Quoting for Legal Work . . .

Frequently a business professional - in my case, an English Solicitor - will be approached by a business and/or its owner(s) that is considering undertaking a significant transaction (for example, taking external investment or selling the business), and the question is asked - "How much will it cost for you to assist me?"

I'll ignore (for the moment) the sub-text of the question which is (broadly) 'How low will you go?'!

The issue with seeking to respond to an enquiry of such a nature - is that it generally hugely helps me / the relevant business professional to know a little more about the envisaged underlying transaction (which can even be : Who are you?  Please would you guide me to some publicly available information with regard to your venture!) - Before I can meaningfully provide a properly formulated proposal on fees.

A small factual difference in background information can significantly change an advisor's understanding of what is required in relation to a broadly outlined request for assistance;  and can make a huge difference in what a competent legal advisor suggests should be the work involved (and hence the budgeted fee proposal).

Ironically, it is the good legal advisors who see significant issues early - that lose out to 'the low ballers' who don't!

In particular, it is generally useful to know the 'quantum' (or size) of the envisaged transaction – since legal fees should (in one context) be seen as akin to 'buying an insurance policy' = seeking to 'ensure' that a transaction proceeds as envisaged and without ‘risk’ = i.e. the outcome is of a manner you are comfortable with, and (heaven forbid) that you don’t (personally) have to face subsequent legal claims from the other interested parties.

The position I often find myself in - is a little like being asked to quote for 'insuring a house', and not knowing (often - to any degree) whether I am being asked to 'insure' Buckingham Palace or a much more modest dwelling (!)

Legal fees have as their broad 'underpinning' the professional time budgeted to be incurred in performing the service industry role involved.  In that regard, Solicitors are little different to most other service industries, where you are paying for the time of those providing the service.  Thus there is one price for a morning's 'quick domestic clean', and another (higher) price for a full day's 'spring clean'.

That said, it is a truism that you can undertake much the same amount of time (and effort), and hence have similar professional fees - in (say) undertaking the 'domestic property legal conveyancing' of each of the properties mentioned above (Buckingham Palace -v- more modest dwelling) - but clients should surely see that you wouldn't expect to pay the same fees for buying Buckingham Palace, as you would for buying the much more modest dwelling!

If you want to think of the principle in an alternative context - of a 'service provider' seeking to provide an economical, efficient, high-quality service (= let's use the example of a 'property decorator'), you will appreciate that a quote for 'decorating a house' does depend upon the nature of the house.  Someone quoting to paint Buckingham Palace would take into account the significantly larger nature of the job, and the need to use better quality materials - as opposed to potentially 'touching up' with 'thinned paint to allow a speedier job' on the much more modest dwelling.

Another analogy, which my more vehicle-centric clients habitually understand is that when you ask for a quote for a car service - the price will differ depending upon whether the vehicle is a new, valuable, prestige make (undergoing a warranty cover service), or an elderly vehicle that it's only really economic to ensure it is road legal.   

In reality, when preparing for a significant business transaction - I’d suggest it sensible for clients to reserve an appropriate proportion of the envisaged transaction proceeds to ensure that the relevant interested parties obtain appropriately sensible, pragmatic and practical legal advice protecting their position(s) – but obviously, ‘we all need to cut our cloth to suit the relevant resources’ (= both ‘customer’ and ‘tailor’ (/Solicitor))!

I would always suggest in such circumstances - arranging to have an initial 'no-obligation' exploratory consultation (remotely / by telephony) with an experienced and expert Solicitor - aiming to concisely discuss (in sufficient detail) the underlying situation and circumstances which should be  sought to be addressed - and - to outline the approaches/options available for you - hopefully formulating an appropriate course of action for you to take.

