Don't Delay

By: Jan Roos | 0 Comments

Why Waiting Too Long to Engage Counsel Can Hurt Your Case

Many individuals will be party to a lawsuit at some point in their lives. The likelihood you will be sued, or need to sue someone else, increases almost exponentially if you operate your own business. Most folks understand it will be necessary to retain legal counsel at some point along the way, but far too many wait until the last minute in the hope they can save legal costs, and that’s a bad idea.

The likelihood you will be sued, or need to sue someone else, increases almost exponentially if you operate your own business...

Imagine you’re a commercial real estate developer, and you’ve just purchased a building in an excellent downtown location for a great price (you represented yourself in the sale to cut down on fees). The seller provided certain assurances and warranties for the building, including a six month guarantee that the building’s electrical system had been re-wired with state-of-the-art materials prior to selling.

Unfortunately, just three months after leasing out several floors of office space to various businesses, the building suffered several major power outages that resulted in major disruptions to the operations of new tenants. After paying for an expensive professional review of the building’s electrical wiring, you discover there are several floors that were not upgraded with new wiring, which is causing the power outages.

Concerned you’ll lose tenants, and damage your reputation, you immediately retain a new electrical crew to upgrade the wiring on the affected floors. This takes another three months to fully complete, and is extremely costly. You’re convinced the building’s previous owner should reimburse you for the costs to upgrade the electrical system, but your several calls go unanswered and unreturned.

You finally hire a lawyer.

Once retained, your attorney immediately gets to work with the goal of recouping your costs for upgrading the electrical system. However, after reviewing the purchase agreement you entered into, your attorney realizes that the language surrounding the building’s electrical system is somewhat vague and does not necessarily contemplate every floor of the building.

In addition, because you were solely focused on upgrading the electrical wiring on the affected floors, you did not actually contact the building’s previous owner until about seven months after the purchase date, meaning the previous owner may try to claim any applicable warranty period of six months had lapsed.

The case goes through arbitration, pursuant to the terms of the purchase agreement, and fortunately your counsel is able to demonstrate the previous owner’s responsibility under the terms of the purchase agreement, and you prevail on your claim.

Of course, in order to prevail, your attorney had to spend several hours reviewing emails and other documentation from your building tenants in order to carefully document when their complaints of electrical outages began (to show it was within the six month warranty period), to demonstrate when you first attempted to contact the building’s previous owner, and several additional hours to research and draft an arbitration brief outlining the contractual principles underlying the seller’s guarantees in the purchase agreement.

Had you retained counsel at the outset, he could have saved you several hours in legal fees...

Had you retained counsel at the outset (i.e. during the purchase of the property in question), he could have saved you several hours in legal fees by reviewing the purchase agreement and being immediately available to consult when the questions of contractual breach first arose.

Yes, it would have cost more up front, but it would have saved much more down the line in document review, legal research, meetings, and arbitration. The point is clear: there is inherent risk in entering into contracts – particularly if the contract is drafted by the other side and not reviewed by counsel – and you may end up paying dearly for not engaging counsel at the time a contract is drafted, instead of waiting until something has gone wrong.