My Contracts professor once told me, “contracts are like relationships; everyone goes in with rose-colored goggles, but nobody plans for when things go wrong.” At the start of a business deal, both parties often feel aligned in their goals, optimistic about the future, and eager to get the paperwork signed. In this setting, it might seem convenient—even collaborative—to use the same lawyer for both sides. After all, if everyone agrees, why complicate things with extra lawyers? But as practical as this might sound, relying on a single attorney can lead to serious complications down the road which cost far more than any legal fees saved. While technically permitted by Illinois Supreme Court Rule 1.7—provided that informed consent is obtained from both parties in writing—using one lawyer for both sides of a business deal is rarely wise.

In any transaction, the parties' interests are inherently at odds. Both parties want to get the most out of the deal possible; likewise, both parties want to minimize their obligations and protect themselves against future risks. A single lawyer simply cannot provide truly unbiased, independent advice to one side without compromising the other party's interests. At the very least, the lawyer's advice to one or both clients is severely handicapped. Even more, while all involved may believe the lawyer can “provide competent and diligent representation to each affected client” (Rule 1.7(b)(1)), the parties may discover later on that they do not agree. However, it may be too far into the deal to back out, and the parties end up signing something they regret.

One case I've encountered illustrates the dangers of this approach. Two businesses entered into a transaction where one sold assets of their company to the other. Rather than hire separate attorneys, both parties agreed to use the same lawyer, assuming the process would be quicker and cheaper. Both parties left the table thinking they fully understood the deal, confident that everything had been handled properly. However, after the deal was finalized, both parties realized that critical elements of the agreement hadn't been properly addressed or understood, including payment of unpaid invoices. Misunderstandings about the obligations and implications of the agreement led to disputes and, ultimately, litigation.

If each party had hired their own attorney from the outset, the problems in the agreement would have likely been spotted and handled before the deal was finalized. Accordingly, the lawsuit could have been avoided. Instead, one party had to hire a litigator (me) months after the deal to untangle the mess. By then, emotions were high and the litigation costs far exceeded what either party would have paid for separate transaction attorneys upfront.

This isn't an isolated issue. When both sides rely on a single lawyer, critical issues are often overlooked. On the other hand, a lawyer representing one side will focus solely on that client's best interests, catching risks and proposing changes to the agreement that ensure their client is protected. The lawyer on the other side will focus on their client's best interests, catching risks and proposing changes to the agreement that ensure their client is protected. In the end, a deal is reached that is acceptable to both parties, “warts and all.” But, when an attorney is trying to juggle the concerns and interests of two adverse parties, as in a business deal, compromises are made and misunderstandings abound; and those can become quite expensive down the line.

The lesson here is simple: hire your own transaction attorney when you're doing the deal, or hire a litigator afterwards to sort out the disputes. While the latter might keep me busy, I'd much rather see my clients avoid these costly situations altogether. Protect yourself from the start by ensuring you have legal representation that is solely focused on your interests. In business, as in relationships, those rose-colored goggles don't stay on forever. Transaction attorneys and litigators at CTM Legal Group can give your business the representation it deserves. Call us today at 312-818-6700.