Why You Want a Written Agreement

I was recently asked to provide some advice to a friend of a friend who had just lost their job.
The thing was that they didn’t just lose their job.
They spent 11 years working 60 to 80hrs per week to grow a business from $150,000 per year to $2,000,000 per year on the promise (on a handshake, not in writing) of a business partnership.

A company was set up in 2008 to take over the business and provide the partners with shares with the transfer coming into effect in July 2009. Coincidently, after 11 years of service under a business management and marketing contract, my friend of a friend had their services terminated in April 2009. Unlikely to be a coincidence. This is the query my friend sent through to me:

Do you know of any quality Industrial Workplace type lawyers who I can talk to simply to get some honest answers… I have spoken to a number of them and they are happy to take on the case but in reality they would all love to take on the case… Ideally if I could find an honest lawyer, pardon the pun then I would be a lot happier… I would be happy to give a lawyer 10% of any money they recover for me as a payment, rather than simply throwing good money after bad on a wing and a prayer.

You do not want to end up in the same situation. If you are entering into a long term arrangement with potentially great benefits at the end, get it in writing! Or at least make notes of YOUR understanding in your diary at the time.

And here is the response I provided:

You will find that most lawyers are honest; they simply don’t have an adequate concept of explaining the way the system works to their clients.

Unfortunately I don’t know anyone over there to recommend. You would be best to get a local lawyer. In terms of finding a lawyer to help you, it sounds like you want someone in litigation with an understanding of contracts and constructive trust arguments more than a workplace lawyer.

Your offer of 10% of recovery is actually not a proposal that lawyers are permitted to accept under champerty rules (its an ethical compliance thing), although I know there are some provisions which allow firms to enter into ‘no win, no fee’ type arrangements.

Some suggestions:

  1. Do not let your legal proceedings become the focus of your life. If you do, you will be disappointed.
  2. Focus on the outcome you want considering what might fall in between your worst case scenario (you lose, pay your legal costs and their legal costs) and your best case scenario (you win, they pay ½ your costs). Expecting to get only your best case scenario is not realistic.
  3. Concentrate on rebuilding your future more than your legal case.
  4. When finding a lawyer, ask them to give you examples of similar work they have done and ask for a testimonial from the people they have done that work for in the past.
  5. You should approach Legal Aid. They fund commercial cases in very limited circumstances and may also know of other organizations which may assist you with legal fees. They might also be able to recommend a lawyer for you.
  6. Be clear on what your fees are likely to be. Keep asking questions until you are clear. Then double the figure that they have given you as an estimate and keep in mind that even if you win, you can only recover about ½ of your legal costs from the loser. You have to win to recover any costs at all.
  7. If your first legal opinion is that you have no case, ask them why and what you would need to be able to demonstrate in order to have a case. Do not shop around until you find someone who says you do have a case if more than one lawyer says you don’t.
  8. Be prepared and clear each time you deal with your lawyers. Its saves them time and you money.
  9. For the 10 page history that you have prepared, collect as much supporting evidence as you can, especially letters, emails and anything that was in writing at the time that your original agreement was made. Relying on oral testimony alone is a risky way of running a case.

A recent movie which highlights the risks of becoming obsessed with court proceedings is Flash of Genius in which Bob Kearns takes on Detroit automakers who he claims stole his idea for the windshield wiper. His obsession consumes years of his life and destroys his family life. Don't let this happen to you.

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2 Responses to “Why You Want a Written Agreement”

  1. seo September 4, 2010 at 7:22 am #

    I don’t know if I am any smarter but I enjoyed reading your post – Thank You

  2. Kortney Bichoff September 3, 2010 at 2:22 am #

    Your articles are interesting and so useful for me.

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