If you wished to proceed upon that basis - it would be extremely helpful for me - if you were able to provide me (before we might 'talk' - and - in accordance with my professional / regulator enforced obligations of strict confidentiality) with such further background information as might be appropriate for me to know (e.g. the identity of the (other) interested parties) and/or sight of any relevant copy documentation (e.g. any relevant 'papers') so as to assist my initial review.

I should be able to limit my firm's fees - to very reasonable budgeted sum(s) (as would objectively be considered appropriate - on grounds of 'what the legal advice and assistance is worth' - i.e. also known (by lawyers) by the Latin phrase a 'Quantum Meruit' basis - taking account of the underlying factual circumstances) - while working quickly and efficiently so as to ensure maximum cost-effectiveness.

Clients habitually find this approach highly valuable - and - the best way of preparing to address the situation you will seemingly be seeking to deal with.

Don't buy solely on price - It's not what successful businesses do (but that requires a further blog!)
There is a reason why the phrase 'Cheap' is generally followed by the phrase 'and Nasty' in the English vernacular!

If the above applies to you - I hope that you will make direct contact with me in the near future - so that we can advance matters.

Should you wish to do so – Please feel free to arrange to schedule any proposed conversation with me at a date and / or time (to suit you) - checking / using my public diary availability > scheduling tool – available via = https://calendly.com/danielrobertjohnson

I look forward to (hopefully) ‘speaking’ in the near future.   

With best regards

Mr. Dan Johnson  - Principal and Business Law Solicitor

EquitableLaw.com  –  Solicitors For Business

+44 (0) 7788 537 187 = U.K. Cellular / e-Telephone

+44 (0) 20 8780 3319 = London Landline > e-Voicemail

"We don’t really know what we want - but we want it cheap"

'We don’t really know what we want - but we want it cheap’ . . .

(and we’re ‘sheltering’ behind an intermediary - so that we are not in direct contact with you - and you don't know who we are – so you can’t explore with us how you could cost-effectively meet our needs) = Frustrating!

But if they leave me ‘blind’ as to who the heck they are - then it’s bound to result in ‘the blind (being unable to) lead the blind’!

They make the fundamental mistake and inviting themselves to be the person who is 'Sold To'.

They should be the person who is making a 'Buying Decision'. 

Pick up the phone (for 'Heck's Sake')!

Regards

Dan.Johnson@EquitableLaw.com

+44 (0) 7788 537 187 = U.K. Based Cellular / e-Telephone

www.EquitableLaw.com 

Feel free to seek to schedule a conversation with me = https://calendly.com/danielrobertjohnson

I've Got a Business Law Issue - How Do I Approach a Solicitor?

if you have a legal issue relating to your business - then you really should consider (potentially) using the services of a highly experienced, expert, fully qualified and legally trading 'English Solicitor' (i.e. an authorised and regulated U.K. lawyer) - specialising in company / corporate, finance and commercial matters (such as me) - as opposed to the numerous laymen - and much, much worse! - who habitually provide all sorts of dubious guidance to people in business.

This is doubly so - If you are dealing with relatively material matters (as regards your ongoing business' trading arrangements - and/or - your time & effort).  

Don't ignore it - Deal with it!

I'd strongly suggest that you do speak with a Solicitor- so as to ensure that you receive the best possible legal advice and assistance in terms of dealing with your current position and/or future proposals - in an appropriately practical and cost-effective manner (and most importantly - in a manner that you can rely upon in the future).

If you don't (or aren't able) to take appropriate legal advice and assistance (now) in relation to the circumstances you are dealing with - you potentially face 'making a false economy' - as I fear you may well spend time, effort (and money) in a manner which is 'sub-optimal' - both in terms of the initial effects of any advice and assistance you might receive (and the relevant advice and assistance's ongoing legal effectiveness - i.e. it's 'worth' in practical use over time).

I would always suggest (if you wish to approach me) that we arrange to have an initial 'no-obligation' exploratory consultation (remotely / by telephony) - aiming to concisely discuss (in sufficient detail) the underlying situation you are seeking to address - and - to outline the approaches/options available for you - thereby (hopefully) formulating an appropriate course of action for you to take.

