Claims and legal trouble can arise unexpectedly at a company. The decision on when and whether to involve legal counsel in the handling of a situation may not always be clear. Attention to a few practical considerations can help determine whether the investment in counsel can help a company realize later savings.
1 - Source
Who is issuing the claim, demand or request? If the source is a lawyer, a company should contact their own counsel immediately. The initial reaction to a demand letter or subpoena may be to try and contact the issuing lawyer and talk through the issue, but an owner should resist that impulse. Rather, he or she should receive good counsel about the demand and the legal obligations/defenses that might arise before reaching out. In the context of governmental claims or subpoenas, do not delay, as time limits are strict and rigorously imposed.
2 - Issue
What does the matter involve? Obviously, if a company is considering its options to defend or bring a lawsuit, it should involve legal counsel. Beyond that warranties, disclaimers, terms and conditions, and web-based materials are a few more items where the issues involved are legally based and warrant getting quality legal advice. Equally, the rights and obligations of supply agreements, leases, purchases and insurance contracts demand more consideration than simply a low price. Good legal advice can help recognize issues before they arise.
3 - Scope
How broad is the issue? This is a contextual consideration. For example, one report of water near a glazing gasket might simply present a workmanship issue that is easily fixed. If, however, that same report relates to the shape of all glazing gaskets throughout the entire project, the context and quality of the potential claim take on a different scope. Even seemingly small claims can present large legal risk when spread across a project or entire product line. Early weighing of the potential scope of an issue, claim or demand can prove helpful on whether to involve counsel.
4 - Time
How much time is involved? When deciding whether to involve lawyers, a practical consideration often involves the length of time available to respond or any required future commitment. As noted above, the ability to defend against subpoenas (for appearance or documents) can be lost in a matter of days if not properly exercised. This is also the case with requirements to respond to compliance demands from entities like OSHA or, more recently, ICE. Alternatively, commitments in warranties and negotiated resolutions that obligate a company to service commitments for years post-completion are equally worthy of legal review given the tail liability and costs to which a company is exposed.
5 - Expense
How much will it cost in dollars, time and manpower? Dollars and cents can’t be ignored. However, considering costs requires more than just bottom-line accounting. The time required to respond in a detailed and appropriate manner to legal compliance and claims requires committing resources. Those same resources may be more effective at getting business in the door and managing existing projects. Often the expense of involving counsel for items such as preparation of an effective risk management plan or negotiation and review of a supply contract can prove more economical when balanced against the practical returns available by keeping the business going.
6 - Resolution
What is the desired end in terms of both time and dollars? Many companies are experienced in concluding smaller, one-time issues without the need for lawyers. When the scale of the issue or desired resolution involves more money or longer periods of time—be those via contract or warranty—legal review may help ensure that the formalities underlying those large commitments protect the business.
