Founding Partner
Legal malpractice can happen in any area of law, including business transactions. Victims of malpractice could face substantial losses in the form of reduced profits, lost business opportunities, and reputational harm. For this reason, parties to a business deal whose attorneys did a poor job of representing them have the right to file a malpractice claim. Stanfield Bechtel Law explains what you and your business need to know about malpractice in the context of business transactions.
Various Ways That Attorneys Can Make Mistakes
Business transactions are delicate deals that result from countless hours of patient negotiations, drafting and reviewing documents, and consulting with legal counsel. With so many stages and moving parts involved, there is plenty that could go wrong. An attorney can fail to properly represent the business client in different ways, including:
- Poor or no preparation of legal documents: Any business deal requires a variety of documents, including contracts, confidentiality agreements, and compliance documents. If these are drafted incorrectly, or not at all, a party could be at a substantial disadvantage by not having its interests adequately protected.
- Excluding important terms: Contracts and other documents should leave no uncertainty about the rights and obligations of the parties to a business transaction. Although every deal is different, they all require certain basic terms that define elements like performance, breach and default, and available legal remedies. Leaving these out could trigger litigation.
- Failure to complete due diligence and other obligations: Due diligence is typically required in a business transaction, especially one in which one company is merging with or acquiring another. Moreover, an attorney should investigate the underlying facts of the deal to ensure the transaction will truly serve the client’s interests.
- Misunderstanding the nature of the deal: If your business wishes to enter into a merger or acquisition, you need an attorney who has working knowledge of M&A transactions. Competence is one of the most fundamental professional duties that lawyers owe their clients. Inexperience with the type of transaction involved will produce a bad deal for the client.
- Failure to explain certain terms: Before agreeing to execute any paperwork, a business client needs to fully understand exactly what is being signed. The lawyer’s duty is to explain the terms and do everything within reason to ensure the client understands them. Some attorneys, however, rush through or neglect this step entirely.
- Engaging in a conflict of interest: An attorney who represents a business client owes that party loyalty and zealous advocacy. Conflicts of interest can arise because, for example, the attorney owns an interest in one of the other parties to the deal, and may therefore draft terms that are more favorable to that business and not to the client.
- Mismanaging funds: Attorneys are often called upon to manage funds that are necessary to facilitate the business transaction. Money may be held in escrow, for instance, until consummation of the deal. An attorney who misuses these funds, even if it is only to borrow with intent to repay later, can be credibly accused of malpractice.
- Giving poor advice regarding business deals: Sometimes attorneys are relied upon to give advice about a business deal and to the extent there has been poor advice given, we can explore if that is malpractice, depending on the roles the attorney played in the deal.
- Litigation: Often business deals end up in litigation, with regard to the nature of the deal, interpretation of the deal, shareholder and owner issues, violation of the deal or contract and many other aspects. If your attorney has been negligent in litigating your business matter, let us review this for you and find out if you can obtain compensation as a result of legal malpractice.
What To Do If You Got A Bad Deal
There are many other ways that an attorney can commit malpractice. If you believe your lawyer did not do a good job representing you or that you ended up with a bad deal, there may have been legal malpractice inherent to the transaction. It’s time to speak with the attorneys of Stanfield Bechtel Law. We can review the circumstances of your transaction, examine your attorney’s role, and determine if you have a case for malpractice. If so, we can seek the compensation you need for your losses. Call us today.