If you wished to proceed upon that basis - it would be extremely helpful for me - if you were able to provide me (before we might 'talk' - and - in accordance with my professional obligations of strict confidentiality) with such further background information as might be appropriate for me to know (e.g. identity of the interested parties) and/or sight of any relevant copy documentation (e.g. any relevant 'papers') so as to assist my initial review.

Once we might have spoken - I should be able to agree to limit my firm's fees - to very reasonable budgeted sum(s) (as would objectively be considered appropriate - on a 'what the legal advice and assistance is worth basis' - i.e. 'Quantum Meruit') - while working quickly and efficiently so as to ensure maximum cost-effectiveness.

I believe you will find this approach highly valuable and the best way of preparing to address the situation you need to deal with.

If the above makes sense to you - I hope that you will make direct contact with me in the near future - so that we can advance matters.

  

Regards

Dan.Johnson@EquitableLaw.com

+44 (0) 7788 537 187 = U.K. Based Cellular / e-Telephone

http://www.EquitableLaw.com

Please feel free to schedule any proposed conversation with me via:- https://calendly.com/danielrobertjohnson

Most Outstanding Business Legal Advisory Firm 2019 - London

Equitable Law is delighted to announce that both it, and its Principal, Mr. Dan Johnson are recipients within Acquisition International magazine’s upcoming 2019 Global Excellence Awards, and that we have been awarded the title of:

Most Outstanding Business Legal Advisory Firm 2019 - London

A.I.'s 2019 Global Excellence recipients are handpicked by AI magazine - based upon a comprehensive analysis and research undertaken by the wider group within the U.K. Corporate finance advisory community.

This proven approach ensures that A.I. selects its candidates purely on merit – not size nor marketing budget – and recognise the very best in business.  Whether you run a single office firm or a multinational corporation, A.I. Magazine rewards those that are succeeding in their endeavours, innovating, growing and improving.

Proudly not 'pay-to-play' (unlike all of the legal directories - to which larger firms proudly announce their inclusion every year - 'after their cheques clear'!).

A.I. Magazine has invited us to share our success with this announcement.

For more information, please do not hesitate to contact:-

Mr. Dan.Johnson@EquitableLaw.com - Principal & Business Law Solicitor

+44 (0) 7788 537 187 = U.K. Cellular / e-Telephone

www.EquitableLaw.com

Tuesday, 20th November 2018

Enterprise Management Share Option Schemes (E.M.I.s) . . .

Businesses  / companies often approach this Solicitors practice - seeking to discuss share option schemes (and in particular EMIs).

If this includes you - Do please ask us for 'appropriate' reading materials for your purposes - Such as the annexed (extract).

EMI Share Option Schemes are a very powerful workforce incentivisation tool - but they do have to be implemented (and run), both with careful thought and skilfully prepared documentation.

There are a huge number of (largely) unqualified, inexperienced and inexpert laymen selling such schemes to relatively early stage / fast growing businesses (who seek to be 'low cost' in the way that such arrangements are introduced).

Be warned that 'low cost' and 'cost-effective' are not the same things = I (and many of my contemporaries) - see huge problems at a later stage in a business' / company's development (i.e upon exercise of the relevant options - whether on sale or otherwise) - costing tens of thousands of pounds in professional fees to correct (if they can be corrected at all) - at which point the 'cowboys' who were historically involved - have long spent their fee for setting up the deficient scheme (and only at that long subsequent point of discovering the deficiencies - does the relevant business / company realise they have no redress = they only then understand that they historically dealt with an unauthorised, unregulated, and in reality - uninsured business who cannot and will not help put right their mistakes).

The maxim (accordingly) is do / always 'Use A Solicitor' - But don't underestimate the upfront (and ongoing) external costs and management time and effort in establishing and running an EMI scheme (properly)!

