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Adding Value: The Benefits of Representation Versus the Costs in Legal Fees

Contemporary consumers of legal services are highly cost-conscious.

As lawyers who concentrate on executive contracts and compensation, we constantly challenge ourselves to make certain that the benefits of legal representation justify the cost to our clients.

Did we add value? Is the client better off as a result of our services than he or she would have been without having come to us?

The answers to these questions are a fundamental aspect of our professionalism.

The professional fees to which most people are accustomed nowadays — the fees of doctors and other medical professionals — are more routine and usually considerably smaller.

By contrast, the legal fees spent on the negotiation of a senior executive’s employment agreement or a negotiation over the severance payout and other protections involved in an executive’s termination are far more substantial (and usually not covered, even in part, by insurance).

Given the foregoing, many sophisticated and experienced executives remain fearful of hiring an attorney even when they know, or at least suspect, that it is in their vital interest to do so.

The principles of our practice go a long way towards addressing this problem:

1. We make certain that prospective clients understand our fees before they retain us. Not only is this a professional responsibility, but we have found that a fully informed client is commonly a satisfied client.

2. We won’t accept matters where we don’t believe we can add significant value to a transaction. For example, we recently handled the re-negotiation of a certain executive contract. The legal fees were approximately $60,000, of which we managed to get the executive’s employer to pay half. For the remaining $30K of legal fees, we increased the value of the executive’s deal by more than half a million dollars. I cannot claim that every contractual transaction we are involved in adds that much value, but legal fees — the cost of quality and experienced representation — plainly make sense when the client walks out with more (or having saved more) than if he or she had not come to us at all.

3. We can add meaningful value to an executive’s agreement even if we don’t “hit a home run” as we did in the previous example.

Deferred compensation and additional severance are only two of the issues which should be considered. Moreover, there are important considerations in every executive’s contract which may not have immediate monetary ramifications, but still could have long-term repercussions.

As only one example, in most executive separation agreements, the departing executive agrees to cooperate in any future litigation against the employer. We have represented several executives who were terminated from significant jobs in the financial services industries and were reasonably concerned that, in the future, they might be called upon to spend substantial amounts of time cooperating with their former employers in on-going litigation, including having to give testimony in lengthy depositions and court proceedings. In anticipation of this burden, we have obligated former employers to be considerate of departing executives’ new schedules and responsibilities, and to reimburse them for any actual time spent in excess of some reasonable minimum, and for out-of-pocket expenses. In addition, we have gotten employers to agree to pay for executives to have their own independent legal counsel to protect themselves in these legal proceedings.

4. We can never promise that an employer will reimburse part or all of a client’s legal fees, since we do not want to be in a position where our independent legal advice could be compromised by our desire to be paid (i.e., we always want to be able to tell a client to reject a bad deal). Nonetheless, assuming that other aspects of an executive’s employment contract are acceptable, we sometimes are successful in persuading the employer to pick up some or all of the executive’s legal fees.

No senior executive in 2018 is hired without extensive scrutiny on the part of the employer. The resulting executive employment contract represents the foundation on which all future arrangements will be built (and this means that the value of that initial contract both anchors and extends into later deals with the same employer). Such a contract, which involves a serious commitment on the part of the executive, deserves the advocacy and guidance of an experienced executive employment lawyer.

Senior executives work for years to reach a high level of achievement. Their contractual arrangements are sufficiently important to have the proper attention paid to them at the outset by counsel with experience in executive employment and compensation matters. Our clients agree, as evidenced by the testimonials on our website.

About the Author

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George Birnbaum

Since 1980, sophisticated business people have relied on George to apply the meticulous preparation, attention to detail, and devotion to his clients he learned from fabled trial lawyer Louis Nizer. A graduate of Harvard College and Harvard Law School, George has over 35 years of distinguished deal-making, litigation, mediation and arbitration experience which he has used to negotiate high-stakes agreements for senior executives and select business clients throughout the United States.