What NOT To Do In Business – Rule 6: Never Ever Hire a Friend as Your Attorney

If you understand the grunts of a new start up business, you certainly understand the need to cut some corners, and cut expenses wherever and whenever possible. I was fortunate enough to have a friend of mine who was an attorney who agreed to handle the legal matters of my company free of charge until I had the money to pay him.

Having a growing business, I constantly needed contracts for various things. After hiring my friend, I noticed that contracts were being drafted at a snails pace and it seemed the longer and longer I used his help, the longer and longer it was taking him to get anything done. Before I knew it, his secretary was screening my calls, taking messages, and not giving me any news I wanted to hear about when my legal work would get done. One pressing contract I was waiting for was an overseas distributor’s contract to be read and revised in time for a meeting of the minds at our showroom the following month. Upon visiting our office, I informed the distributor that, due to a backlog of my attorney’s workload, I wasn’t prepared to sign the contract in his presence. He was so upset that he demanded I pay for his fare back to Germany and related expenses. I refused, and we never spoke again. The contract would have guaranteed over one million dollars a year in orders to our company.

That was the first strike.

Strike Two:

After giving up on my friend after a year of aggravation, I went in search of a new attorney. I was fortunate to have another friend who was an attorney who was willing to take over my legal work. This time it was different. My demands were always met with punctuality and I never had a problem getting through to him when I needed. At the time, I was in desperate need of a very complicated contract. The contract consisted of a responsibility contract within an order fulfillment contract within an overall financing contract. Complicated indeed. The problem was, however, he did not specialize in this sort of thing so he would constantly look up information, call other associates and, to his credit, did everything he could to put the contract together. In the end, as it turned out, he had missed a few crucial points that would later prevent me from collecting nearly two hundred thousand dollars from the party that I was under contract with.

Whose legal work do you think is always worked on last?

In the first example, I was a non-paying client. Friend or no friend, the non-paying client. Always. Who are the most important two people in your company? You and your partner? Try again…your lawyer and your accountant. It’s your job of course to create the money, but if you don’t have the guidance to both protect it and direct it into the right places, all your work could put you in a worse position than from where you started. In my first business, not only did I lose my life savings, but I also lost much more than that from what I made in the years building it. Your accountant’s responsibility is to show you how to save the money, how to redirect it from a tax advantage standpoint, as well as how to make that money work for you and grow. Your lawyer’s responsibility is to protect that money so all the work your accountant has been doing isn’t for nothing. If you don’t do this, you might be better off going to Vegas with the money and playing roulette. Would you run off on a horse with saddlebags full of gold without a compass to show you where you are going? Odds are you’ll end up in the hands of the enemy.

Effort Without Knowledge

In the second example, I used a lawyer who didn’t specialize in my trade, and forced him into doing something he was ill informed to handle. He did it on time, but it was missing certain key points that were necessary that an attorney who had specialized in that area would have thought of right away.

Simply put… if your business can’t afford a lawyer and an accountant, DO NOT START YOUR BUSINESS! Find both a lawyer and an accountant that specializes in your field. In these situations, be careful about “haggling”, as you don’t want to be penny-smart and pound-foolish. The rule rather than the exception is, you normally get what you pay for!

Have a great day!


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4 thoughts on “What NOT To Do In Business – Rule 6: Never Ever Hire a Friend as Your Attorney

  1. Hey MJ – We learn oftentimes even late in life – we get what we pay for. Thanks for sharing the personal and business pain that you endured here – with friends! It is once again so amazing that you and Gary continue to rock it 20 years in business together. Would love to hear more how you guys have managed that and how you keep it going this long! I have had two significant breakdowns of friend ships in business – both such that we still don’t speak – despite attempts. And the breakdowns were not – theft or stealing or major negative business things. If I see any similarities it is when the balance of work-success-rewards got out of balance.
    I do remember your post on the work your strengths and how that is a big part of your success with Gary for the last 2 decades – yet would love to hear more!


    1. Thanks So much my man. Yeah, I got very lucky with this Gary character (lol), not that we haven’t made a million mistakes along the way! I will definitely continue to share the war stories, as I’m going to post one every week, which will be either an abridged version of one of the 55 case studies from the book or any of a million other lessons I have learned along the way! I know you downloaded the sample chapters, you have to give me some feedback when we speak next! Always learning and ALWAYS making mistakes, but the importance is to fail forward right? By the way, when speaking to Gary today he said he just tried to post from Siri and it works like a charm so I’m sure he will thank you!

      Have a great one my man and thanks again for your comments! :-)

  2. So many good lessons in this story. Thank you for sharing. The ones that hurt like this often provide the greatest learning. I took away a lot:

    1. You get what you pay for.
    2. Relationships are complicated and need to be reviewed and nurtured. Your friend may have felt he was being used, especially if he wasn’t being paid anything for a contract that could bring $1 million per year.
    3. Specialists are always more expensive than generalists, and there is often good reason.
    4. If you cannot afford the help, think about striking a different deal that allows the other person to see value. For instance, an equity stake.
    5. Don’t mess with MJ.

    1. Hey Skip. Thanx so much for the comments. I think you hit it on the head. The phrase “penny smart and pound foolish” could have come in very handy in so many circumstances. My Pops used to tell me that all the time, it wasn’t until maybe the 12th time that I think I finally got it! I didn’t start to really understand the sweat equity that you were talking about until much later. Bottom line is, whoever is doing work for you (& since they are not working ‘with’ you) must be motivated by SOMETHING. If not money then something else… especially when they know they are working on a potential 7 figure contract. Unfortunately hindsight is 20/20 right? Thanks again my man. I always appreciate and value your feedback. Best- M :-)

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