You Need the Right Attorney
When it comes to the need for an attorney for your AEC business, I tell my entrepreneurship students the same thing I tell firm principals – find someone who is specialized in the issue you need help with.
Not all attorneys are equal – it’s just like architects and engineers. You wouldn’t hire a structural engineer for a high-rise project who had only done bridges. And you wouldn’t hire an architect to design an elementary school who had only done strip malls. But don’t think there aren’t plenty of attorneys out there who won’t take your work even if they have no experience in that problem. Getting the right attorney on board can be extremely valuable to you.
For example, don’t sign any lease without running it past an attorney who knows what they are looking at. I will never forget how years ago we had a new lease to sign for a larger office space in the mixed-use complex we were already leasing space in for our Natick, Massachusetts, office. I took it to our attorney, a wizened old New Yorker who spent 20 years as in-house counsel for an office developer. He told me to grab a tape measure and meet him at the new space. The lease was for 10,000 square feet of space at about $25 per square foot. What we found was the space actually only 8,800 square feet. In less than an hour, our attorney saved us roughly $180,000 – 1,200 square feet less, at $25 per square foot, over six years.
The same scenario was repeated here in Fayetteville years later. When I came back to Zweig White after the lender took the company from its private equity owners a year earlier, we relocated the business to Fayetteville. The lesson learned in Massachusetts was not forgotten. Again, we started in a smaller space in a multi-tenant building that we quickly outgrew. Our landlord had a (supposedly) 3,600-square-foot space we could expand into. So I had a young intern architect who worked for my other business, a design/build/development company, put the floor plan we were provided by the owner into AutoCAD where it turned out to be only 2,700 square feet. Again, big savings for us. As sensible as that is, I never would have thought to do it without the right attorney’s original advice.
Another area that requires specialized legal advice is internal ownership transition. Your LLC operating agreement or corporate shareholder agreement and bylaws just have too many ways to go wrong. I’m not an attorney myself, and I have zero interest in reading legal documents, but I can tell you that rarely have I looked at one of these agreements that I couldn’t find problems with (many times BIG problems). You cannot just keep using the old agreements you have that were drafted 20 years ago, or worse – something you pulled from an online source such as Rocket Lawyer or LegalZoom. The cost of good legal advice is minuscule compared to what the wrong documents could cost you.
There is also the issue of actually selling stock or ownership interest to people inside or outside of the company. There are all kinds of rules requiring the filing of legal forms with the SEC or state secretaries of state that most of us are completely unaware of. Plus legal disclaimers must be written properly to be sure that any investor knows their money is completely at risk and can’t claim the ownership opportunity was misrepresented. And if you sell ownership outside of your employees, there are qualified investor requirements that must be met. Get an attorney who is experienced in these matters!
Mergers, acquisitions, and external sales are yet another area that you should not get into without experienced legal counsel on board. Everything from whether or not the transaction will be a stock sale or asset purchase, or what the non-compete provisions for sellers are going to be, or what sellers are committing to in their warrantees and representations is critical. There is no place for an inexperienced attorney in these deals – just way too much is at risk for all parties involved.
I could go on here but will conclude by saying that while I know many of our readers are self-reliant, “do-it-yourself” types and I respect and admire that, these issues and more are not where you want to go it alone or just get your regular business attorney’s input. You need specialized help.
Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com. This article originally appeared in The Zweig Letter. Reprinted with permission.
