Prevention is better than cure so the adage goes. It sounds even better in Kiswahili where the wise men (and women?) of old said “usipoziba ufa utajenga ukuta”.
Translated, “If you do not seal cracks, then you may be forced to build a wall when the wall falls”.
These wise words hold in legal issues. Most businesses end up spending a lot of money “building walls” when all they could have done is “seal the cracks.”
I am of the humble view that most of the commercial and business cases in court are preventable (well, unless your opponent is a frivolous and vexatious litigant).
Preventive lawyering enables businesses to save legal costs and time spent on litigation by adopting certain strategies.
I get concerned when I see some businesses facing a lot of legal hurdles that could have been easily prevented.
Here is a little scenario.
On December 31, Mpenda Raha, the general manager of Company Y hurriedly signed a contract with X Limited without reading the fine print. Mpenda Raha could not afford to miss the fireworks display happening later that evening!
One year later Company Y receives a demand letter from X Limited alleging a breach of contract and a claim of damages worth Sh60 million.
Mpenda Raha is shocked to the core. He has never seen this clause in the contract!
The matter ends up in court as Mpenda Raha vehemently denies the claim. To defend the lawsuit, Company Y hires Mkali advocates whose fee is Sh5 million.
Three years later, X Limited wins the case. The court awards X Limited Sh60 million for damages and orders Company Y to refund X Limited’s legal fees.
In short, the company has made a loss of about Sh70 million thanks to Mpenda Raha’s laxity!
All Mpenda Raha would have done is read through the contract or hire a lawyer to explain to him the terms before signing the contract with X Limited.
The contentious clause would have been deleted from the contract before signing.
The above is a common occurrence in the legal field.
I have witnessed a case where an angry lawyer almost got physical with his client in court because the client’s small mistake cost the company hundreds of millions of shillings.
Preventive lawyering is a service offered by lawyers to prevent and mitigate legal risk even before it happens.
A good “preventive lawyer” will first seek to understand his client’s sector in detail. He will then understand his client’s business and business objectives.
The lawyer will then try and assess external and internal legal risks and give recommendations on mitigation. External risk assessments entail reviewing past cases in the client’s sector.
Armed with a sound understanding of risks as well as the client’s objectives, the lawyer will then offer recommendations to his client.
This could be in the form of advisories, drafting or amending policies, setting up structures, drafting and reviewing contracts, and having processes and procedures that adhere to the law.
A “preventive lawyer” could discover a flaw in a client’s process, for example, and recommend an amendment of the process to minimise the legal risk.
Other than helping clients save on costs, preventive lawyering is a strategic tool. A business can adopt preventive lawyering to help it attain a competitive edge.
An example is being compliant with data privacy laws. Not only is it a preventive lawyering tool but can also be used as a marketing strategy! We are 100 percent data compliant.
Ms Mputhia is the founder of C Mputhia Advocates | [email protected]