Take, for example, one of our longtime clients, Penny Wise.* Ms. Wise is a smart, hardworking, and entrepreneurial woman for whom our law firm has done legal work for many years.
We first met Ms. Wise shortly before she started her first business. At the time, Ms. Wise had just inherited a handsome “nest egg” from a recently deceased relative and wanted to use a small amount of the inheritance to launch her first business.
We suggested to Ms. Wise that she consider subscribing to the LAW Plan, which is our firm’s version of a legal services plan. Since Ms. Wise was about to start a business, we suggested the Small Business LAW Plan, rather than the Personal LAW Plan.
As we explained to Ms. Wise, each LAW Plan option would provide her with priority access to a Texas attorney, who would answer her questions and counsel her on the multitude of legal issues that come up when starting a business.
We also explained to Ms. Wise that Small Business LAW Plan subscriptions include Registered Agent Service, as well as Demand Letters, written on a law firm letterhead, which we would be glad to send to any of Ms. Wise’s customers who neglected to pay her on time, or who paid her with “bad” checks.
Lastly, we explained that, as a LAW Plan subscriber, Ms. Wise would receive a 10% discount on legal fees for any matter that we might handle for her which is NOT covered by the LAW Plan, including fees for forming the business entity for her new business.
Penny Wise decided to save some money by using an Internet-based, non-attorney, to help her with the formation of business entity and to forgo subscribing to the LAW Plan.
Some time later, Ms. Wise contacted our law firm and requested representation in a lawsuit that had been filed against both her and her new business.
Unfortunately, because the Internet-based company from whom Ms. Wise had purchased her business entity formation documents is not a law firm, it was not able to provide Ms. Wise with the legal advice that she needed to make the best decisions. As a consequence, Ms. Wise did not have the lawsuit protections that she thought she had purchased.
The good news is that our law firm was able to help her with the lawsuit, although Ms. Penny Wise did, after all was said and done, spend more on legal fees than she otherwise would have spent, had she obtained legal advice before legal troubles arose.
As the saying goes, “All’s well that ends well.”
Ms. Wise moved on from the lawsuit against her business, while still in possession of a good, albeit smaller, portion of her inheritance.
Romance struck soon thereafter, and Ms. Wise was engaged to be married. When Ms. Wise called our law firm to share the good news, we suggested that she consider some premarital Asset Protection planning. Not entirely unexpected, Ms. Wise dismissed the idea and, in a good-natured way, suggested that such concerns explain the plethora of “lawyer jokes.”
The next time we heard from Ms. Wise, several years later, was when she called us to request representation in her divorce case. It seems her husband, Deadbeat Dan, wanted not only his rightful share of their marital property, but also a sizable portion of both the value of Ms. Wise’s business and of what remained of Ms. Wise’s inheritance.
Although our law firm was able to resolve Ms. Wise’s divorce case, there is little doubt that the divorce cost Penny Wise much more than it otherwise would have, if only Ms. Wise had done some effective premarital Asset Protection planning.
Moving on after divorce, Ms. Wise continued with her business, but also became interested in real estate investing.
Ms. Wise became quite successful as a real estate investor. Unfortunately, however, Penny Wise again tried to save money on legal fees by not doing preventative legal work. As of this writing, our law firm has resolved several legal matters relating to various real estate investments in which Ms. Wise has been involved.
But please do not misunderstand. We are not complaining. Penny Wise has been a very good client of our law firm for many years. We just hope that you won’t be penny-wise and pound-foolish.
*Penny Wise is a fictional character. The legal matters described in this article are also fictional, and are intended only to illustrate the perils of not obtaining legal assistance which is appropriate to one’s situation.
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