experience and focus. We live in a society that is structured using a dizzying array of laws and regulations. Those laws may be unfair, unjust or even applied poorly but law informs the underlying structure of virtually everything you do. You are probably not aware of most of it but it is there nonetheless.

So when I have that typical conversation with a prospective client (or even a current client, although this happens less frequently with current clients), it is frustrating, not because I won’t be paid a fee I quoted for but because that prospective client is taking on a potentially substantial risk to save a relatively smaller amount of money in the short term.

I’ve used a couple analogies to try convey this to non-lawyers and my latest, favourite one, is my diabetes. The idea is that not taking care of your business’ legal needs early on can lead you into a delusional state where you think you are immune to all the fire and brimstone we lawyers repeatedly warn you about (modern snake oil salespeople, you may think) until the metaphorically sugar induced haze lifts. When that happens, you find yourself in a clinic having blood taken and being told you have a lifelong condition that can kill your business if you don’t take dramatic action immediately. By that point, you probably have a chance to get past this relatively intact and you know you will be better off soon enough but, still, that is some bitter medicine to swallow.

What it comes down to is as I said in my tweet and I don’t think I am being overly dramatic about this:

If you don’t have budget for essential legal work (like good contracts), you are budgeting for deferred disaster.

That disaster may not occur with this one client, or the next one. It will happen, though, and when it does the cost will far exceed what I (or another lawyer) quoted you to put something in place that could have prevented it in the first place. Hopefully the disaster will not be a metaphorical extinction level event but it won’t be pleasant and I certainly won’t feel much like saying “I told you so”.