Businesses
facing
financial
problems
or
other
types
of
challenges
usually
need
to
hire
lawyers. For
instance,
companies
being
sued
by
disgruntled
investors
for
mismanagement
may
need
to
secure
counsel,
and
businesses
headed
for
restructuring
might
need
lawyers
to
handle
the
complicated
bankruptcy
process. Such
companies
may
want
to
cut
costs
to
focus
on
vital
business
operations,
and
this
might
mean
stiffing
the
lawyers
they
hired. However,
this
tactic
can
be
shortsighted
and
cost
businesses
dearly
in
the
long
term.
One
reason
why
distressed
businesses
should
not
skimp
out
on
paying
their
lawyers
is
that
attorneys
can
minimize
the
amounts
owed
by
such
companies
or
delay
payment
of
sums. For
instance,
if
a
lawyer
represents
a
company
that
owes
money
to
a
creditor,
the
lawyer
can
be
essential
in
raising
defenses,
delaying
payment
of
sums
owed,
and
negotiating
a
payment
plan
that
might
make
it
easier
for
the
company
to
pay
off
the
debt. However,
if
a
business
does
not
have
counsel,
the
creditor
can
conceivably
obtain
a
default
judgment
and
begin
using
that
to
create
difficulties
for
a
business. The
amount
of
money
a
business
may
owe
in
legal
fees
is
small
in
comparison
to
the
pain
that
could
be
caused
by
going
without
counsel
altogether.
Another
reason
why
it
is
usually
best
for
distressed
businesses
to
pay
their
counsel
is
since
such
lawyers
might
be
essential
to
the
continued
operation
of
a
business. For
instance,
distressed
companies
might
seek
restructuring
to
help
them
survive
a
financial
crisis. This
usually
requires
that
bankruptcy
lawyers
and
other
types
of
attorneys
complete
the
appropriate
filings
and
take
other
legal
action
to
ensure
that
the
restructuring
process
is
successful.
If
this
process
is
not
complete,
shareholders
can
lose
far
more
money
if
a
company
goes
out
of
business
than
they
would
have
to
pay
if
the
businesses
had
competent
lawyers
working
on
a
problem.
It
also
usually
does
not
pay
for
distressed
companies
to
delay
payment
to
lawyers
or
make
it
difficult
for
attorneys
to
receive
their
fair
compensation. Lawyers
usually
have
numerous
clients
and
limited
time
they
can
devote
to
client
tasks.
Attorneys
therefore
spend
the
most
time
on
clients
that
treat
them
well
by
paying
invoices
promptly
and
not
giving
the
lawyer
issues
in
other
aspects
of
the
representation. In
addition,
lawyers
may
not
want
to
accept
new
matters
from
clients
that
have
payment
issues,
and
businesses
then
would
have
inefficiencies
in
having
to
secure
additional
counsel
that
might
not
be
as
familiar
with
a
company’s
needs.
Distressed
companies
often
need
premium
legal
services
the
most
since
any
defenses
that
can
be
raised
or
money
that
could
be
saved
from
the
work
of
counsel
might
have
a
monumental
impact
on
a
business. However,
such
businesses
can
jeopardize
the
type
of
representation
they
receive
by
not
paying
their
lawyers
or
by
otherwise
making
it
difficult
for
lawyers
to
receive
their
fair
compensation.
As
a
result,
it
is
extremely
short-sighted
for
businesses
to
short-change
their
lawyers,
since
this
usually
has
a
negative
impact
on
the
company
in
the
long-term.
Some
companies
have
such
limited
resources
that
they
simply
do
not
have
the
money
to
pay
their
vendors,
including
their
lawyers,
and
such
companies
cannot
avoid
letting
legal
invoices
go
unpaid. But
if
distressed
companies
have
resources,
and
need
to
decide
where
to
best
apply
such
resources,
they
should
understand
that
paying
lawyers
and
keeping
them
happy
can
have
long-term
dividends
for
a
business
facing
difficulties.
Jordan
Rothman
is
a
partner
of The
Rothman
Law
Firm,
a
full-service
New
York
and
New
Jersey
law
firm.
He
is
also
the
founder
of Student
Debt
Diaries,
a
website
discussing
how
he
paid
off
his
student
loans.
You
can
reach
Jordan
through
email
at jordan@rothman.law.