Having just completed a very successful closing in which we helped an Iowa-based company and its owners sell for a number that represents a HUGE return on investment, I’m feeling pretty good about the practice of law. After all, there’s nothing more satisfying to me than working with Iowa business people who have done it right and are getting their reward for doing so. These are people who recognize the value of a dollar and the importance of setting goals, evaluating risks/benefits, prioritizing tasks, allocating resources, and then executing.
I cannot, however, say the same for the “big city” law firm that represented the buyer in this transaction. That firm – whose website boasts that they are an international firm with nearly 1,000 lawyers located in multiple offices around the world – and its approach to the deal, represented precisely what many business people dislike about lawyers and what this blog preaches against – an overly technical approach that complicates rather than simplifies business deals and leads to countless hours and thousands of dollars in unnecessary legal fees (and lost business revenues) protecting against contingencies that are so remote and unlikely that no party to the deal really believes they need to be addressed, except for one side’s lawyers. In this deal, in fact, there were at least a half dozen times where the buyer said the equivalent of “we’re fine with that from a business perspective, but we’ll have to run it past our lawyers” – only to result in the buyer’s lawyers saying it couldn’t be done – generally for one of the following less than compelling reasons:
• “We’ve never seen it done that way.”
• “That’s not industry standard.”
• “We haven’t given that right to any of the other parties we’ve worked with.”
I’m not suggesting that the buyer’s lawyers in this deal are not good lawyers – especially if the sole measure is legal expertise and the analytical ability to identify every potential issue (no matter how peripheral) or contingency (no matter how unlikely), and every risk (no matter how small), and arrive at a legal strategy to address it (no matter how impractical or costly from a business perspective). By this measure, they are outstanding lawyers. So, if that’s what you’re looking for, go to the big firms in the big cities. But if you’re looking for a firm that views a business deal like you do – from a business/value perspective – you might start with a firm that’s a little closer to home and a little smaller.