Why SMES don’t use lawyers

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RATHER HAVE A FENCE AT THE TOP OF THE HILL THAN AN AMBULANCE AT THE BOTTOM:

WHY SMES DON’T USE LAWYERS (AND WHY THEY SHOULD)

Small and medium-sized businesses typically encounter similar commercial law dilemmas. Graeme Wilson, founder and CEO of boutique commercial law consultancy, Whipping the Cat, believes that there is an opportunity to demystify law and make legal services more accessible to a wider range of companies. Below he outlines the four most common legal obstacles encountered by SMEs when “dealing with lawyers”, and some real-life solutions, which the Whipping the Cat legal advisory team has developed over the last year for its clients.

1. Lawyers are expensive.

There is a perception that lawyers are expensive. This may be true in several circumstances, but I am aware of several lawyers who offer really good value for money. I think that the reality is rather that companies do not know what costs to expect when they engage a lawyer. Most lawyers will tell you their hourly rate; some may even give an estimate of the time they will spend and give you a “ballpark” figure to budget for. But, almost without exception, traditional law firms reward their staff for the hours they bill. Where is the incentive to work fast?

At Whipping the Cat we charge fixed fees. What’s more, our fees are based on output and value to our client rather than hours spent. We continually look for ways to work more efficiently and staff are rewarded by client satisfaction and retention. This way, we don’t pit the interests of our staff against the interests of our clients.

2. Lawyers are inaccessible.

I spent several years working at large corporations within their legal departments. The in-house legal team sat behind closed doors. We huddled together and ate together; we spoke of “the business people” as if they were different from us. Somehow it seemed that we needed to be distant in order to be objective. Most law firms adopt a similar approach. In time, I have learned that clients don’t value lawyers because they studied Latin at university or because they speak and write in a way that only other lawyers understand. True value comes through delivering solutions and peace of mind.

At Whipping the Cat we try to have meetings at our clients’ offices, often walking through their factories and showrooms as we do so. Because the better we understand our clients, their environment and their risks (and appetite for risk), the better we are placed to identify problems early and assist in providing legal solutions. We also give our clients online access to self-help tools and templates. We think there is no point in reinventing the wheel – unless you are being paid each time that you do!

3. Lawyers don’t understand clients’ needs.

A client once told me: “Don’t tell me what you know, tell me what I need to know”. Enough said.

4. You don’t need a sledgehammer to crack a walnut.

There comes a time for most companies when it becomes necessary to “bring in the big guns”. This may happen when there is an exceptionally complex problem or where a specific area of expertise is needed, for example, when enforcing a restraint of trade or filing a merger with the competition authorities. But most of the time, what a company needs is just enough help to get them across the line.

Our clients trust that we know what we know and we know what we don’t know. They also rely on us to point them in the right direction to find an expert in a particular area when they need one.

In his book, The End of Lawyers – Rethinking the Nature of Legal Services, Prof. Richard Susskind challenged lawyers to ask themselves what elements of their workload could be undertaken differently: more quickly, cheaply, efficiently or to a higher quality, using alternative models of working. I suspect that SME owners would be delighted if more South African lawyers would take up the challenge.

Whipping the Cat has, for the second consecutive year, been shortlisted in the Innovation Category of the African Legal Awards for its fresh approach to legal services. The winners of the 2014 African Legal Awards will be announced on 31 October.

More about Whipping the Cat

Boutique commercial law consultancy Whipping the Cat was founded in September 2013. Since then, the consultancy has spearheaded the NewLaw trend in South Africa’s legal service industry through its MultiplawyerÔ model and its promise of fixed-fee billing – an innovation which has seen its client base grow substantially since September 2013.

Whipping the Cat aims to change the perception of the way that legal services can be delivered in South Africa, providing a trusted and viable alternative to traditional law firms and attracting and exciting clients with a new approach. For the last year, it has put its innovative business model to the test, and proven its worth.