I look forward to hopefully 'talking' soon.         

With best regards

Dan Johnson - Principal & Business Law Solicitor

www.EquitableLaw.com  -  Solicitors

+44 (0) 7788 537 187 : U.K. Cell. / e-Tel.

+44 (0) 20 8780 3319 : London Landline

No Deal #Brexit : The Unpalatable Consequences . . . .

One of the extraordinary effects of #VoteLeave upon the #British populace - Is that complete laymen (as far as any legal training, experience or expertise) seem able to lecture qualified U.K. lawyers (Barristers and Solicitors - The latter like me!) what U.K./E.U. #law is.

Regrettably, most of those layman's understanding (misled by ridiculous politicians - and - others with a hard Brexit agenda - who are prepared to lie to achieve their aim) is what we lawyers call 'TOTALLY WRONG' (Apologies - There are a lot of concise 'Latin phrases' used in my profession but really something altogether more 'Anglo-Saxon' is what is really required to describe the deluded understanding of some people).

To assist any of my readers with understanding the U.K.'s most significant national negotiations in (at least) my lifetime - I'm not too proud to provide the 'work of another' - Setting out in clear, comprehensive but concise terms the unpalatable choices which the British Government is currently grappling with.

https://documentcloud.adobe.com/link/track?uri=urn%3Aaaid%3Ascds%3AUS%3Afaecdb8f-eee5-4a3b-8156-a1e57bd305d6

https://www.linkedin.com/pulse/no-deal-brexit-unpalatable-consequences-dan-johnson/

Regards

Dan.Johnson@EquitableLaw.com

+44 (0) 7788 537 187 = U.K. Cellular / e.-Telephone

www.EquitableLaw.com

‘SHAREHOLDERS AGREEMENTS’ : DON’T FALL FOR THE CON!

‘The Sting’ – Don’t Be Sold What You Already Have!

I wanted to take this opportunity ‘to get off my chest’ a set of circumstances that really annoy me – and which this ‘grumpy old Solicitor’ (specialising in British company / corporate matters) sees repeatedly in the marketplace. I hate seeing people fall for a con!

My ‘gripe’ is that there is a surprisingly large business advisory industry in the U.K. that seeks to actively market the sale of ‘Shareholders Agreements’ to early-stage ventures and diverse owner/managed businesses – being effectively, quasi-partnerships of entrepreneur individuals, coming together to found and/or develop businesses within the shell of a limited liability company.

At best, these ‘business advisors’ are inexperienced and/or inexpert – but many of them are completely unqualified, unauthorised, unregulated (and in reality – incapable of providing any redress) laymen as regards British company law – and their skill sets are more focussed upon 21st century web-advertising (and the like).

The strange aspect of legal agreement preparation is that unlike (say software – with which legal drafting otherwise has many similarities), a relative layman has difficulty in knowing ‘whether it works or not’ at the point ‘they pay their money’.

The ‘proof of the pudding’ is (often) in the eating – when one or other interested party wishes to enforce what they believe is a legal (and practically useful) document, often sometime in the future and that is often when one wishes they were not subject to the adage ‘you get what you pay for’.

Call me old fashioned, but when I’m feeling unwell – I would generally opt to discuss matters with a doctor or a pharmacist – whom I had some comfort are medically trained, experienced and relatively expert in their field (being authorised, regulated and insured).  I don’t tend to take steps in relation to my health on the basis of a ‘health advisor’ who was trying to sell me a ‘magic potion’ over the internet!       

Endlessly, the shysters in my legal sector will seek to tell the early stage venturers or diverse owner/ managers – “You absolutely MUST have a shareholders agreement” (which I would advise you to read as – “We have a ‘Word’ document of dubious provenance and extremely doubtful legal effect – which with our limited word processing skills we can make minimal amendments to – e.g. add your individual names and your relevant company name at the appropriate place where 'blanks' appear in the template we have – and then charge you (only) several hundred pounds for the privilege).

