Most of us, at some point, are frugal in our spending. This is particularly true for a startup or emerging company, where being lean is likely a necessity for survival. The concept of “frugality,” however, describes a wide range of thrift — from prudent and economical, on one end, to unwise and cheap, on the other (not that I personally have ever been alerted to this by a significant other, of course!).
When discussing the estimated transaction costs for a particular deal with a client, I, as a matter of course, encounter the “breather,” or the short moment of silence that conveys the client’s surprise after receiving the estimate. I’ve seen service providers handle the “breather” period in different ways, from staring down the client old-west style, to attempting to distract the client by changing the subject at an auctioneer’s pace.
Negotiating transaction fees is perfectly acceptable. Clients should be mindful, however, that most good attorneys recognize the potential complexity of a deal, and, based on experience, are proficient at estimating the time and fees required to close the deal and accomplish the client’s goal. Some deals are very complex, irrespective of size; further, a client’s own expectations and negotiating style often influence the total transaction costs.
Surely, there are attorneys out there who will claim to be able to do the job for less. But cutting corners or the lack of true competence carries significant risk to a business. The best advice for a client seeking to manage transaction costs is to work with an attorney advisor who is experienced in working with early-stage companies. When the opposing side’s attorney has similar expertise, the transaction will run much more smoothly, and total costs will reflect the increased efficiency.
