Working with Lawyers- Navigating Legal Partnerships
This is the twelfth topic in a series of articles aimed at informing directors of their duties and options for small to medium enterprises (SME) if faced with insolvency. The article deals with the engagement of a lawyer.
In the dynamic business landscape in Australia, legal expertise is essential for navigating regulatory requirements, protecting assets, and resolving disputes. Whether you're a startup, a growing enterprise, or an established corporation, working effectively with lawyers can be a game-changer for your business success (or survival).
When you employ a lawyer or law firm, that person or firm is acting as your agent and is under a duty to act according to your instructions. However, lawyers also have a primary duty to the court and cannot do anything which will mislead the court.
Lawyer’s cover a wide range of services and practice areas. The most common areas likely to be required or encountered by SME businesses are:
- Disputes/Litigation - Resolution of disputes, usually via court proceedings, mediation, arbitration, and other formal dispute resolution processes.
- Commercial - Applies to the rights, relations and conduct of people and businesses within commerce. E.g. contracts, sale of goods, business transactions, partnerships and company law.
- Employment- Governs relationship between employers and employees. Typically covers employment contracts, workplace rights, wages, discrimination, termination, and health & safety regulations.
Understanding the key aspects of the relationship between you and your lawyer and the breadth and limitations of their role (and sometimes expertise), can help your lawyer resolve your legal problem quickly and effectively.
Lawyer/Client Relationship
The basis of the relationship between you and your lawyer is called a retainer. A retainer is an agreement whereby you offer to pay the solicitor and the solicitor agrees to fulfil certain obligations. A retainer need not be in writing, although it is in both your and the lawyer’s interests if the essential terms are in writing.
Under a retainer, the lawyer agrees to use all the relevant information to further your interests. The lawyer often has authority to act on your behalf, engage other people (e.g. accountants, valuers or barristers) to do work on your behalf; and accept service of certain legal documents.
When you engage a lawyer to handle a legal matter for your business/company, you should expect to pay for the professional skills and experience the lawyer applies to that work. The costs that lawyers charge will vary depending on the type, duration and complexity of the work involved.
In general, a lawyer must provide you with an estimate of the total amount they expect the work will cost, and information about how those costs will be calculated. This is called a costs disclosure and must be given to you in writing as soon as practicable after you give instructions.
Legal Professional Privilege
Legal Professional Privilege remains one of the most important areas of law for business owners/company directors to understand, particularly those navigating litigation, dispute resolution or insolvent situations.
In general terms, for privilege to apply it is necessary to show a communication was confidential, and that its dominant purpose was for the purpose of obtaining legal advice or for actual or anticipated litigation.
There are several exceptions to legal professional privilege, including waiver, statutory exclusions and improper or illegal conduct. Clients and their lawyers should be aware of these exceptions to dispute claims of privilege by opposing parties, and to ensure their own privileged communications do not fall within an exception.
Legal Services
Selecting the right legal professional depends on your business needs. Here are key considerations:
- Expertise: Look for lawyers specialising in corporate law, insolvency and restructuring, commercial litigation, employment law, or intellectual property.
- Reputation: Research client reviews and case success rates.
- Communication: A lawyer should provide clear, actionable advice.
- Fee Structure: Understand billing methods—hourly rates, fixed fees, or contingency-based pricing.
WCT Advisory – How do we fit in?
WCT Advisory is often engaged directly by law firms to assist with the provision of advice to their clients or and acting for and advising their clients on issues such as claims by (other) liquidators or trustees, restructuring processes and options (particularly around the financial assessment and analysis), solvency (or insolvency) and the practical implications of any proposed strategies.
Most lawyers are not accountants and do not typically have specialised training in accounting/finance evaluate underlying viability of a business, assess trading considerations, or decide/recommend which, of often several, alternatives available may offer the best commercial outcome. Although lawyers play a vital role in interpreting financial implications from a legal or regulatory standpoint.