By the time that ‘shareholders agreement’ is actually considered by a legally qualified, authorised, regulated (and insured) Solicitor – attempting to deal with the ‘real world issues’ which have arisen under it – This Solicitor all too often has to inform the individuals involved that they have bought little more than ‘poor quality toilet paper’, which needs to be completely disregarded (in terms of seeking to help those who paid for it), and that regrettably – they don’t (in practice) have any realistic redress against those who sold them this garbage.

‘The Legal Reality’ – You ALREADY have a ‘Shareholders Agreement’

The first fact that those who have any involvement with a British limited liability company need to realise - is that I can guarantee (with 100% certainty) that they ALREADY effectively have a ‘shareholders agreement’ from the day that they formed their company (and that ‘perhaps’ the fact that this wasn’t discussed with them - when they bought ‘another shareholders agreement’ might lead them to reflect that they were ‘taken for mugs’ by being sold something they already had.

The position stated above is because every limited liability company formed in the United Kingdom HAS Articles of Association by virtue of incorporation (even if they are only the default ‘Model Articles’ provided by the Companies Act legislation), and Articles of Association ARE a format of 'shareholders agreement'.

A limited company’s Articles of Association should be freely ascertainable and accessible from a company’s filing record, publicly available from Companies House’s website.

Look and find yours – usually the first item in a company’s filing record:-   https://beta.companieshouse.gov.uk

Articles of Association provide rights available to, and bind with obligations upon, the various interested shareholders, directors and the relevant company (and recognise that the identities of both shareholders and directors may and do often change over time).

For various technical reasons, Articles of Association are a much more effective way of creating the vast majority of the relevant rights and obligations (which are advisable to exist / be created between the various interested parties in a company) - than seeking to do so in private shareholder agreements (although ‘uninitiated draftsmen’ continue to produce the same often largely worthless documents – absent any initial or ongoing consideration of what the relevant company’s Articles of Association might provide).

The technical advantages are largely the reason why public companies don’t have shareholders agreements (but are run pursuant to their Articles of Association) – and Articles of Association are the appropriate way (in the first instance) to set out the governance rules (rights and obligations) of a private company – especially with various diverse shareholders – as is the common situation seen.

That’s not to say that many company’s articles are appropriate for the companies in which they are being used – After all, if you paid less than GBP £50 for a company, there isn’t going to have been a lot of legally qualified thought (read ‘NONE’!) given as to whether the ‘shelf Articles’ are appropriate for your use.

Often they merely contain relaxations – so as to allow for the operation of (say) a ‘one man’ or ‘husband and wife’ company.   They are very rarely appropriate for ‘a multi-stakeholder / quasi-partnership’ type of ownership structure.

Non-company lawyers habitually find Articles of Association quite difficult to comprehend - but I would encourage anyone involved with a limited company to initially set aside some time to seek to read and understand their existing Articles; before discussing with someone with appropriate legal experience and expertise - whether they are appropriate for the company structure in your specific circumstances (and in particular – whether they could be made much better) – long before some ‘snake-oil salesman’ seeks to sell you a ‘shareholders agreement’.

The lack of accessibility/complexity is largely a result of Articles (habitually) having to be consulted as / when / if there might be ‘contention’ between certain of the shareholders and/or the directors, representing the company – when the necessary level of detail is highly advisable (so that interested parties are restricted from seeking to avoid the Articles’ provisions; and much can be effected without the need to go to court).

My view is that Articles should be treated as an ‘insurance policy’ (or the foundations of good governance) – prepared as a means of encouraging amicable and constructive co-operation between shareholders and the board of directors (potentially the same – but ‘wearing different hats’) – often forming the ‘back-stop’ to which stakeholders will have to turn – should circumstances arise in which the interested parties are having difficulty in ‘playing nicely with each other’.

