Retaining counsel

I used to want to be a lawyer. My favorite read of 1992 was John Grisham's The Firm, and I ruefully admit now that Mitch McDeere, a figment of Grisham's imagination, was an early professional role model for me. A high school colleague I ran into at my ten-year reunion this past weekend referred to Grisham's influence in her career visioning, and we laughed about the author's surpassing professional influence on our generation. The difference is that she's a litigator today, and I'm still wondering where my criminal defense lawyering fantasy went.

So anyway, here's a primer in retaining counsel I've cobbled together after three months of searching: How to hire a good lawyer.

To begin, my business partner and I had been vaguely aware of the need for counsel eventually, and had gleaned in our professors' asides how important legal counsel could be to the health of our business investments. But we didn't know what to look for, and certainly couldn't say concretely why we might need one. More than anything, we were suspicious of the billable hour. Being a pair of bootstrapped search funders, we weren't keen on shelling out $300 to $700 an hour for advice we could get from our deal advisor as part of our normal course of business.

A note on the billable hour. My business partner and I are dumbfounded that this payment system is the norm in the legal profession. We're not legal types (come to think of it, we're not financial types either), but it doesn't take a law or finance professional to react: Now wait a minute. You're incented to take as long as you can to solve my problems? That just doesn't sound right. The norm of compensating lawyers by the billable hour certainly didn't endear us to the firm-based lawyers we spoke with -- through no fault of their own, we allow -- so we held out. Maybe there were others in the wilderness.

And so there were. Upon hearing of our woes, our deal advisor and another b-school colleague of ours who is a former lawyer suggested looking for counselors who work on a contingency, or perhaps a success fee. A whole new world opened up. To be sure, business lawyers who work on an arrangement that isn't the billable hour aren't common, and as they tend to be independent, can be rather tricky to find. But once we learned that they were 'out there,' we reset our search terms and began afresh.

We contacted former co-workers, alums who do business transactions typical of those a search funder would do, and anyone else who seemed to have a sense of what we were looking for. We cast a wide net, and as we spoke with lawyers across four states and three time zones, a few criteria became clear to us. We wanted someone in our own time zone who gave us just enough advice to make an informed decision. Lawyers are fundamentally different animals from us MBA types, we came to realize. They are trained to anticipate the 1% risks, i.e. the unlikely scenarios that might derail or harm a business, whereas we're trained to imagine the 1% growth possibilities. We admit that that form of legal training is important -- it certainly grounds people like ourselves when we ignore or downplay risks in hopes of growth. But it was downright depressing to talk to lawyers whose only contributions to our dialogue were those 1% risks.

To wind down this long story, we found our man, and through a most unlikely source: the seller's counsel.  Given our interest in setting up for a smooth transaction (and given that the seller's longtime counsel was someone we liked speaking with), we asked for an introduction to a lawyer the seller's counsel trusted, respected, and had worked well with in the past -- crucially, as opposing counsel. It's not easy to be a watchful consiglieri without also coming across as a nervous Nellie, but somehow our counsel does it, and does it well. And as a bonus, he was willing to work with us on the compensation front too.

Our search has finally ended. Bye bye John Grisham. We've retained counsel, and we believe we're in great hands.