Trusting Your Advisors

April 04, 2019

by a searcher in New York, NY, USA

In the Search community most Lawyers will defer any payment until after closing and will waive costs if the deal falls apart. Maybe I'm a little cynical, but how do you trust that the advisor is actually giving you the best counsel vs. just trying to get to closing and get paid? Does it make more sense to ensure the lawyer is paid no matter what so they provide the best counsel?

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Reply by an admin
from Stanford University in Honolulu, HI, USA

In the USA, attorneys are advisors. Ethics rules generally require that the advice given be independent and candid. In addition to the legal aspects, the attorney may also guide you based on economic considerations. I've never had a lawyer I've hired to tell me whether a deal is good or bad. They have told me whether my deal is consistent or inconsistent with others. Firms providing this type of fee arrangement are generally playing the long game. They know that there's a substantial probability that you (or many others like you) will become grateful, paying clients over the long term. So, even if I were a cynic, I'd doubt a reputable attorney would push a business person into a deal she might later regret because it would hurt the relationship and likely mean the end to more lucrative fees down the road. And, if word spread around, it could mean that prospective clients would shy away from the attorney or firm as well.

Reply by an admin
from Stanford University in Honolulu, HI, USA

Hi, ^redacted‌: I don't have a list of attorneys who defer fees, but we did chat with ^redacted‌ about this in his interview, Top Mistakes Searchers Make: https://www.searchfunder.com/article/editarticle/3853

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