A good set of Articles should be capable of being prepared on the instruction of the board – with the aim of achieving that stated goal – and then ‘tucked in everyone’s bottom drawer’ – only to be consulted should contention arise between the various interested parties.

What shouldn’t happen is that they should be completely ignored – largely by virtue of the ignorance of the supposed business/legal advisor (or who – at best – recognises that they don’t have the legal knowledge or drafting skills to prepare them).

A skilled Solicitor (with expertise and experience in British company law) should be able to prepare a set of Articles on the basis of being instructed by the Board of Directors of the relevant company to produce a prudent & sensible set of governing documentation relevant to the specific circumstances of the company – which are designed to produce ‘equitable’ (i.e. fair and reasonable) outcomes for all of the stakeholders in the company (while reflecting sensible commercial arrangements either proposed by the Solicitor or instructed with regard to – e.g. (say) (un-)vesting arrangements for (very-)early leaver(s) from the venture etc.).

In the first instance, it’s arguably best to keep the drafting to a single class of (Ordinary) Shares (for all envisaged shareholders in the company) – as investors (in particular) find this (habitually) easier to understand.  However, ‘one size does not fit all’ and a skilled legal professional should be examining the various stakeholder interests and proposing ‘fair and reasonable’ structures to reflect an equitable position.

In addition, Articles should be designed to ensure appropriate flexibility of board of directors actions (without abuse of shareholders), encourage a small / manageable shareholder base – through pre-emption on transfer (and leaver provisions to ensure no ‘sleeping partners’ are being carried by the ongoing management); and ensure that the company can be administratively simply and fairly sold – through exercise of a ‘drag-along’ provisions and right to exercise ‘tag-along provisions’ etc. (all of which are commercially advisable provisions for a private company with potentially – a relatively large and/or growing shareholder base).

This draftsman tends to include a few notes [by way of wording in square brackets] within the text of draft Articles to potentially assist the comprehension of the text – but it is generally best to ‘page-turn’ with a qualified Solicitor to discuss any aspects/issues – once the stakeholders have had an opportunity to read and consider the relevant draft.     

‘The Gloss’ – Have a Shareholders Agreement (If You Want/Would Benefit From One)

Only after the advisability of (variations to – or more likely) new Articles of Association has been discussed and appropriately addressed – should the issue be addressed of whether an envisaged separate (and private) ‘shareholders agreement’ for appropriate interested parties is needed and/or advisable.

Whether there should be some agreement between the company and certain (or all) of the shareholders depends upon the particular facts – But there are arguments (after the position on Articles has been dealt with) for a relatively short shareholders agreement to be prepared (a 'wrap-around' in my parlance); - including aspects such as private agreements as to (say) restrictive covenants (upon ‘Executives’), dividend policy, and certain other management and operational matters.

This draftsman tends to use a ‘template’ shareholders agreement designed to ’wrap around’ (i.e. work in tandem with appropriate Articles) – but most shareholder agreements are largely designed for circumstances other than a quasi- partnership – e.g. they are requested by a material investor (if minority) shareholder and/ or venture capitalist – say which has ownership of a substantial proportion of the shareholding (but not control of the board by numbers – i.e. a MBO situation) etc.

This draftsman tends to prepare such a document (if deemed desirable or appropriate) with large sections – ‘Schedules’ - that the interested stakeholders can complete themselves – reflecting men of business agreeing upon their commercial plans.

If you want to discuss any of the above – Please do not hesitate to contact me.

However – If someone tells you that you ‘need’ a Shareholders Agreement (and doesn’t make any mention of your Articles of Association) – Be wise to the con!

Regards

Dan.Johnson@EquitableLaw.com

+44 (0) 7788 537 187 = U.K. Cellular / e-Telephone

http://www.EquitableLaw.com

Please feel free to schedule the proposed conversation with me via: - https://calendly.com/danielrobertjohnson