How to protect yourself against legal liabilities in the modern everchanging world?

Gvido Senkans

In the modern world everything is constantly changing!

 

Just 10 years ago it would have been hard to predict which exact technologies would be invented and how they would affect our lives, not even mentioning the drastic changes that Covid-19 has brought in the world!

 

What else expects us in the future?

 

It's obvious that competition is increasing in almost every sector, not only within the same industry but also across multiple industries.

 

Ir jāspēj saskatīt – kādi attīstības virzieni ir perspektīvi, lai tajos varētu ieguldīt savu spēku un resursus, kā efektīvāk un kvalitatīvāk izdarīt to, kas nepieciešams, kā arī savlaicīgi saprast – kuras sfēras jau savu laiku ir nodzīvojušas un no kurām labāk laikus atteikties.

 

It's not easy, you always need to constantly sift through loads of information, learning how to separate the essential and understand tendencies.

 

How to survive in these circumstances?

 

How not to commit lethal mistakes for your company?

 

Is it even possible to avoid these kinds of risks?

 

It's one thing if you're just thinking about the development of your business, you need the right ideas and resources, but it's another thing if you already have a functioning company. You can't just focus on growing the company, but you also need to preserve what's already been built.

 

It's not possible for a human to be an expert in ALL areas.

 

If you're already a specialist in your area of expertise which requires you to have continuous education and growth, then it's very unlikely that you will have time to follow all the changes in jurisdiction and keep legal issues in the back of your mind.

 

At the same time, the negligence of an employee, imprecise obligations in the contract or timely non-compliance with changes in legislation can deal a huge blow to the company or even prove fatal.

 

An example is one of Latvia's most recognizable brands - "Stenders", which after the rapid expansion in foreign markets the owners were forced to sell, acknowledging that the amounts are not what they dreamed of when creating the company.

 

Was it avoidable?

 

If we do not want to risk everything that has been accumulated and earned in the past, the legal side of our company needs to be taken care of.

 

With each subsequent step, you must be sure that it does not jeopardize existing assets.

 

These are expenditures that may not make an immediate profit, but are necessary for security and development.

 

What to do?

 

There are usually 2 ways companies handle legal issues:

 

The first - hiring a lawyer.

 

This is possible if the company has enough work to fully employ a lawyer, but even if it is only one person, he may not be a specialist in all areas, and he may also fall ill, go on vacation, etc. 

 

Of course, if a company is bigger, it has a whole legal department and they can afford to maintain it, then that is a completely different situation.

 

The second - hiring a law firm for various tasks
 
Often this is the solution that is best for the situation, but it also has its drawbacks.
 
First of all - the lawyers get paid per hour and the rates for good lawyers are quite high, starting at 100 EUR/h and up. This makes it frustrating to think about economics, as legal costs alone do not usually generate revenue for the company and lawyers are only given tasks when certain problems have already arisen or there are serious risks. 

Second of all - in any case, if lawyers are paid for the time they spend, it is economically in their interest to spend more time on specific issues, although objectively the same could probably be done with much less time. 

Third of all - the lawyers will answer the specific questions asked, they will not answer about the whole situation. If they try to look more broadly, this can lead to questions about unnecessary time spent by the customer. However, if they do not warn the customer, it may cost him even more.
 

What would be the solution?

 

In our opinion, there is a much better solution that combines the pros and cons of these two options.

 

Our many years of experience show that for companies that do not have the workload to set up a legal department, it is often more advantageous to conclude a contract for legal services with a certain monthly fee, so to speak - a subscription fee.

 

This can also be done in situations where the company has its own lawyer, but his qualifications are not such that the company's management can be entrusted with all legal matters.

 

The monthly fee is determined based on the actual amount of work required, and in such cases a discount is always applied compared to standard hourly rates.

 

In this case, it is in the best interest of the law firm to do everything necessary, as efficiently and effectively as possible, to satisfy the client and to the benefit of both parties.

 

The task of the law office is to follow all the client's activities and warn in time about possible legal risks, as well as to offer solutions and prepare the necessary documents.

 

All legal documents in which the company assumes any obligations or liabilities are then checked and endorsed.

 

In order to provide the necessary and essential legal services, the Parties shall jointly develop a solution, which is done directly by lawyers - usually a lot of time is spent on things that can also be done by secretaries or other staff - printing, sewing, sending documents.

 

Usually, the office only reviews the documents already prepared by the company's employees, which does not require as much time as the physical preparation of documents, and performs the full preparation of documents if the company's employees are unable to do so.

 

If these contracts are standardized, then the law firm helps to develop and approve them, if the contract with a particular client is changed or supplemented, then the law firm's lawyer will always review it to avoid risks that are not known to the company's management.

 

Our experience shows that it is often relatively easy to make the necessary changes at the stage of negotiating and signing contracts, which is much more difficult to achieve once the contract has been signed, and even worse when unforeseen costs are already incurred or the other party claims.

 

Of course, cooperation with a law firm will not allow the client to avoid all legal risks, but it will allow him to understand them and make an informed decision - to take specific risks in a given situation or not.

 

Mutual trust is a necessary element in all this activity, so the law firm cannot afford to be superficial or careless.

 

A legal service contract is not an employment contract subject to employment law, the client can decide to stop working at any time, so lawyers need to be able to work in a way that makes the client benefit from working with them so that they know the savings are greater than their costs.

 

The law firm will always provide a lawyer, even if someone falls ill or on leave, another equally qualified one will take his place.

 

At the same time, the Customer may request the replacement of a specific person serving his company, in case he has not established a sufficiently successful cooperation or has other objections.

How is cooperation usually started?

 

It is usually necessary to meet with the owner or management of the company to discuss the overall vision and needs of the client, then a legal analysis of the current situation, review of existing contracts and other legal documents, if necessary, adjust or develop new ones.

 

And then a procedure is established for all documents to be signed to be checked and endorsed.

 

It is also agreed - approximately what amount of work is included in the fixed monthly fee, moreover, in case there has been more work in some months, it can be compensated for the following months at the expense of the year.

 

If necessary, the lawyers accompany the client in negotiations with the contractual partners.

 

However, given that everyone is human and the lawyers commit a mistake in their work, it is important to make sure that the civil liability of the law firm is insured.

 

In the event that an error is committed and results in additional legal work, this will be done free of charge.

 

It is not in our best interest to bringing the client's problems to court, because litigation is always the most unfavorable solution, except, of course, for special cases of abuse, but we must be able to guard against them at the contract stage.

 

In the event that litigation is unavoidable, we will assist the client in all possible ways.

 

In this way, for a fixed and predictable fee that can be budgeted in advance, it is possible to prevent the company from wasting its resources inefficiently and unpredictably, while ensuring that all legal risks are covered.

 

In case you would be interested in the legal side of your company being supervised by the Law Office Vindex, SIA, whose operating experience over 25 years has already exceeded 1,000,000,000 or a billion euros, contact us! Even if you do not choose to cooperate with our office, we hope that you will find this information useful!