Lawyers Gone Wild

There is a classic holiday movie called A Christmas Story. The story revolves around Ralphie, a young boy who wants a Daisy Red Ryder Range Model 1938 Air Rifle BB Gun for Christmas. In one scene, Ralphie’s younger brother is dressed by his mother to go to school. The mother puts several sweaters and coats on the brother so that he will not catch cold and get sick. The young child is so wrapped up in sweaters and coats that he can hardly walk. This embarrasses Ralphie as well as the little brother, and matters get even worse when the little brother falls down in the snow and can’t get up.

The overprotective mother is much like an overprotective attorney. Attorneys want to protect their clients from any possible situation that could have a negative effect. In many circumstances in a sale transaction, an attorney will try to wrap so many levels of protection around a client that it becomes embarrassing to the transaction and it causes a seemingly friendly transaction to turn into a tit for tat battle over ridiculous items. In addition to causing unneeded tension in a transaction, the overprotective attorney usually racks up excessive legal fees for both parties and delays the closing. Remember, the only way an attorney can protect you 100% in a transaction is to cause you to not do the transaction. Business has certain risks and good attorneys balance getting the transaction done while accepting reasonable risk.

In a past transaction, the seller had to spray paint the words “out of service” on tanks that had been removed from customer homes. Would anyone think that a tank not connected to anything was in service? My favorite item was when an attorney required, as part of a lease, that the landlord (Seller) remove all used florescent light bulbs and show documentation that they were disposed of properly.

Is it a good idea to remove used florescent light bulbs and dispose of them properly? Sure it is, but the middle of an acquisition transaction is not the place to address lightbulbs or spray painting tanks. Sellers already agree to multiple environmental indemnifications and specific environmental representations and warranties. Have the attorney protect you on legal matters but not in ordinary day to day business matters. All the buyer needed to do was ask the seller to get rid of the lightbulbs or just get rid of them after the transaction closed. Sending a red lined document that cost both parties additional legal fees to throw out some light bulbs makes no practical sense. Asking for petty changes usually just increases legal costs, upsets the other party, delays a transaction from closing and puts a negative cloud over the transaction. As an owner of a company, it is your responsibility to listen to advice, yet act with reasonable business sense.

I have seen many well-respected large and small companies get caught up in the same trap. When you are negotiating legal terms of a transaction there is a tendency to blindly take the advice of counsel without stepping back to examine what is reasonable and what is unreasonable and petty. If you end up in a battle of attorneys, please remember Ralphie’s little brother waddling down the sidewalk, falling into the snow and flailing hopelessly trying to get up. No one needs all those coats and sweaters to stay warm while walking to school or in negotiating a transaction.

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We were very pleased to have such a knowledgeable and experienced company in our corner with the team at Cetane. It was obvious that they knew the best process and how to get the ball over the goal line. Their advice throughout the process was greatly appreciated and we thoroughly enjoyed working with them.

— Steve Lombardi, Brodeur’s Oil, Moosup, CT