A Legal Minefield

The first time Craig McDougal, a Dallas lawyer, was hired by a shop to do some legal work, he didn’t imagine there would be much work to do.

"I hung up the phone thinking, ‘that’s nice, but I don’t see much coming out of this in the long term,’" McDougal said. "This guy had a medium-sized shop, with a handful of employees, and I just didn’t comprehend how much was involved in his business.

"Within six months, I was spending about 20 percent of my time on that one client," he said. "It’s amazing the amount of legal work a shop can produce."

INSIGHT set out to examine the relationship between collision repair shops and their lawyers, and in the process discovered a simple axiom: Lawyerless shops beware.

"It’s not so much that shops are being sued right and left," explained McDougal, who today represents a number of shops throughout the southwestern United States. "It’s just that there are so many legal issues that any employer, let alone one associated with delicate automotive industry, must navigate in order to keep from being suffocated. Employment issues, environmental issues, liability for their work.

"Even a small shop can produce a tremendous amount of legal work."

The Attorney Relationship

While it’s rarely necessary for a shop to have a lawyer on a permanent retainer, legal experts believe it is paramount that shops cultivate a relationship with one or two attorneys so that they don’t get stuck floundering in a time of need.

While some attorneys may ask for a small fee up front, the majority of attorneys are more than happy to sit down and talk with potential clients, beginning a dialogue that likely will result in work down the road.

When searching for an attorney, shop owners should keep several things in mind.

Expertise

All lawyers are not created equal.

Shops have a unique set of issues that are likely to arise continuously over a period of time, and thus it’s important for a shop to find a lawyer with quality skills in those particular areas of law.

When beginning a relationship with an attorney, inquire about his experience in the following areas:

• Employment Law - There are numerous employment issues encountered by all employers, and shops in particular. Workers compensation, federal discrimination, OSHA, salary and benefit, and union laws are just a sampling of the employment issues faced by today’s shops. Any discussion with a lawyer should begin by inquiring about expertise in this critical area of the law.
• Environmental Law - The modern shop faces a slew of environmental issues, from the disposal of hazardous materials to the storing of toxic chemicals.
• Litigation - Any attorney-client relationship should begin by understanding that someday the attorney may be representing that client in a court of law. When choosing a lawyer, it would be wise to select one who knows his way around a courtroom.

In short, a good attorney for a shop must be a well-rounded attorney. It’s not necessary that the attorney specialize in representing shops, although that would be nice, but it is necessary that he have a solid working knowledge of these areas of the law.

Fee

Before beginning any client relationship, it’s also important to negotiate the fee arrangement up front. If a lawyer won’t openly acknowledge his fee in advance, and indicate that he will keep you abreast of rising costs - as they rise - then you want to look elsewhere. There are many respectable lawyers who work for hourly fees ranging anywhere from $90/hour up to $200/hour. Of course you can pay much more than that if you wish, but it’s rarely worth it.

Bottom line, keep an eye on your bottom line.

"You don’t have to have a lawyer," McDougal said, "but you sure don’t want to get stuck needing one and not ever having thought of the issue."