The Cost of Delay

A common error I have seen over the course of my career is delaying bringing in counsel.  I know.  That seems self-serving on my part.  And we all know that not every problem requires legal assistance and, of those that do, not all of them provide the kind of assistance I typically provide.  Nevertheless, delaying that act (bringing in counsel) can cost a great deal.

 

I will give you an example.  A few years ago a client of mine had a bond claim come in on a college bookstore.  The principal had filed bankruptcy and the schools were nervous.  It was March and the end of the semester was fast approaching.  The schools were concerned about servicing their students in terms of buy-backs and, of course, the coming summer semester.

 

The client had no one in-house adebt at bankruptcy proceedings.  But, rather than call us, they sat by as the schools and trustee pressed the court to reject the contracts and allow the schools to replace the principal with another vendor.  That left the principal with a required payment to the schools of the commission its contracts required.  Those commissions, which exceeded $1 million in total, is what the surety bonded.

 

After all the water had passed under the bridge, the client called us.  It turns out the contracts between the principal and the schools required the schools to buy the principal's inventory upon termination of the contract.  Had we been involved early, we could have forced the issue with the court.  The value of the inventory could then have been offset against the commisions saving the client almost all of the outstanding claims.  Instead, the court steadfastly refused to retroactively enforce the provision and apply the offset.

 

In short, the client's delay forced it to pay out over $1 million when, had it not delayed, it would have paid out virtually nothing other than our fees.

 

 

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